EDINBURGH, Scotland—With increased hope on the horizon due to possible effective vaccines for COVID-19, the travel industry is likely to embark on a more stable but, ultimately, long and slow journey toward recovery.
However, the crisis has caused profound shifts in consumer behavior and attitudes toward travel and hospitality. These changes have major implications for the industry as hoteliers must act fast and adapt to meet the needs of post-COVID-19 consumers.
STR, which is owned by the CoStar Group and is the parent company of Hotel News Now, carried out consumer research using STR’s Traveler Panel in late August and early September 2020. The goal of the research was to understand the attitudes of consumers and investigate their needs in this ‘new normal’ world impacted by COVID-19.
The results show, unsurprisingly, that intent to travel is significantly below “normal” levels. Consumers expressed multiple concerns that deterred them from booking and undertaking travel in the past few months. Aside from the hassle of quarantine and general concerns around personal health, the possibility of financial loss also played a significant role in consumers’ decision not to travel. Potential refund and travel insurance issues were cited as barriers to travel by 42% and 20%, respectively.
Source: STR, © 2020 CoStar Realty Information, Inc.
Despite concerns and uncertainties around travel in the current environment, consumers continue to demonstrate strong underlying motivations to travel. Around half of respondents in this survey were still planning at least one overnight trip before the end of the 2020.
However, if we highlight the broader impact of the pandemic on consumer behavior and decision-making, consumers now not only seek the best location and price for their accommodation, they also evaluate bookings based on COVID-19-related aspects, such as social distancing, perceptions of cleanliness and flexible cancellations.
Source: STR, © 2020 CoStar Realty Information, Inc.
While safety and cleanliness are clearly important aspects influencing accommodation choice, the persistent uncertainty and volatility of travel puts increasing pressure on the hospitality industry to implement more flexible booking processes. In order to encourage bookings and build reassurance and trust among consumers, there is an increased need for accommodation providers to adapt booking systems and policies. This includes offering reservations without prepayment or cancellation charges as well as providing prompt refunds.
An encouraging sign for the industry is consumers are willing, albeit somewhat reluctantly, to accept higher charges for their bookings to reduce risk and assure more flexibility. The research shows that 46% of consumers are willing to pay more for accommodation that guarantees flexibility and a refund in the event of cancellation. This compares to 25% who stated that they would not be willing to pay extra for this reassurance.
Source: STR, © 2020 CoStar Realty Information, Inc.
Updating cancellation policies is, perhaps, not the most convenient or desirable change for hoteliers. However, it may be a crucial change from the consumer perspective in this ever-changing environment. As evident from above, there is an opportunity for hotels to develop new pricing strategies to charge a premium for cancellations which can help hotels to generate additional revenue during this challenging period.
However, experiential purchases, particularly spending on travel, continue to play an important role in consumers’ budgets. The strong bond that today’s consumers have with leisure and hospitality coupled with the goodwill and solidarity they demonstrate toward the industry—as the research showed that more consumers agreed rather than disagreed (45% versus 25%) that they want to travel to help the industry as well as to help kick-start the economy—bode well for accommodation providers even in this current challenging environment.
Source: STR, © 2020 CoStar Realty Information, Inc.
There are opportunities for hotels to leverage the current underlying positive sentiment toward travel among consumers. Bookings, positive references and brand loyalty during COVID-19 are all attainable by offering increased flexibility when it comes to booking and by responding to guests’ changed needs and requirements that address current concerns to travel, such as perceptions of cleanliness.
Tereza Anderson is a Senior Research Executive at STR, based in Edinburgh, Scotland.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.