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Hope for Your Local Hotel Industry Recovery


When Will Visitors Return?

Hospitality Industry Crisis

We certainly cannot understate the impact of the federal, state and local level shelter in place orders on domestic consumer spending, investment and travel. Economists continue to share a dismal outlook for the remainder of 2020 including an estimated GDP contraction of over 5%. Other economists predict unemployment to surge from 12-15% or higher before things begin to subside.

Alarming statements are being made daily from experts across the country. For example, the Surgeon General of the United States, Dr. Jerome Adams was recently quoted as saying, “this is our Pearl Harbor moment” and “it’s going to be the hardest moment for many Americans in their entire lives”. Some economists are predicting as much as a 40% decline in the US economy while others indicate that recent stimulus packages will result in the US debt eclipsing $30 Trillion. In the midst of all of this, studies show that a majority of Americans are living paycheck to paycheck and many families lack the funds to cover a $2,000 expense.

The Hotel Industry’s Recovery Prospects

That said, analysts are predicting some areas of opportunity for the travel industry in Q3 and Q4 of 2020. While the US travel industry is facing a projected $400 Billion dollar loss, experts agree that rural areas will likely not experience the significant negative impacts like the metro areas. In fact, US travel is expected to continue to improve through the summer and fall of 2020 with rural areas likely rebounding more quickly.

While some indicators remain positive related to recovery, make no mistake, the US travel industry is likely to see an unprecedented drop in demand and revenues. A rebound is likely, but the year over year numbers for 2020 will be nowhere near 2019.

One challenge for the hotel industry will be the sharp decline in ADR in 2020. Even with the predicted recovery in late 2020 and 2021, ADR typically lags other indicators and generally experiences a sluggish, more long-term recovery trajectory. Certainly, lower ADR will impact profitability and will change the financial projections for both existing and prospective hotel operations.

On the positive side, recent Shelter in Place orders have created significant pent up demand. It would be hard to argue that a majority of people are not ready to get out of their homes and travel. In fact, experts predict that late 2020 and 2021 travel will put the industry on the road to recovery. Given the continued need for social distancing as well as concerns over COVID-19 response in other countries, international travel will likely not be a preferred option for many travelers in 2020, and even 2021.

According to travel industry experts, a significant share of the US population plan to travel when the virus begins to subside. Domestic travel is positioned to recover more quickly, but with social distancing likely to continue, regional travel is predicted to be the greater opportunity in the near term as travelers shift away from flights altogether.

Opportunities for Tourism Now

Savvy communities are already marketing to prospective travelers in an effort to gain top of mind awareness. Marketing campaigns like the Dream Now, Visit Later initiative from the Hannibal Convention and Visitor Bureau are encouraging travelers to begin making plans to travel. The message: while now may not be the time, the community will be ready to welcome visitors soon. Hannibal CVB Video Experts express the importance of having a plan in place indicating that the destinations with a plan will recover faster. In fact, experts insist that travelers will prioritize locations with a plan in place.

When will visitors return? When formulating and executing the plan, start reaching out to prospective visitors now and make your case for why they should be planning to visit your community. Demonstrate that your community has a plan in place to protect visitors and provide a safe and healthy environment.

Specific Plans to Revive Your Local Hospitality Industry

Who should you reach out to? Start with your previous visitors. Many communities have a database with contact information for their visitors. Send them emails with photos and videos and remind them of the experience they had, and can have again, in your community.

Who else can we reach? Take an inventory of your community’s attractors. If your community is blessed with nearby lakes, reach out to fishing clubs. If your community is blessed with great trail systems, reach out to cycling, running and multi-sport clubs. What assets do you have in your community that can bring visitors to the community quickly?

In my ongoing conversations with rural leaders, I know that some of your communities lack overnight accommodations. You are losing revenue to nearby communities. You have events that could extend from one day to multiple day events if you just had the rooms. You have wedding/event venues that could schedule larger events with people from further distances if you just had the rooms. Let me provide some food for thought.

Experts are predicting that the COVID-19 virus will fundamentally change the travel industry forever. In other words, the virus has created a level playing field for destinations where everyone will now be working to re-establish partnerships and market their destinations. This combined with the strong preference for regional travel creates a significant opportunity for many rural areas to get a jump start on the road to recovery.

Survival is in Your Hands

Two schools of thought; contract and react to how the next year plays out, or invest in the near-term opportunities and come out ahead of the competition on the back side of this pandemic. If you prefer the latter and would like to complete an analysis of your options, we are here to help.

Corey J Mehaffy, CEO, Hospitality Industry Consultant

Workforce Intelligence for Growing Business

GROWTHSERVICESGROUP.COM | 124 El Rancho, Hannibal MO 63401 | 660.353.1726

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