The travel industry will survive COVID-19, but with big changes

For Fast Company’s Shape of Tomorrow series, we’re asking business leaders to share their inside perspective on how the COVID-19 era is transforming their industries. Here’s what’s been lost—and what could be gained—in the new world order.

Mark Hoplamazian is the CEO of Hyatt Hotels Corporation, which operates more than 900 hotels and resorts across the world

We’re now at a point where virtually all of our hotels in China are reopened. And we’ve seen steady increases in demand. Before this recent outbreak in Beijing, more than 50% of our hotels in China were running at 50% or better occupancies. That confidence comes from the extensive contact tracing environment that they’ve got there.

Bookings [elsewhere] are starting to recover, the United States first and then Europe. Right now, it is leisure travel. Business travel will take some time to return. I’ve talked with a lot of CEOs, especially those of our largest customers, and they are looking at ways in which they can create a more hybrid [work] experience for their colleagues. Right now, they’re focused on remote working. But I think it’s really early for people to be making declarations about what life will be like, post-COVID and two years from now.

It’s clear that the lower-priced chains—the economy, budget, and midscale hotels—are doing better. Some of that is locational: A lot of those hotels are at airports, around airports, and on the interstates, so that means that they’re accommodating people who are moving around. But over the next six- to 12-month period, you’re going to see a bit of a barbell recovery, where lower-tier, lower-price hotels will be doing well, and then you will have luxury hotels doing well once air travel starts to free up a little bit. The hotels that will [take] the longest to recover are our large group meetings hotels, our convention hotels. . . .  There’s definitely going to be a short-term bias toward [hotel] brands [over rent-from-owner experiences]. Just looking at the guest experience, the question is: How do you implement cleaning regimens and safety protocols consistently across a diverse selection of offerings? With a marketplace platform [like Airbnb], I just don’t understand how the consistency and assuredness comes through. The execution piece is not clear to me.

Some of the solutions that we’ve discovered are going to work well for our business [long-term]. We’re creating hybrid weddings, where you can do a streamed version and distribute guests across the property, so you have appropriate distancing. That’s something that we can continue to enable, so that people with relatives who can’t travel in the future or who are unable to come from very long distances can still participate. We’ve created unique solutions for dining—a sort of delivered buffet kind of experience. You can come in and select what you want, and then it’s plated for you and brought to your table, as opposed to you self-serving. Or you create a mobile buffet, where you put selections into a cart that you can then wheel around to different tables, like Dim Sum. That level of experimentation is one of the wonderful things that have come out of [the pandemic].

Steve Hafner is the co-founder and CEO of the travel search engine Kayak and the CEO of restaurant reservations platform OpenTable

We got an early read on what COVID-19 was going to do to our business because we have operations in China and Asia. As we started seeing travel demand soften [there], we said, if this virus escapes, it’s going to have a similar impact across our businesses. We started focusing on informing our users, not only travelers, but especially customers on the restaurant side. Airlines and hoteliers are big companies and well-resourced. Restaurateurs are a completely different beast. We did a lot of messaging to restaurants saying, these are all the things you need to be aware of; here’s a hub for information about government restrictions; here’s a way to turn off your books, so that you’re not taking reservations for hours you’re not going to operate. If you want to sell excess inventory, here’s how to do it. Get on the phone with your landlords and start negotiating on your rent. Take advantage of government programs, all that kind of stuff.

If you visit Kayak right now, the homepage is actually rental cars. I never would have thought in a million years that would be the case, but that’s the people buying right now. They’re not buying flights to London yet.

On OpenTable, we allowed grocery stores to start taking reservations for people to actually shop. And we started giving restaurants the ability to act like grocery stores and sell products, like paper towels, baked goods, or meal-prep kits. [We introduced reservations] for bars. If you were a bar owner and had a long line of people out front waiting to get in, that used to be considered a good thing. None of that works in the COVID-19 world. You have to manage capacity. And god forbid, you do have a contract that needs to be traced, you need to know who was in your establishment. We’re staying focused on food [businesses], but everybody who has to open a physical location and control capacity and crowd size has reached out to us, from retail stores like Nike to university dining halls.

I think [this focus on reservations and capacity control] will be lasting. Once you get used to making reservations, you hate the idea of waiting in line. And if you’re a business owner, once you get future insight about who’s going to show up at your location tomorrow, you don’t want to go back to being blind.

Rob Katz is the CEO Vail Resorts, which owns 37 ski resorts in three countries, and operates a number of North American hotels

Our focus is on reopening summer operations in North America and winter operations in Australia, and then reopening winter operations next November in North America. [Having ski resorts in Australia] is definitely helpful.

Right now, we’re particularly focused on social distancing. We’re looking at what hotels and airlines are doing, and concert venues and sports facilities. We’re watching casinos very closely to understand how they manage what they’re going to do, and summer theme parks. Summer is their most important time period, where for us it’s not, so it gives us a chance to take all of that in. We’re also lucky that skiing is an outdoor experience. Even when you’re in line, everybody’s separated by their skis.

We’re the largest employer in every one of these communities where we have resorts, so we feel a responsibility. We are the economic engine [of these places], in many respects, during the winter. That was something that was weighing heavily on us in the middle of March [when Vail closed its resorts]. But closing was the moral thing to do. It was also the right business decision. There’s this kind of weird bifurcation where everybody’s talking about whether you put the economy first or people first. I think that’s a false choice. You put the people first and that puts right your business first. Because when your guests see you putting them first, that builds trust. And when you’re building a business—not just a travel business—trust is critical. Trust also means acknowledging when you don’t know all the answers. If you’re willing to say that, you can earn a lot of credibility from folks.

Joe Gebbia is the cofounder and chief product officer of Airbnb

There are three things that we think people will want. The first is to travel more locally. Second is affordable options. Third is that they want to prioritize cleanliness and private spaces.

We don’t think that people are going to get on planes for the foreseeable future. This heightened interest in domestic travel will be with us for many years to come. It goes beyond the [arrival of a] vaccine. People will have a different risk tolerance. In addition, given the economic climate we’re in, people are looking for affordable travel. And the most affordable travel is sometimes in your own backyard.

We looked at bookings from May 18 through May 31st, and there were more nights booked for domestic travel on Airbnb, globally, than there were in the same time period in 2019, which is kind of astounding. I think that for every week that goes by for people staying at home, it creates that much more demand for people to want to go somewhere and just get out of the house.

I don’t think business travel will be the same as it used to be. We’ve all experienced the fact that business can go on without being together in person. It’s no longer cumbersome or technically challenging to conduct business digitally. That’s where the puck was headed anyway. The pandemic kind of accelerated it.

But new things are popping up, like our online experiences. That’s something that we never would have imagined. Our Experiences head said, hey let’s bring these online. So we gave it a shot. And sure enough online experiences have exploded on Airbnb. We have a host in Portugal who offers a sangria-making class online and has already had north of $100,000 in bookings in the first two months. I did an experiences with a Buddhist monk in Japan, who offers a meditation course. From my laptop in San Francisco, I learned how to meditate like a Japanese monk, with an actual monk. And it cost like 30 bucks. We’re trying to find more experiences to come online.

There’s also this idea of, not necessarily working from home, but what I would call working from anywhere. And it’s kind of cool to think about.

Sonia Cheng is the CEO of the Hong Kong-based Rosewood Hotels & Resorts, which operates 28 hotels in 16 countries

In Hong Kong, the COVID situation is very much stabilized. Restaurants are really busy, though there are still social-distancing measures in place. And we’re very strict about travelers coming in.

In the short-term, travel will be domestic-focused. Leisure will come back before business. China was the first out of the gate in terms of experiencing the restrictions, but also the recovery. In May, we had a long weekend holiday, and at our resort in Sanya [a Chinese beach destination], it was 100% percent occupancy—all domestic business. That shows that there’s a strong desire to get out and travel for leisure. However, even with a corporate hotel in a place like Guangzhou, we already saw about 50% occupancy in April. So if everywhere follows this same pattern, business travel will slowly come back. And then we’ve seen that once we open up our restaurants, they fill up very quickly. It also has to do with the city: How strict are they with their social distancing? In China, in general, people feel like it’s under control. And they feel safe and comfortable in a place like Hong Kong, so they go out.

People are also looking to stay within their city. Which means at places like the Rosewood Hong Kong, we’ve seen a peak in staycations. Every weekend, our occupancy goes up, because people are looking to get away. So we’re amplifying the hotel’s kids’ program over the summer to replicate what normally people [do] at a U.S. or European summer camp.

We are looking at these city hotels, which were originally driven by corporate demand, from a different angle. In the past, business travelers [from Asia] would stop in New York for two nights and then London for two nights. And in Asia, they would go to Beijing for two nights, then Shanghai for one, and then Hong Kong. Now the McKinseys of the world don’t want their associates on the planes too much. So if they need to travel to Hong Kong, they’ll just stay for a week and do videoconferencing for Beijing and Shanghai [meetings]. Which means that the length of a stay is longer, and the hotel needs to adapt. We have to make sure we have advanced technology to enable them to turn that room into their workspace.

We’ve been using social media to stay engaged with our guests and producing content, from cocktail-making classes to online cooking classes to yoga classes. This kind of content is very appealing to our guests. And it drives a lot of digital engagement. And it’s a very different way of marketing. It’s not just the hospitality brands that are doing this: retail and fashion, they’re all doing the same thing. I think this trend will continue.

The [prospect] of a second wave [of infections] is of course a concern. We are making sure we are protected and that our team is as safe as possible as we open up our hotels. I can say that rigorous testing and fast action in controlling the spread is absolutely critical. The Hong Kong and the Chinese governments have done a great job in controlling this. I also think because we had the experience of SARS, the population is generally just very paranoid. So they all wear masks. [People] are just very, very, very disciplined. So it’s not just about the government, it’s also the culture and the population.

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