While 2020 was a trying year for nearly every industry, hospitality and leisure companies continue to face some of the most blistering headwinds. Overnight, the pandemic turned everything that the industry knew about revenue streams, business models, and customer behavior upside down.
Governments and health departments limited or shut down restaurants and bars, lodging, and arts, entertainment, and recreation venues. At the same time, anxious consumers postponed outings and trips amid closed borders and travel restrictions. In many regions, restrictions were eased and then tightened once again, giving business owners whiplash as they tried to keep doors open and staff employed. And while consumers are optimistic about resuming some hospitality and leisure activities over the next year, the industry's recovery is expected to extend well into 2023, according to a report by the U.S. Travel Association by Tourism Economics.
Emerging from the pandemic's shake-up, the industry's survival and durability depend on efficient operations and reimagined customer experiences—all of which must be powered by insights. Across all sectors, operational efficiency (80 percent), customer experience (79 percent), and data and analytics (78 percent) play a decisive role in the strategic plan, according to North Highland’s annual Beacon survey of cross-functional industry leaders. In hospitality and leisure, each company faces a unique scenario that presents a set of critical challenges and opportunities. In this blog, we uncover insights into industry outlook. More importantly, we’ll arm you with practical guidance to help you capitalize on the trends.
Reimagining Customer Acquisition and Care
Increased concerns about wellness and safety have radically changed buying behavior, so it should come as no surprise that hospitality leaders are committed to reimagining experiences for safety-conscious customers. Across all industries, 79 percent of business leaders are focused on CX. Less than half (40 percent), however, believe that it’s very attainable.
For their part, customers are now generally less motivated by price, instead favoring the assurance of a safe and sanitary experience. At theme parks, for example, a long, crowded line or busy restaurant kiosk is likely to remain a deterrent for wellness-conscious consumers. That means that these companies must infuse more physical space into the end-to-end customer experience, whether it be through virtual ride lines (enabled via a digital app) or grab-and-go food options.
We see a similar trend in the restaurant space. Even before the COVID-19 crisis, millennials moved away from sit-down dining and toward take-out or drive-thru options. As a result of the pandemic, we anticipate a sustained, accelerated shift in this direction throughout 2021.
Across all industries, changing customer demands is the top external factor driving the course of change (42 percent). The impacts are sure to cascade into nearly every aspect of how hospitality and leisure companies operate. More on this below.
Rightsizing the Operational Footprint
The industry has also turned toward operational rightsizing in response to changes in customer demand and revenue headwinds. Operational efficiency ranks second highest on the strategic priority list (80 percent), accompanied by an emphasis on cost take-out. For instance, business leaders (41 percent) consider cost reduction to be a top factor influencing their preparedness for top priorities. In the hotel space, leaders anticipate reduced demand for key revenue streams (e.g., business travel) into 2021. As a result, companies are looking at how they can restructure internally and reduce their footprint while running efficiently and profitably.
For restaurants, safety concerns and regulatory restrictions on in-person dining have stifled demand, making physical restaurant footprints very costly to manage. The result? Restaurants are converting unused dining areas to kitchen space or ghost kitchens to pilot new brands or expanded service offerings. In some instances, they’re even leasing this space to third parties.
With only about one in four organizations (26 percent) feeling very prepared to tackle operational efficiency, leaders can consider priorities that will help them feel better equipped for the year ahead. One of those is analytics. Read on below.
Smarter Analytics at the Heart of it All
Reduced customer demand and operational constraints have created a perfect storm in hospitality and leisure. Analytics can help the industry not only weather the turbulence but also become more resilient long term.
Business leaders across industries have their sights set on data/technology as a top transformation area in 2021 (51 percent), and the hospitality industry is no exception. Data and analytics (D&A) can help leaders identify how to best allocate their limited marketing dollars for maximum customer acquisition and retention. As such, it will be vital to the industry's recovery.
D&A can also guide hospitality companies through strategic planning. Real-time analytics and a more robust, organization-wide data blueprint can help leaders more confidently plan for the year ahead. And with more than half (53 percent) of business leaders conducting strategic planning more frequently than ever before, real-time analytics has become a vital lifeline for more iterative planning cycles.
Finally, the pandemic has forced industry leaders to get creative as they look to attract the next generation of consumers. Insights can play a central role in guiding product and service innovation opportunities. For example, in the rebounding timeshare industry, customer insights can help companies appeal to an emerging millennial customer base through a reimagined product suite that favors more experiential products. Think sports, cultural activities, adventures, and more.
Taking Action: Deliver Reimagined Customer Experiences, for Less
- Maximize the value of data. Configure a customer data blueprint that allows you to gain a deeper understanding of the complex data flows that support all interactions with your customers or guests. The blueprint showcases high-level interactions, data that is created or consumed at that interaction, and the flow of data through the environment. With a robust, holistic blueprint, you’ll be one step closer to the insights needed to guide strategic planning, marketing spend, and innovation opportunities.
- Conduct an operational efficiency review to rightsize and operate more nimbly. A comprehensive operational efficiency review can help you prioritize choices that drive lasting efficiencies and keep costs in check. Zero in on opportunities for process improvements that fix any cracks in your operational foundation. As a result, you'll deliver sustainable change and amplify efficiency improvements.
- Accomplish more with less through your workforce. Cost reduction and internal reorganization may result in workforce rightsizing. With workforce skills/capability a top factor helping (or hindering) preparedness for the year ahead (66 percent), hospitality leaders must optimize their limited people resources. By flexing the appropriate mix of expertise for the job at hand, Managed Services helps you achieve greater impact with fewer people. Specifically, the service delivery manager role can help you capture end-to-end quality and value across the Managed Services lifecycle through a clear quality framework, associated KPIs, and day-to-day management. The result? Assurance that you’re achieving the value you expected.