The Canadian geese are amassed at the border waiting their turn to cross. And so begins the long, strange summer of 2021.
As I write this, I am in The Big Easy attending a graduation ceremony that has been divided into several different events over the course of three days. The graduates, school administration and all other attendees are dodging rain drops and unclear mask protocols to celebrate the students’ and society’s achievements of the past year. There is a clear sense of victory in the air and a feeling of relief, along with the excitement of the return to travel, as noted by the numbers in the French Quarter, and the overwhelming challenge of securing restaurant reservations amongst hundreds of NOLA’s great choices.
With summer underway, we are in one of the strangest periods our industry will ever see. Fresh with vaccinations, our potential guests are craving the opportunity to spend time on the beach or visit with family and friends that live out of state. Those who would traditionally consider long-haul destinations in Europe, Latin America or even Asia are reticent to test such an adventure as many of these regions are hit-and-miss on their own vaccination supply and COVID recovery. After all, what is Paris without the cafés or Brazil without the beaches?
The combination of pent-up demand with lingering restrictions on popular long-haul destinations will create a silver lining for markets that are typically slower in the summer — this year more so than ever. Travelers looking to get away over the next few months are left with fewer options, and thus hotels in the normally “too hot” locations such as New Orleans, Miami or even Phoenix are posting better-than-expected occupancies. In fact, many resorts are approaching sell-outs at rates they could only dream of during “normal” years.
We are seeing this now in summer 2021 production figures in leisure destinations like Mexico and South Florida. Demand is up significantly over a timeframe when these destinations typically drop rates and lure regional travelers with in-state/country resident deals. Compared to summer 2019, June and July bookings for many hotels in these areas are 50% to 90% above the last normal summer. Average rates have also bounced back with a vengeance! In past crises, it has taken years to recover average daily rate losses, but not this time! It’s important that hotels in these newly “hot” markets stand out, but some hoteliers may not recognize the advance buildup soon enough. Are weekends already sold out? Should you be putting minimum night stays in place to stretch two nights into three? In addition to holding strong or high rates, consider what else you can do now to get even more value and a higher-end consumer.
Shortages are the other phenomenon that could serve to make this a long, strange summer — with staff being one of the most immediate, glaring, painful shortages for our industry. The reasons for the lack of service staff are well documented, but combined with the extraordinary demand, we could see surging average daily rates at a time when it is nearly impossible to provide the level of service that was expected prior to COVID. It is hard to fault guests who are in disbelief as they receive a letter at check in noting the services they will not be receiving during their stay, while at the same time signing off on a resort fee or COVID tax added to the already high room rate. Wise hoteliers are recognizing the long-term view and guest value and using smart pricing policies, which include avoiding the appearance of gouging by adding new or unique fees that come with fun services that help offset any negative guest perception. You may feel justified that you are recovering losses of the past several months, but guests won’t see it that way, and they are likely making a decision on whether they will ever plan to return. Don’t forget, they were planning to be on the Amalfi Coast this summer!
And now, bring back the cities! With the announcement of the re-opening of Broadway and museums and ballparks across the country, can we still salvage the summer for our cities? Can our city-center hotels and restaurants overcome the staffing challenges to meet the demand for travelers to hit the road? Will this open up our great cities in advance of what we all hope is a recovering corporate market in the fall? The demand will be there for the first time in 15 months. Hotels that continue to promote cleanliness protocols, leverage outdoor spaces, welcome the family dog, and add creativity and value to their packages will gain occupancy as the summer warms up. City-center hotels need to maintain a price-aggressive posture, and those that do will benefit.
Results of our brand’s own survey of more than 500 global corporate clients suggest that September is when restrictions will be removed for corporate travel. This is, of course, the ultimate requirement for our cities to see a rebound and the road back to profitability. The corporate travel leaders surveyed note the following as the top three priorities as travel returns: cost, safety and cleanliness, and sustainability. Has your hotel pulled back on corporate sales efforts due to the long pandemic? It’s time to re-engage and be sure opportunities are not missed.
At the end of this ceremony, our commencement speaker congratulated all of the graduates by noting, “Your resilience has prepared you for a world that is more dynamic than ever before.” As an industry, I hope we have weathered this pandemic with the same courage and optimism. We won’t have to wait long to find out, as summer 2021 is building fast and is sure to be a test of our will and desire to meet some difficult challenges. It is sure to be a strange one, indeed!
Now, let’s hope the geese have proof of vaccination on hand for when Canada finally opens!
Robert Van Ness is Executive Vice President, Americas, for Preferred Hotel Group, overseeing the success and retention of the company’s Preferred Hotels & Resorts and Beyond Green portfolios of hotels, resorts, and residences in the region.
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