Covid-19 and the Hospitality Industry

It can objectively be said that perhaps no sector has been as badly hit by the Covid-19 pandemic as the hospitality sector. Guruprasad Sankaranarayanan, Chief Strategy Officer, OYO India and South East Asia, has a bird’s eye view of the numerous challenges faced by the sector and the incredible innovations brought in by OYO to mitigate them and regain customer confidence. At a marketing symposium at a leading university, Guruprasad talks about the impact of the pandemic on OYO in particular and the entire hospitality sector in general, and how OYO introduced out-of-the-box concepts to accelerate the path to recovery. Corporate Citizen brings you snippets from the riveting session

Guruprasad
Sankaranarayanan

What OYO does

OYO is a global platform and we are present in 35-40 countries meaningfully. What we do is essentially empower small hotels and homeowners to become entrepreneurs in the current digital and technology-driven environment. We provide our full stack of technology solutions to these clients to showcase their assets to a broad consumer base and manage their interaction with the consumer in a seamless way. We manage everything from luxurious villas in Austria to some of our marquee brands such as OYO townhouse which exists in 200 cities currently. We have 157,000 storefronts on our platform. We are also largely a tech-focussed company, so 25% of our staff are tech people. We are the third-most downloaded travel app globally, and we have around 100 million active users. 70% of our business comes from repeat customers. We have almost 12 lakh rooms globally. What we have done over the years is build various brands which are relevant to different segments of customers. We have OYO rooms, which are affordable, standard rooms. We have a range of brands that go up in scale in terms of premium experiences. We have townhouse, vacation homes, and of course, OYO Life.

Role at OYO

I have been with OYO for three years now. I have been heading operations in India, which is our biggest market. Then, I moved to South-East Asia to start and run Thailand as a market for us, and then headed the region. Currently, my role is largely looking at disruptions in the market or other disruptions such as the pandemic and figuring out how OYO evolves as a company in our core matrix so that we continue to stay relevant and we continue to grow. We are also hoping to go public at some point shortly.

Impact of the Covid-19 pandemic

I will be speaking today about how the pandemic has impacted us and how did we rethink our strategies to overcome the impact of Covid-19. We have gone through two waves of the pandemic, during which, we have gone through a rolling series of lockdowns. So, back in 2020, when we saw the first wave, we had almost a three-month shutdown for markets. Then, we saw a gradual recovery since August of 2020, where we were back to our pre-pandemic levels by December 2020. But then the second wave hit India and put the whole industry in a tailspin once again. Now, of course, we are back in the recovery trajectory. These are overall positive trends for the business, and direction when it comes to recovery.

Consumers and Partners remain the priority

Let me talk about what we did during the pandemic to rise up to the challenges. I’ll talk about what we did from a consumer strategy perspective and also a bit about what we did for our partners. These are the two most important stakeholders for us in the business. At the end of the first wave, we went back to our consumers, and we spent a lot of time understanding what are they thinking of in terms of travel, what are they thinking of in terms of hotels, how are they thinking of restarting life as usual. A few things became clear from these conversations. The first is, there was an increased hyper-focus on hygiene. People became very sensitive to the cleanliness of hotels and they preferred a trusted brand with high standards of service. They also preferred to see the standards being implemented in front of them. For example, if you promise no-touch check-ins, customers want to see this consistently being implemented across all hotels in the brand. The second thing we saw is that there was a big push on domestic tourism. A part of this was because of lockdowns, but primarily this was because people were stuck at home for so long that they were looking to travel for any excuse possible.

Earlier, 20-25% of the revenue used to come from travel agents. That has changed quite dramatically post-pandemic. This is primarily due to consumers adopting digital tools.

"You may have heard of the term revenge travel. The frequency of trips has gone up dramatically due to this reason. Long weekends have seen massive spikes in demand. Since the pandemic, people have stopped planning in advance"

Location wise boost during the pandemic

Location wise, we saw big spikes in locations such as Goa, Jaipur, Mysore, and mostly in mountainous hill stations like Shimla and Darjeeling in the north. You may have heard of the term revenge travel. The frequency of trips has gone up dramatically due to this reason. Long weekends have seen massive spikes in demand. The other interesting thing is that since the pandemic, people have stopped planning in advance. People are booking closer to the date of travel due to fears of a rise in cases or lockdowns.

Online penetration

Online penetration has gone up during the pandemic. From 38% in 2015, we see that it is now 56% for travel bookings globally. India saw a similar kind of trend. We jumped from 17% to 33% in bookings. South-East Asia and Europe are more in line with the global trends than India. But while it is lower, there is still a lot of headroom for online penetration in this business. I am speaking about the travel market as a whole.

We saw a lot of recovery on weekends. We saw a lot of recovery on drivable distances. People who preferred weekend getaways in their car increased versus people who would take longer vacations once every quarter or so. The third is that the reasons for travel also changed. With work from home setups, people were more flexible about where they wanted to work from. So, a lot more people expressed interest in travel, if they could find more affordable locations and accommodations in places they would love to go to.

Accelerated trends

Certain trends were already forming before the pandemic, and they accelerated over the last two years. One is that large brands started gaining more market share. People started becoming leerier about stand-alone hotels. They became more uncomfortable without a brand backing the product, mostly because of hygiene. Value started playing a bigger role. As incomes reduced during the pandemic due to salary cuts and layoffs, people were looking for value leads. High-end travellers were not so affected by this. But the mid-market segment was very affected by this trend. Thirdly, the most significant trend since the pandemic is that digital adoption just took off. People were much more comfortable shopping online. The E-commerce sector saw a massive boom during the lockdown. And these tailwinds carried forward to all other industries.

Mitigating challenges

To address these challenges, we did a few things. We focused our business on the recovery line. We first addressed customers’ concerns about hygiene. We rolled out a lot of SOPs and launched marketing campaigns focused on building customer confidence in our hotels' chain's hygiene standards. We also did some interesting partnerships such as with Unilever in India and some of the other brands in international markets to push the message of sanitisation. With Unilever, we had pushed the Lifebuoy campaign to say that we have partnered with Unilever and we are using their products to keep our properties sanitised. We also spent a lot of time improving our portfolio to focus more on longer stay durations. Typically, the average stay time pre-pandemic was one day or 1.5 days. Today, we are seeing that spike up to 2-2.5 days and in some cases as high as five days. People are staying longer, and different kinds of people are travelling.

Promoting local destinations

Another thing we did is push on local demand. We began promoting local destinations on our app and other channels to push ahead in the decision process for the consumer. Even before the consumer thinks of travel and where he wants to travel, we start putting locations in his head, so he starts saying that why don’t I go to location X for a vacation. I’ll give an example. We pushed on Leh Ladakh this year, starting in May. What we saw is not only a massive spike in occupancy in our properties there, but also the most searched location on our app ended up being Leh Ladakh in India. Consumers react to these pushes, and so if you get ahead of the curve in putting some of these ideas in their decision matrix, then you start seeing benefits and results of that.

"We began to see a higher demand for vaccination. People began asking more about staff vaccinations. Brand trust was also very important. Consumers tended to trust brands vs. independent chains to provide the kind of service that they were looking"

Hygiene and Trust

Eighty five per cent of the consumers we spoke to at the end of wave one and at the end of wave two of the pandemic focused on hygiene. Price, quality, and location were secondary to hygiene. Pre-pandemic, these other factors were primary to the decision-making of consumers. Post the second-wave, we began to see a higher demand for vaccination, as people realised that vaccines were affordable and accessible, people began asking more about staff vaccinations. Brand trust was also very important. Consumers tended to trust brands vs. independent chains to provide the kind of service that they were looking for.

In response to this, we did a few things. We launched a few things so that when recovery happens, we were able to capture that trend by promoting a certain kind of experience. We pushed a concept of a minimal-touch stay experience. What we ensured is that customer interaction with hotel staff is minimum. There is no hand to hand interaction between the customer and the staff as far as possible. Whenever these interactions did happen, we ensured that there was proper protocol around masks, sanitisers, gloves, etc. In the check-in process, we largely tried to automate it so that the customer doesn’t have to sign anything or physically hand over his ID. Similarly, we changed how we ran housekeeping in our hotels. We changed how we did F&B in our hotels. We advertised this extensively so that people knew what to expect when they walked into our hotels. The second thing is that we actually started putting this tag called 'Sanitised Stay', which now 100% of the properties in our inventory have, where hotels that were certified to be following our protocols were given this tag onto their property in the app. We assured our guests through our communication that this is a hotel that will follow the protocol which we have set about. Customer communication, messaging, and pushing that whole narrative about certification was a big part of our recovery story. We were also very stringent about who would get certified, and where would we put the tag. We used to audit frequently, and if we saw any violations or changes in the sanitisation protocol, we used to pull the tag out of properties, so that customer confidence in the tag is not shattered. It was very important to build that trust. We ran this programme at the end of the first wave, and we got a lot of positive feedback.

Sanitise before your eyes

As we kept speaking to them and we tried to understand how to make the customer even more confident, brands like TAJ who have been around for decades, inherently have their customers’ trust. If they say they have sanitised their rooms, their customers will believe them. It’s a function of their brand history and the segment they play in. For a budget brand, we wanted to know how we can match that confidence. One of the feedbacks we kept receiving is that customers wanted to see the sanitisation happening themselves. In response to that, we started this campaign called 'Sanitise Before Your Eyes'. We started focusing on cleaning certain touch-points in front of the guests. If you checked into an OYO hotel at that point, you could have actually asked the hotel to sanitise the room in front of you and they would do it.

VaccinAid

We drove a campaign in June 2021 called 'VaccinAid' to get the majority of our hotel staff 100% vaccinated. We would organise camps, encourage hotel owners to get themselves and their staff vaccinated and then we would certify these hotels as VaccinAid. The idea behind this was to communicate to the customer that all the staff you will meet in this hotel will be 100% vaccinated. We were the first in India to do it. We were the first hospitality player in India to do a corporate camp, and 30-40% of our inventory was already vaccinated before some of the major players were starting.