By Anil Aggarwal, CEO and Dev Kurbur, SVP Customer Success
Milestone Inc’s perspective on what the recovery looks like continues to evolve. We are collecting data, processing it, discussing it, and sharing updated guidance with the community.
The current state of affairs is mixed. The virus has maintained its presence, and depending on local government guidelines, we see a wide range of status for opening of schools, businesses, and corporations. Many consumers are temporarily deferring travel or buying, but their demand to travel and shop in person is likely building. Corporations are navigating the pandemic, conserving cash, and preparing for growth and rebound after the pandemic ends.
The end of the pandemic appears to be in sight with 44 vaccines in trials
Put most simply, the pandemic will really end when there is a cure or a vaccine, but the economy will start moving when vaccine approvals are announced. The good news is that as per the New York Times Covid Vaccine Tracker, there are 44 vaccines in clinical trials on humans. Of these 44 vaccines, there are 11 vaccines in Stage 3 testing, and 5 approved for limited use. Stage 3 testing involves large-scale efficacy testing with thousands of human test subjects and is the final stage before vaccine is approved by the regulatory bodies. There is high confidence and reason to believe that some of these trials will result in an approved vaccine within the next 3-4 months.
What does vaccine approval do to economic sentiment?
Once the vaccine is approved by regulatory bodies, the next big challenge will be producing the vaccine in enough quantities for the world population. That’s a complex exercise, and it may be several months before the vaccine becomes available to the wider public. However, the approval of the vaccine kicks off a timeline and shows the light at the end of the tunnel. That is a critical milestone for many consumers and for businesses. While consumers will still be conservative until there is herd immunity and the majority are vaccinated, the confidence that the pandemic is coming to an end will play a large role in boosting the morale and also their willingness to spend. For corporations, I believe that it’s a different game. There are many corporations who were performing very well in pre-Covid times and are currently holding onto cash and delaying expenses. These corporations will now be able to see a timeline for the economy to rebound and are very likely to ramp up spending.
What does this mean for businesses?
Milestone currently operates in hospitality and several other verticals, such as automotive, financial services, retail, restaurants, etc. We believe that once the vaccine is approved, the confidence for businesses is going to go up. Especially, the businesses that were inherently strong with cash on the balance sheets are likely to invest heavily to gain an advantage on their competitors and also to catch up on implementing several initiatives that they have been deferring. We also expect that one irreversible change that Covid-19 has caused is that businesses will be inherently more digital. It will be imperative for businesses to make their digital presence more robust and competitive and we expect to see pace of digital transformation faster than before.
What we see in the hospitality community
As mentioned above, we are already seeing that business who have been pushing their expenses out are now beginning to make the spending decisions as they feel it’s getting closer to when the economy is likely to rebound. Another factor is that some of these businesses can’t push the initiatives any longer without jeopardizing mission-critical initiatives or their competitiveness. We expect to see this phenomenon play out over the next 6 months with a consistent increase in pace of innovation and digital transformation.
For the hospitality sector, as STR reported, there has been some recovery – occupancy had dropped down to about 20% in March/April, has since recovered to about 50%, but is still about 30% below last year
Recovery is uneven as expected with some markets faring better than others
- Examples where markets are on a good trajectory to recovery
- Markets where there are fewer governmental restrictions
- Mid-market and budget hotels
- Destinations like beaches and mountain resorts
- Drive and highway markets
- Slower to recover
- Markets which are still restricted by government mandate
- Luxury hotels
- City center hotels soley dependent on business travel
- Certain international locations that are dependent on air travel
What Milestone clients have been doing to prepare for recovery
During the crisis the focus was on maintaining relevant digital presence. This included providing the right information about open/closed, hours of operations, etc. on the website and other channels.
Since the recovery started in May/June, our clients have realized that consumer expectations have changed. Consumer concerns include safety & health, staying/doing business locally, flexibility, and value. Most businesses have focused on building confidence by sharing what they are doing to keep their consumers and employees safe. Where demand has started to pick up, customers are investing in building and capturing demand using various sales and marketing strategies. Some innovative companies who know that their previous business model might not kick back in for a few quarters are experimenting with pivoting their targeting efforts – university housing, disaster housing, emergency personnel housing, targeting staycations, and local markets.
Some customers, especially those who were less impacted by the crisis are starting to plan and budget for 2021 in anticipation of meaningful recovery in Q1 and Q2.
What should businesses do in the next few months?
- Update your website with current images and offers
- Improve the overall speed of your site and digital experience
- Improve the mobile experience with a focus on speed and workflow
- Improve the commerce experience
- Clean up and expand your customer database
- Run experiments on the website and in email
- Find new ways to improve direct bookings and take share from OTAs
- Make sure you are ADA compliant and your PDFs are accessible
Milestone will continue to monitor the economy and innovate its digital solutions to help you be ready to rebound.