9 Disrupting Business Model Shifts in a Post Pandemic Era

Did you notice how the first three business model shifts are disrupting traditional thinking?

Indeed the need of the hour is a totally different approach to problem solving.

Treading new waters, experimenting like never before.

Are you tackling the disrupting shifts head on.

You have no choice but to go that way.

I will lay out a case for not just what these disrupting shifts are resulting in but also some examples of what can be done to overcome them.

This Part 2 of the 3 part blog post series will cover:

Disruption at the heart of Business Model Shifts 

This is Part 2 of the 3 Part Series of Blog Posts on 9 Disrupting Business Model Shifts in the Post Pandemic Era.

If you missed Part 1, click below to read that first.

The first three business model shifts are indeed disrupting traditional thinking.

Just to recap, the first three business model shifts are:

• Changing Consumer Behavior
• ReImagining the Customer Experience and
• Operational Agility

The first major disrupting behavior is that consumers are using discretionary spending to divert their money to internet or mobile services.

Spending before the pandemic on travel, entertainment, sports etc is being moved elsewhere.

And this is huge since the travel, entertainment and sports sectors (to name a few) were huge money spinners for the hospitality undertakings.

This simply meant one thing: your hospitality establishment’s revenue streams were suddenly undergoing drastic change.

As a hotelier, you have to go back to the drawing board and look at your market segments closely.

What new market segments could you create and target with this disrupting consumer behavior?

This is metaphorically like attempting to reposition a load bearing wall in a building.

It was going to cause major upheaval in resources, people and investment.

How are you tackling this disrupting situation?

Second, with the consumer behavior changing, hotel establishments have to completely rethink how the customer experience is going to be.

This is another major disrupting factor.

Instead of in person or person to person interaction, you now had contactless, touchless processes.

This meant a lot of technology, artificial intelligence pressed into action.

Finally, the disrupting shifts is testing how nimble your business establishment is in responding to this sea change.

In other words, how agile you operationally are?

New Strategies Required to Tackle Disrupting Business Model Shifts

As you saw earlier, all the disrupting shifts are forcing business establishments to pivot fast.

Market Segments are traditionally the holy grail of hotel revenue management strategies.

Now these very strategies have to be rethought.

Let us take an example.

EXAMPLE

Revenue from international customers suddenly dried up because of freeze on travel.

This meant that if your hotel depended heavily on international customers, you suddenly saw your revenue drop to disastrously low levels.

How would you augment that revenue loss?

Well, many hotel establishments have pivoted sharply and now begin to target domestic customers.

That is customers within the country, province or state of even city.

Staycation packages as an example are becoming exceedingly popular.

What is a staycation you ask?

A Staycation is a holiday spent in one's home country rather than abroad, or one spent at home and involving day trips to local attractions.

This meant a major shift in customer profile.

Business establishments now have to woo the domestic customer.

One trend that is catching on in this new strategy is how entertainment businesses are using staycations.

For example, in the mecca of entertainment, Las Vegas, entertainment businesses are coming up creative packages for customers within the country.

Packages which are heavily discounted and with great value.

Who are they targeting specifically as an illustration?

They are targeting individuals who are say 5-8 hours or less drive away from Las Vegas.

Offering them suites which sell for $800 a day for $100 or even less with coupons for use in bars added.

What was the entire approach about?

To produce the volumes that will fill the rooms rather than go empty.

The classic Heads in Beds strategy.

What Out of Box Thinking Are You Applying to the first 3 Disrupting Shifts?

So, with this mindset firmly in place, let us move on to the fourth business model shift.

Disrupting Business Model Shift 4 - Technology

One central fallout of the first three disrupting business model shifts is the sudden major emphasis on technology.

Technology had been playing a decent role in the past in the hospitality industry.

With the disrupting shifts caused by the pandemic suddenly it was thrust into center stage.

This is where the power of the internet became even more critical and strategic.

Analog had to be turned digital.

Personal Contact was to be replaced with contactless processes.

The idea was to avoid a situation where the spread of the virus could get a chance.

This brought with it numerous challenges.

How would your business establishment compensate for lack of the personal touch?

Hospitality is a heavily service based industry.

Service based on regular interactions with customer.

And enhancing customer service through personal touch initiatives.

Suddenly, that central driving force - personal touch - was being taken away.

Technology might be able to stand in for a process done earlier.

However, it is impossible to replace the personal touch.

Self Check Ins and Outs meant that customers never came into contact with hotel employees.

A huge element in the service delivery was snatched away.

Let us now move on to the next disrupting shift which is closely related to this one.

Disrupting Business Model Shift 5 - ReEngagement

Technology might complete a process done earlier in an analog way.

But technology cannot produce the human touch or the personal touch.

This meant that business establishments had to rethink how they would be engaging customers.

And a totally new phenomenon was created.

The phenomenon of pent up demand being released.

People had been under lockdown and stuck indoors for a long time.

With restrictions eased or in some cases removed, suddenly there was a surge in demand.

Demand pent up and now craving entertainment and fun.

Reengaging those customers and fast was key.

Business establishments were suddenly confronted with a deluge of people making travel, hotel, entertainment bookings.

Many of these were of course accompanied by restrictions but not as severe as a lockdown.

Restaurants were allowed dine in but with entry upon complete vaccination proof.

Often the requirement was of having taken a booster shot.

Social distancing went from 6 feet to 2 feet, number of people in an elevator went from 2 to 4 and so on.

The idea was clear: keep the environment safe but leverage that pent up demand.

Disrupting Business Model Shift 6 - New Offerings

You saw earlier how hotels were forced to take a relook at their market segments.

This relook resulted in the creation of at least one new offering.

A new market segment if you will.

The Domestic Short Trip Traveller.

This was because the international travel market segment that was a huge bread earner was shrinking alarmingly.

It gave birth to the rethought domestic short trip traveller.

Something to keep in mind is that it was not entirely an equal match.

Meaning that the domestic short trip traveller was not going to produce the same average rates as the international traveller did.

But they pushed up volume even at a lower rate.

This released some of the pressure on revenue.

Domestic short trip traveller market segments had different versions.

The versions were all domestic travelers but based on distance by air or by driving.

For example, the versions could be:

• Those within a 2-3 hour driving distance
• Within the same state
• interstate but within a 5 hour driving distance
• Within an hour flight anywhere in the country

Business establishments were beginning to become creative in their offerings.

And customers were liking the newly thought out offers.

It was a win win situation.

And it began to fill up the hotel rooms better than the past 24 months.

This brings us to the end of this post on the disruption factors and business model shifts 4 to 6.

In the next week’s post we will look at the concluding Part 3 of the 3 part post series on disrupting business model shifts.

What strategies and new approaches are you putting in place to take advantage of the pent up demand?

How are you reengaging the customers with new offerings?

You can the take some steps right away - see the next section.

Steps You Can Take Right Now

STEP 1

Examine your establishment's market segments with fresh eyes in the post pandemic environment.

STEP 2

What market segment changes are occurring in your hotel?

STEP 3

Zero in the consumer behaviors that are directly related to your hotel's market segments. How are they impacting you?

STEP 4

Are you leveraging the Domestic Short Trip Traveler market segment? 

STEP 5

How operationally agile is your establishment? Take action right now to correct any deficiencies.

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