How innovation, diversification and going local will help the hospitality industry thrive again

Following the recent announcements that one in four hospitality businesses are unlikely to make it through, and 40% of hoteliers are considering giving up, it’s no surprise that the mood in the industry is one of pessimism. What’s more, as uncertainty continues and we adapt to the seemingly ever changing, on again, off again legislation, it can be hard to plan for the future, or even to feel some semblance of enthusiasm.

As I stop and consider where we are and where we might be, I can’t help but think back to the mid-80s and the start of my own hospitality journey. I know for many it hardly seems relevant – it was a very different time – but for me personally, there were some major lessons learned that I feel might just be relevant to the sector now.

When I set up an independent hotel as a first-time hotelier, things were very different to how they are now. There weren’t any OTAs to support with last minute bookings, there was no digital marketing or websites to hook someone either, so I had to be just a tad more creative.

Within a year, I was fully-booked from a Monday through Thursday for roughly 45 weeks of the year, thanks to corporate relationships and networking that brought on clients like The Chelsea Building Society. The weekend on the other hand was a ghost town and we struggled to fill even a handful of rooms. It was here that I learned some very hard, very necessary lessons that I think have some relevance in the uncertainty of today.

Innovation and diversification are key

By the time I sold my hotel, the online booking engines were in full swing, we had a huge, well-established database and the ‘chase’ was far less necessary for me to secure the bookings. If anything, I became lazy and I didn’t need to work as hard to make a decent enough living.

What happened in hindsight is that I stopped innovating because I didn’t need to, but in innovation and diversification lie the keys to the future of this industry. When we don’t have certainty, it is the most creative innovators that commonly survive or should I say thrive. We’re already seeing this across the global sector and some of my favourites include:

• Ethel’s Club: a social and wellness club for people of colour in Brooklyn, New York, which had 275 members and a waiting list of 4,000 pre-lockdown. What do you do when you can’t open your doors? Well you innovate and go online instead. Featuring a live programme of events, workouts, guided meditations, and professional workshops, Ethel’s Club now has a new business model that has the potential to far outstrip its original, and can be there as a waitlist alternative when the doors properly reopen.
• 25hours Hotels: although appropriate only due to German lockdown regulations, 25hours hotels, which has 13 outlets in Germany, was forced to cut its overnight stays, but was not actually told to close. They responded by creating “Covid-secure home offices” which you could rent for €50 per day or €200 per week. True, the revenues were not at pre-covid levels, but they boasted 700 bookings across April and May and their overnight stay recovery far exceeded the German market norms thanks to the broadcast coverage secured for the brand through the initiative.
• Bluebird London: based in Chelsea, London, and the haunt of many locals, Bluebird opted to create a rotisserie pop-up on the pavement outside. In the three weeks to the 4 July, they were generating an average of £20k per week in takeaways.
• Scenic Supper: a collaboration between Kingstone Dry Gin and Roots & Seeds Events, this is one of my new favourites, just up the road. Picture spectacular rural scenery with breath-taking views, individual ‘greenhouse’ pods for each dining couple and a five-course tasting menu, and you are pretty much spot on. I loved the use of redundant space, combined with a concept I’d not seen anywhere else, and great food & booze in a very secure environment.

I can’t name them all here, but I’ve seen car parks turned into exclusive, number-restricted live music and street food venues; drive-through cinema experiences popping up in the grounds; a B&B with outdoor ‘pods’ where walkers can order light refreshments via iPad; and of course, the most obvious innovation – lunchtime and evening takeaways.

The sad thing is though, speaking to many of these places, the innovations have a distinctly temporary feel, despite having the potential to become long-term, profitable adaptations and enhancements of the hospitality business model. I’d like to see many of these kept on even after we return to ‘normal’, but that’s a conversation for another day.

Thinking laterally, for me hotels have several things at their disposal; space, both indoor and outdoor; individual / self-contained units and bedrooms; skilled teams including sommeliers and chefs for example; and time which can be put to good use while you don’t have the guests and visitors to entertain. It’s all about having a creative attitude and bouncing around ideas and I’d like to see more hotels devising a diversification strategy rather than just giving up. I think this will be even more relevant with this week’s announcement of the job support scheme, where you can employ your team for a minimum of a third of their hours and then get wage support for the remainder – a much more flexible option than furloughing has been!

Thinking local helps

In the short-term, one of my fastest strategies for filling my dead weekends was to focus on the local market. Initially, I was a hotel with a bar and small restaurant which meant I didn’t really do casual dining or anything that wasn’t attached to rooms rentals, so local might seem like a very bizarre strategy. It turned out to be an apt one. We threw parties, ran themed evenings such as board game nights, offered weekend break deals exclusively for the local county populace and brought in expert speakers to create weekend retreats.

Local was our fastest route to market – remember there was no social media, no email marketing, no website and no digital advertising – and within a year, we had 50% of our weekends fully booked too. The knock-on effect, which cannot be underestimated here, was the strength of word-of-mouth referrals and the locals bringing national. When their friends or family came to visit, they recommended us. When visitors went into shops, they recommended us. By the end of my second year, we had 98% occupancy year-round. It was our localisation strategy that did this.

We didn’t stop there and our success with the local market whetted our appetite for more. We set up a local walking group, a cycling group and a bike hire facility, all of which generated small but regular income, and we then went on to set-up a travel business to attract national and international visitors as well. It meant we had a wait list and we didn’t have to think about securing our occupancy further, which in today’s terms meant almost 100% occupancy with not a whiff of commission!

This time around, looking local has a different purpose, but one that is just as relevant, and hoteliers have the advantage of significantly more marketing channels to get the message out instantly. The local market is more flexible, can respond faster, are less-risk averse and are arguably more stable bookings than your national or international ones. They might be in hunt of a bargain, but attracting them can provide a new and long-term revenue stream and reputation that will far outlast the Covid impact if you are savvy.

One of my faves is the story of a corporate hotel with almost zero local clientele, which now has a pop-up fish and chip shop, a local afternoon tea delivery round, a ‘village shop’ outlet, a parcel collection point, home working pods, and a takeaway service. It’s a very different business model, with a perhaps restricted revenue compared to their normal corporate one, but it’s keeping the lights on, the staff paid and the business ready for the future.

This column has been much more introspective and less advisory than my norm, but I think it is an important speculation. For me, I’d like to see hospitality businesses set aside the worry and concern, at least temporarily, and bring teams together with the specific aim of innovating, diversifying and looking local as you seek to survive. I truly believe it is the key to future success and that we will get a richer, more diverse and interesting industry in the long term too.

Angie Petkovic spent over 25 years as an independent hotelier before returning to her first love of marketing. She supports hospitality and tourism businesses to maximise their potential. She runs apt marketing & pr and you can send her your questions to angie@aptmarketing.co.uk. She’ll be more than happy to help!