So much for certainty. Throughout 2016, “uncertainty” was the watchword for hoteliers throughout the United States and in much of the world. Many in the industry hoped the result of the presidential election would clarify what the business climate would be going forward.
We now know hotel developer Donald Trump has been elected and inaugurated as the 45th president, but that is about all we can say for sure.
As hoteliers saw from the events surrounding Trump’s Jan. 27 executive order barring refugees and visa holders from seven African and Middle Eastern countries— which judges subsequently blocked in federal court—some new policies could have significant, if unforeseen, effects on the travel industry.
The Global Business Travel Association estimated that $185 million in travel bookings were lost in the United States the week after the Jan. 27 executive order was signed.
The uproar over the ban and its possible chilling effect on business travel add a new layer of uncertainty to a picture still lacking clarity to start 2017.
Even after Trump was elected president last November and inaugurated in January, many hotel professionals weren’t sure what his victory meant for the industry in the short or long term. It might take longer for us to know what to expect in terms of labor regulations, corporate tax reform, health care mandates or the fate of the EB-5 Immigrant Investor Program.
7 Earth-like planets found orbiting a star 39 light-years away. Donald Trump extends travel ban to include them, just in case.— 22Minutes (@22_Minutes) February 22, 2017
Make Sure You’re Ready for More Uncertainty
It is hard for business leaders to sort out all these competing factors, and it injects more nuance into the usual parlor game of, “Where are we in the industry cycle?”
I’ve argued before that the hospitality business could soon be headed for a cyclical downturn. Since the post-election certainty we wanted still hasn’t materialized, I think the mindset needed to win a market-share game will be even more important for hoteliers this year.
First, we all should be lobbying or engaging with our lawmakers for pro-travel policies and supporting groups and initiatives that build up the travel and hospitality industries. While inbound travel to the United States decelerated from many markets after the travel ban was announced, that business could recover before we anticipate.
In the meantime, hotels can’t back-fill all the lost demand from foreign guests domestically, so new tactics at the property level will be needed to stabilize performance.
Take a fresh look at your segmentation and distribution channel strategies. If some segments are showing a fall-off in demand, consider other feeder markets or customer groups that might respond to new offers or marketing messages. If uncertainty remains the new normal for a while, the objective for many hotels will switch from driving RevPAR gains to taking more share of bookings from competitors and growing RevPAR Index.
Fight Confusion with Communication
Hoteliers in major gateway markets with a greater percentage of international guests might do well to communicate directly to travelers in affected countries or regions. Work with sales and marketing teams to segment your hotel’s database by market and email those customers information meant to reassure them.
We’ve seen how easily inaccurate information around controversial policies can spread. Gather the latest information you can find and verify, and tell your guests what they need to know and that you value their business.
Things could stabilize soon into the slow growth pattern we’ve had for a few years, or new policies and outside forces might cause things to drastically improve or get worse. Nobody knows for sure, but it’s more important than ever to be vigilant and ready to respond to changing market conditions.
Get your team aligned behind a revenue strategy that can adapt to changes in consumer demand and maximize your results once things come into focus.
Patrick Bosworth is co-founder and CEO of Duetto, a San Francisco-based developer of revenue strategy technology for hotels and casinos. Before leading Duetto, he was director of yielding and business strategy for Wynn Las Vegas.