IHG Insight: Shape of the recovery
Paul Proctor, VP Europe Commercial for IHG Hotels & Resorts, recently moved back from Shanghai to the UK and before that spent eight years in China. He tells The Business Travel Magazine why he is positive about the recovery.
Some may say I’m unlucky. Unlucky to deal with the impact of Covid-19 and the subsequent recovery for our industry not once, but twice. I like to think I’m lucky. Lucky to have seen the recovery in China, witnessing travel going from strength to strength, and lucky that it makes me positive about the future recovery of travel in other parts of the world.
After lockdown lifted in China, we saw a huge uplift in staycations and domestic leisure travel. Firstly, in our mainstream hotel brands such as Holiday Inn and then in luxury and upscale, particularly in our resort hotels. Chinese travellers who were used to enjoying the neighbouring countries of Thailand, South Korea and Vietnam had to stay closer to home, but still had disposable income to spend and a desire to get out and travel. We’re seeing that same trend now across Europe.
The same-day Eurostar to Paris for a business meeting, or the short flight to Amsterdam for a one-night trip away, currently seem further away than ever before. Europe is heavily reliant on its neighbours, especially when it comes to corporate travel, and there is a long way to go for that to resume to normal levels. The impact of this crisis on the travel and hospitality industry cannot be underestimated – but I passionately believe it will recover. People will always want to explore the world, relax or reconnect with friends and family. The wheels of business must turn, and events still need to run.
In China, following the initial uptick in leisure travel, corporate travel followed. Companies who had a need to travel, such as FMCG or those who relied on face-to-face sales, were the first to return. Other companies kept a close eye on those first movers, and after a few weeks confidence began building and smaller board meetings by other corporations started again. Ten months later and the country is almost back to normal with 1000-person weddings and large events happening in our hotels in China daily.
We know that the speed of recovery in Europe and in other markets will likely be different to that of China. But there are commonalities in the recovery and one of those is customer sentiment. People want to be able to stay and meet with confidence, whether that’s for business or leisure.
Cleanliness, health and safety are now top priorities for every customer, and while the wellbeing of our guests has always been important to us, we’ve enhanced this over the last few months with our new IHG Way of Clean procedures and introduced the IHG Clean Promise. We want customers to have, and we understand that they need, peace of mind right now.
The other commonality is flexibility when it comes to booking travel. With so much uncertainty, people want to be able to change their mind, or adapt to having their plans changed, and not be penalised for it.
Companies like ours have adapted to this, introducing the option for guests to book now and pay later, with no deposit required and cancellation up to three days before they stay. We’ve also updated our cancellation policy so that all bookings made directly with IHG can be changed or amended without charge, including our usually non-refundable and pre-paid rates.
We recognise there’s a need to offer customers this flexibility, so they feel confident when booking our hotels.
As an avid sea angler in my spare time, I’ve learnt the importance of ‘fishing where the fish are’ and our recovery will continue to be led by the data. We’re keeping a keen eye on what markets are recovering first, what markets are opening up their borders, where people are starting to travel to and from, and recognising that booking lead times have shortened dramatically in recent months.
In June-August 2020, 67% of bookings happened within seven days of the stay, compared to 46% during the same period last year.
During the summer months, IHG Hotels also saw a similar proportion of business versus leisure bookings compared to previous years, in part due to rooms being booked to house key workers, essential services and the homeless. More recently, in the UK we are seeing there is a need and a demand for meetings. As furloughs have started to lift, there are more (socially distant) executive meetings taking place as companies get together and assess the future.
SMEs, who aren’t usually as restricted by corporate travel policy, are getting back to domestic travel first, and we expect to see large international players coming later.
Having said that, there are large industries which still have a need to travel domestically, for example transport, construction, healthcare, government and FMCG. It’s primarily companies who have large projects that can’t just come to a halt, such as rail.
We’re also seeing SMEs who are innovating their offering in response to Covid-19, such as smaller technology companies who are bringing a new value proposition to market and with it there is a need to travel.
We’ve all had to stretch new muscles during this crisis and adapt to new ways of doing things, but I know that the time of coming together with colleagues over a conference’s coffee break, or flying to see clients in another city, will be a reality again. I’ve seen it happen before and I’m confident we’ll see it here again soon.