Technology and data are among the top concerns today as they are considered the means to help the hospitality industry find the path to recovery in the future. In the context that the market has completely changed and previous data no longer provide relevant insights about travelers’ behaviors, what is the solution to predict market changes in the future?
Destination Review had a conversation with Ms. Alice Nguyen, Business Development APAC of OTA Insight to discuss the importance of data in business management, especially in anticipation of market demands for the Vietnam hospitality industry.
With OTA Insight data, what changes have you noticed in the travelers’ behavior when searching and booking hotels and flights in Vietnam compared to the past?
In the context of uncertainties, travelers tend to search for information at the last minute. Vietnamese travelers are more hesitant to travel again than other countries because they worry about quarantine or lockdown at destinations. Therefore, travelers’ booking windows are now much shorter.
Another change is travelers’ priorities when searching for hotels. In the past, travelers often preferred hotels with add-on services. But now travelers’ priority is price because they know hotels have to offer discounts to attract guests in this period. This makes price competition between hotels become fiercer than before.
According to OTA Insight data, the volume of flight and hotel searches increased before the 3rd Covid-19 outbreak in February 2021 but all took a downfall when the 3rd Covid-19 outbreak happened. It was not until recently that Ha Noi and Ho Chi Minh City started picking up again, although just slightly. Leisure markets such as Da Nang saw a dramatic increase in searches in March and April. This shows that leisure tourism will likely lead the recovery sooner.
What challenges do these changes pose for the Vietnam hospitality industry?
The first challenge is the lack of information to respond to changes in travelers’ demands. Currently, as Vietnam has not opened to international tourism yet, domestic tourists are the main customers and it is easier for hoteliers to grasp their behavior. Currently, Vietnam has started planning to open some international flights as well as considering implementing vaccine passports. However, all trends, habits, and behaviors of international travelers have changed. There are also many guest segments who cannot afford to pay as before. As a result, hotels’ old data and knowledge about international travelers are no longer relevant. This will be a difficult problem if hoteliers have no data to predict upcoming trends in travelers’ behaviors for the first phase of reopening, which is also expected to play an extremely important role to revitalize the hospitality industry as well as the tourism sector.
Therefore, hoteliers will need to study upcoming international travelers’ behaviors and trends again. There is no lack of data about the Vietnam market; however, it is often unconfirmed and not actionable data. Especially, market changes made the previous patterns can not be used anymore. Thus, historical data is no longer suitable for forecasting the future. Even data last week might not be used for this week. Therefore, real-time data and forward-looking data are useful for hotels in this period.
The second challenge is the lack of human resources. In the pandemic, hoteliers have to cut off staff as well as business support tools to reduce costs. But in the near future by the time of reopening, travelers’ booking behavior may have changed and hoteliers may not be able to recruit enough staff immediately to serve guests and develop business strategies for the new status of the market. It also takes time to train new staff. This will lead to the lack of human resources while there is a huge scope of work.
In addition, change in segmentation is also a challenge. Many hotels were previously positioned to attract only international guests or only domestic guests but now they may have to change their positionings. Furthermore, many hotels built large meeting spaces to focus on the MICE segment, however, MICE tourism will not be a priority in the first phase of reopening. Instead of that, leisure travel and individual business travel will tend to recover first. As a result, many hoteliers need to change their focus on these segments. This of course leads to an increasingly competitive hospitality market in Vietnam and the risk of escalating price wars.
On the other hand, what opportunities might hotels seize with these changes?
Although this time is difficult, there are still some opportunities that hotels in Vietnam can seize.
Firstly, hotels will have time to improve their knowledge, expertise as well as review their long-term business strategy. Looking back, the tourism market in Vietnam was booming in the period of 2017 – 2019. The number of hotels increased sharply and they grew so fast. However, one of the difficulties at that time was the shortage of key personnel who were responsible for business strategies such as sales & marketing, revenue management, and sustainable development. So, in my opinion, as the whole hospitality industry is slowing down, this is an opportunity for hotels to consolidate their staff, reassess their competitive differences and business strategies.
The key question at the moment is: which solution will be useful for the hotels’ business strategies in the short-, mid-and long term. In this case, data is the correct answer. Investing in data at this time will provide a solid foundation for hoteliers to make critical decisions as it helps hoteliers analyze their business performance and determine whether their budgets are allocated to the most suitable segments to maximize revenue.
With real-time data that is accurate and reflects the current market situation, hoteliers can make strategic plans to maximize revenue, optimize distribution channels, and minimize the risk of wasting resources. Travelers’ booking window is now much shorter. Sometimes, it only takes travelers a day or even an hour to search for flights and hotels before booking. Therefore, when capturing real-time data, hoteliers can quickly plan their pricing strategies that meet market demands. Furthermore, forward-looking data can also help hoteliers predict upcoming peak and off-peak periods for more effective human resource allocation and operations.
Hoteliers who are able to capture real-time and forward-looking data can give themselves more time to prepare for new market demands, thereby improving their competitiveness.
The second opportunity that has been talked about a lot recently is digital transformation. According to a global survey by McKinsey, the hospitality industry ranks third in terms of slowest digital transformation speed. The rank is even lower in the Vietnam hospitality industry because Vietnam is still on its baby steps to transform digitally and it is high time the Vietnam hospitality industry applied more technology. Technology will be a factor to assess whether a hotel can perform well, be flexible and develop sustainably or not. The pandemic has brought a completely different perspective, as now, the hospitality industry has to always be ready to face the difficulties in the future and develop in a more sustainable way, besides just expecting year-on-year growth as before.
Currently, the trend of domestic travel and individual business travel is on the rise. When Vietnam and other countries loosen their travel restrictions, there will be an influx of travelers from new markets to Vietnam. If hotels are well-prepared in terms of human resources and technology to offer unique experiences to their guests, this will be an opportunity for hotels to turn them into repeat travelers in the future.
Could you give some advice for hotels to adapt to the current context of the market?
During this time, hotels are quite cautious about their budgets and cut off almost everything. However, in my opinion, the expense can also be an investment. Hoteliers should make necessary investments that are able to yield revenue to spend on.
According to recent OTA Insight’s data in hotel review scores, more than 80% of hotels have lower review scores than before. This can be understood that because hotels cut off staff and tools, the service quality is affected. However, in the near future when the market reopens, travelers will see the low ratings of hotels when searching for information. This will make it more difficult for hotels to recover. Therefore, hoteliers should re-plan their human resources, technology, etc. to redefine their focuses, especially to yield revenue while maintaining the best experiences for guests.
Although there is no official information about the reopening of Vietnam, it will be too late if hoteliers wait for official information to take action. Hoteliers should plan now, utilize data to build long-term strategies and make better decisions, stay ahead of competitors in pricing strategy, products, booking experiences, etc. as optimizing all these factors may ensure your hotel to be preferred by travelers.
In addition, hotels that use data for their current business in Vietnam are mainly 5-star hotels. Such hotel chains or groups already have a lot of resources, technology, and data from their property networks across the country to capture market trends, and they even invest more in data. Meanwhile, 3-star and independent hotels do not have this advantage as their sources of data are very limited and scattered and the importance of data is not stressed enough. Three-star and independent hotels should invest more in data for their businesses because their pricing strategies also affect major hotels’, and the hospitality industry and tourism sector cannot rely only on major hotels to grow.
Thank you very much for your sharing today!