American mindset driving demand in rural hotels
 
American mindset driving demand in rural hotels
14 OCTOBER 2020 7:00 AM

Rural hotels are experiencing unprecedented high demand driven in part by culture, but that demand may be short-lived once global markets reopen. Hotel owners, however, can take steps now to retain these new guests for the long term.

When hotels started reopening in early summer after being closed for several months due to COVID-19, many rural properties noticed an immediate uptick in bookings. As the summer continued, these hotels were able to implement longer-term stay restrictions with the ability to continuously increase rates due to strong demand.

In fact, at least two of the properties I work with are having the best September in their histories, with significant growth in year-over-year topline performance. So, what is behind the strong demand in the countryside versus urban hotels?

Logically, it is easy to understand that after months of being confined to homes and apartments people would want to go outside and be in nature, but for many Americans, this desire has been programmed into our culture for over a century. America’s obsession with getting back-to-nature began as early as the 1880s with the idea of creating a pastoral landscape for relaxation and rejuvenation.

In 1916, Woodrow Wilson signed the law that established the first 35 National Parks, which have now grown to over 419. And aside from public schools, no other institution has had more of an impact on children then the annual pilgrimage to summer camp. The America Camping Association estimates that summer camps are an $18-billion dollar industry, catering to more than 17 million children in more than 8,400 overnight camps across the U.S, with an additional 5,600 day camps. These core foundations helped make the wilderness a central part of American culture.

Academic Roderick Nash wrote, “Appreciation for the wilderness begins in the city.” This best summarizes the idea that today’s manufactured wilderness is more of a mental than a physical place. The modern wilderness is a place where guests can hike on well-laid out trails with pine needles underfoot, hear cheerful voices splashing in nearby pools or lakes, smell campfires in the early evening and enjoy the taste of delicious s’mores after a long relaxing dinner. Its romantic idea that captures our imagination with hopes of reconnecting and renewing our spirits to take on life’s next big challenge. With many international boarders closed, global travel restrictions and the inaccessibility of many destinations, the wilderness offers a refuge of familiarity and safety in a time of uncertainty.

During early 2020, hotels across the globe temporarily closed their doors due to a lack in demand, as many owners considered the possibility they might be facing bankruptcy. So, owners and operators were in disbelief when reservations for summer and autumn bookings started spiking to new heights in occupancies and rates. Some of these same owners are now surprisingly considering expanding their operations with additional units, cabins and other amenities.

However, it is wise to remember the words of one senior hotel leader who often says, “One week or one month does not make a trend.” In midst of this profitable excitement, owners and operators need to pause and ensure the recent boost in demand is not artificial but a real trend that can be sustained over several years.

The real question for these properties is what happens after the pandemic? Once global travel opens back up and destinations are more accessible, will demand arising from a false sense of safety and immunity be viable? Will guests return to the international jet set and take more risks with adventures overseas in exotic destinations?

Today, these are difficult questions to answer. Given the various timetables offered by pharmaceutical companies, it may be possible for rural hotels to enjoy one more season of extraordinary demand next summer, however, when the world starts to reopen, demand patterns and revenue management algorithms will start shifting again in favor of different markets.

Rural hotels, especially the ones that over build their operational capacity, could end up discounting rates and offering promotions to stimulate demand when the world returns to normal. To help mitigate this issue, hotels need to have a strong understanding of their guests by focusing on customer relationship management tools now.

Many properties do a great job at collecting data such as mailing addresses, email addresses, birth and anniversary dates as well as stay and spend history. Properties should also focus on more critical questions to help identity the personality of their guests, learn how these new guests discovered their property, as well as their hobbies, likes and dislikes. Comprehension of these basic questions can help a property develop future marketing campaigns to attract the same or very similar visitors for years to come.

Asking the right questions is only the first step. Hotels must have the skill to quickly mine the CRM data and turn it into actionable marketing tactics—this is where the rubber meets the road. Good CRM data provides the building blocks for a successful marketing campaign that connects the guest and the property on an emotional level that yields bookings focused less on commodity pricing and more on experiential driven rates. Long term, hotels that succeed at truly understanding their core customer create sustainable business models with healthy bottom lines. As the embers of demand in rural hotels fade to a soft a glow, there is a still much work a property can do to preserve and enhance its long-term demand.

William P. Perry Jr. is director of revenue strategy at Revenue Matters and serves as an independent hotel financial advisor on development projects.

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