Op-Ed: Cancel overseas visitors and incentivise domestic travel!

Often hope is translated as “gut instinct” or “I think”, but essentially whilst we often need a life raft to cling to in uncertain times, and positivity is underpinned by infamous hope, it’s important that plans are built on facts and reality, not hope itself.

Therefore, as the true impact of COVID-19 starts to emerge, accommodation providers across the globe must not be blindly led by hope, rather they need to follow a realistic, sustainable plan.

Tourism Australia has some meaningful detail around the visitor numbers and subsequent dollars earned from inbound tourism, whereas AFTA.com shows the traveller numbers and dollars spent by those heading out of Australia.

It’s clear from this information that a well-executed plan could see our tourism thrive over and above 2019, even though international borders may remain closed. However, the plan needs to be uniform, with the whole country working together to message effectively.

Tourism bodies can drive the enquiries to a region, but only the operator can convert the looker to a booker.

Currently the entire country is desperate to travel once lockdowns and interstate borders are removed. Along with targeted campaigns, operators need to understand that the hope of occupancy going through the roof and prices exceeding everyone’s expectations, is simply that – HOPE.

It is not a plan, nor is it anywhere near the likely reality of what will eventuate. Presently, our economy has been badly impacted and a large portion of our workforce is effectively unemployed. The true unemployment rate is likely much higher than we currently appreciate, but this is being masked whilst Jobkeeper is in place. We won’t know the true economic position until the end of September, just in time for the usual Xmas bookings to start flowing.

Therefore, the industry as a whole has to plan for the worst and prepare to celebrate if the outcome is better than the plan.

Now is the time to start looking at how we can incentivise those travellers who feel they must go overseas for a “true” holiday rather than travelling within Australia. We have to work together to change their mindset that a sufficient holiday requires a passport, which simply isn’t the case if you’re fortunate enough to live in Australia. We have to remember that whilst many of them will still travel, they will be doing so reluctantly to some degree. They may start off their booking journey a little angry that their choice is being limited by “bureaucracy” and therefore the arriving guest may not be the usual excited traveller you’ve become accustomed to.

We have the opportunity though to change the perception from the outset by select messaging that changes the mindset of the booker. And naturally this messaging would be different for first time guests compared to repeat guests.

It’s also important not to reduce nightly rates, instead, offering specific promotions that provide a win for both the traveller and the accommodation operator.

Let’s take a look at the likely scenario all accommodation providers will be faced with in the coming months:

• Less people wanting to travel if they can’t head overseas = lower overall occupancy
• More effort required to convince these people that a holiday at home will be just as good (if not, better!) as a holiday overseas = deal required
• Travellers wanting peace of mind that it will be safe to stay away from home = increased cleaning costs, business less profitable
• Less money in the economy = cheaper accommodation demands

Our plan to tackle the above would be to offer a stay 6 pay 3 deal – SHOCK HORROR you may yell. But in reality, it makes perfect sense.

Think:

Occupancy is going to be lower, so why not add value to the guest that is willing to invest in your property over your neighbour’s property by letting them stay longer?

• The customer will see this as a massive deal – 50% discount in their mind will likely encourage them to treat themselves to a proper holiday after all, one they had thought they couldn’t afford
• This keeps your additional cleaning costs to a minimum. Instead of the chop and change of guests, one booking all week means only one clean required!
• The guest thinks they are getting cheaper accommodation when you’re simply charging the full rate for 3 nights rather than a discounted rate for 6 nights.

Looking back at some past numbers, many hotels have dropped their rates dramatically to 50% in times of low occupancy, desperate to get people in beds (especially in the strata market). This deal enables the same behaviour but with a different angle:

The full rate is displayed across all channels, if the overall demand is out there, you may well pick up some regular price short stay bookings at the full price. But those you are targeting directly; previous stays or past cancellations/enquiries are able to get a fantastic deal by booking directly with you.

This deal would therefore only apply to property direct bookings and would be an offer you could market in two ways.

1. Using your existing database; you could market to your past guests as a “welcome back” package, with your messaging around you, the operator, paying for half their holiday as a thank you for their past business.
2. For new business, your messaging would change slightly, and would centre more about you, the operator, wanting to help them recover and recharge from the shock of the lockdown, by covering the cost of 3 nights.

This will only work if:

• You stick to a 6-night deal, not 3, not 4 or anything else – only 6 or more.
• You put the effort into marketing to your past guests, even if it’s 10 years since they last stayed. They have families and friends that they can share it with, if you invite them to.
• You keep this deal for property direct bookings only and don’t waiver. If the guest says they only need 4 nights, they pay 3 and get one free. You want guests for the week to keep your sanitisation costs down – explain it to them so that they understand or let that guest go and work on the next guest who will give you the outcome you want
• Leave the room empty on the day in between arrivals. Tell the guests this is what you are doing – they will appreciate the efforts you are going to in order to keep them safe

This will give you an overall good occupancy but with lower average rates, however unless the indicators we are monitoring drastically change, this will be a fantastic outcome for your property and may give you additional bookings during periods where you might ordinarily have very few.

Lastly:

• Leverage the integration tools provided by your PMS and Channel Manager to manage the number of rooms you’re prepared to sell on this deal.
• Create a sense of urgency by only making it available for purchase before the end of June, to be used by the end of December/January etc
• Monitor the number of bookings and date ranges each day to ensure you get a feel for the market tolerance
• Moderate the deal if you’re inundated with bookings by changing it to a stay 6 pay 4 deal, or throw in some breakfast packs/swim towels etc with a slightly different offer

But whatever you do, focus on the longer stays rather than the 2 to 3 night stays, it’s the only way you will turn a profit for you and your apartment owners in the coming months.

Sylvia Johnston

Sylvia is a Senior Executive at HiRUM Software Solutions, which has become one of the global leaders in hotel software, helping hotel and accommodation managers with a complete hotel software solution.

www.hirum.com.au/