Will Hotels Use The Crisis To Regain Distribution Control?

Hotel owners and operators in the Maldives are learning the hard way how quickly disruption can turn cash flow negative. One key trend in global leisure destinations is a severe liquidity crunch of wholesalers and travel intermediaries, which in turn has created a domino impact on hotels. This has created difficulties for the tourism dependent Indian Ocean island nation.

Cash strapped hotels, who are owed significant funds for guests who have already stayed are being forced to negotiate payment terms or event contemplate write offs, are crying foul. Further stress from contracted allocations that cannot be fulfilled has become commonplace as advance deposits are being held by external suppliers.

The situation is expected to become worse should wholesalers become insolvent. In Thailand, hoteliers have sought government action with the TUI Group, as despite a 1.8 billion Euro loan being approved by the German central government, they have yet to clear past payments overseas with are due.

As hotels look to the reopening journey ahead, a new survey of 1,100 qualified Chinese travelers in first tier cities by hospitality consulting group C9 Hotelworks and Delivering Asia Communications focusing on travel sentiment to the Maldives has pinpointed some key changes forecasted in visitor behavior.

One of the shift dynamic shifts in the data saw 75% of respondents prefer independent travel versus being part of a group. While 38% wanted to book hotels and flights separately.  A rising tide of consumers identified direct or social media channels to book a Maldives holiday with Fliggy, WeChat and hotel websites accounting for over a third of the expected share demand.

Looking at the report findings C9’s Managing, travel safety is a key post-crisis factor for all overseas travelers including Chinese. What is interesting from the China responses was that 67% of those surveyed considered the Maldives to be a safer holiday choice compared to other destinations. While a lingering ‘fear factor’ is a Covid-19 consequence, the country is likely to be seen as a safe haven given its inherent island isolation.

Summarizing the learnings from the survey, there is a clear opportunity for hoteliers to more directly control their business stream, create healthy segmentation with increasingly influential social media channels and stay relevant in a fast-evolving travel scene that is all part of how the industry can take back control of its own destiny. The single use business model of leveraging business with wholesalers looks to be past it’s ‘used by’ date.