Occupancy figures have been very high this summer, but prices even higher. Unfortunately recession in 2023 has not been on holiday. Half of all goods purchased have suffered drastic price increases this year. Holiday rentals and hotels are no exception.
As a result, owners and managers face major challenges in order to continue to offer a valuable and competitive product that meets the new needs of guests.
In this article we will give you applicable and accessible tips and guidelines to face the 2023 recession.
Win line and loss line for dealing with recession in 2023
Unlike the COVID-19 pandemic, the 2023 recession does not prevent travel, but it does change the way consumers plan their trips: closer to home, by different modes of transport, etc.
So what needs to be done to prepare for the changes brought about by the recession?
The answer is simple; ADAPT. Companies that act quickly and flexibly to adapt to the crisis can gain an important competitive advantage and secure their position.
To adapt in the most appropriate way, certain guidelines/guidelines must be followed, which we share with you below. The winning guideline, which tells you what is needed to achieve a stable and profitable business in times of recession. And the losing guideline, which is the one followed by the majority, and which is the perfect example of how NOT to deal with the current recession.
Winning guideline
- Support longer stays
- Be aware of changes in source markets and diversify your distribution
- Try different pricing strategies
- Reduce fixed and recurring costs
- Streamline your operations
- Retain your best talent
- Study your metrics
- Consider acquiring more inventory
- Think and plan ahead
Losing directive
- Does not adapt, continues to run the business as if nothing is coming.
- Not keeping an eye on the “pulse/rhythms” of the market.
- Expect demand to continue as we saw in the “COVID rebound” period.
- Failure to analyse changes in guest source markets or segments.
- Failure to implement a resilient pricing strategy;
- Not taking the time to take advantage of the OTAs and direct booking strategy.
What should you do now, to face the 2023 recession?
Here are our 6 basic tips on what you should do from now on to prepare for the 2023 recession:
Focus more on the ecosystem of guest experiences around the property.
The more local and unique experiences you incorporate into the overall booking experience, the more chances you have of being chosen among other similar establishments.
Whether it’s a local food guide, a hiking trail or an art museum. Follow this advice and spend an extra day or two rediscovering your area. Make sure this is mentioned in your listing description and on the OTA channels. This will allow you to get to know the area better.
Increase your profits with every booking thanks to Upselling: Top 10 experiences thrugh the booking journey
Enter at least 3 cancellation variants for your property.
Accommodations that offer more flexible booking options rank higher in the search results of OTAs. They are essential to increase bookings and, at the same time, hedge the risk of higher cancellation rates.
According to the latest data from Your Rentals, hosts that switched from a strict or moderate cancellation policy to a flexible policy after October 2021, saw a significant increase in bookings, in the following month, of 21%.
Reduce the operating expenses, as much as possible.
During the year you should have as much cash as possible. Here are some tips on how to achieve this:
Get rid of subscription-based services that do not directly generate revenue. Adopt a commission model to leverage cost/risk during the 2023 recession.
Develop a plan to run the business with the minimum of staff. Retain key team members, those who are difficult to replace. Take small steps towards automation so you can increase inventory without increasing headcount. Once demand recovers and outsource business operations.
Domestic Market
Start targeting the domestic market NOW and make sure your OTA distribution is targeted.
According to Quick Sight data, domestic travel has increased significantly. Closer, more environmentally friendly and less expensive. Turn your attention to the local market as early as possible. Think about actions and strategies to attract local consumers in your country.
Aim for longer stays
One way to act during stormy weather is to resort to long-term bookings. Although these types of bookings include lower rates, they provide a steady income. Essential in times of crisis and recession.
Make sure you have a proactive marketing plan.
Examine your marketing spend from scratch and determine the 20% of activities that deliver 80% of the results (Pareto’s Law).
Don’t stop using social media, email marketing and blogging on your website. Always stay visible.
Where did your local guests come from in the last two years? You should invest some time in researching the origin of your customers, to learn about their buying behaviour.
Conclusion
The current recession of 2023, affects us all, but life goes on. Therefore, we must continue to find solutions to deal with it. Actions have to be carried out at all levels of your business, both in your offer or value proposition, as well as in the analysis of your customers’ behaviour or the reduction of the operating costs of your activity. It is a constant struggle towards innovation.
In order to help you to go deeper into the subject and if you are interested in the topic, we share another article of interest: How to reduce the total energy costs in your hotel or holiday home.
