Every hospitality brand experiences demand anomalies that are directly influenced by events. So as companies attempt to forecast demand for 2021, the big question is when will events come back?
Here in the United States, the idea of a packed stadium might feel lightyears away. But according to PredictHQ, which works with major hotel and airline groups to understand what impacts global demand, events are already coming back in countries like New Zealand and Japan, and are causing significant spikes in demand for hospitality brands operating in those regions.
To learn more about this topic, HT spoke with Campbell Brown, CEO of PredictHQ.
Which countries are seeing events return already?
We’re seeing the most events and larger events return in countries that have COVID-19 under control, such as China, New Zealand, Thailand, Vietnam, Taiwan and South Korea. For example, in New Zealand, concerts and sporting events are selling out to packed crowds.
But there’s a lot happening in the United States too, and that’s only going to increase this year. Severe weather, religious and cultural observances, and academic college and school holidays are still occurring and impacting hospitality businesses. Even the classic definition of events, such as expos and concerts are still occurring in some parts of the United States. For example, in February 2021 in the U.S., there are more than 17,000 events happening, including large events such as The Nascar Cup Series - Daytona 500 that is expected to attract 30,000 people; The Nation's Gun Show that should draw up to 23,000 attendance, and the Southwest Florida & Lee County Fair with an expected attendance of 14,000.
New partners' initial understanding of the different types of events impacting their business is narrow compared to what is actually occurring. So when working with PredictHQ, they understand the full spectrum of just how much is going on, even in these strange COVID times, which if anything has made it even more complex to understand. And that’s just the many events being scheduled - postponements and venue updates are up significantly, and more and more 2020 events are being rescheduled. We find and verify every event, so we can see firsthand how chaotic this recovery is going to be. There are thousands of events businesses depend on for new revenue or need to mitigate against their negative impact that are being scheduled, rescheduled, cancelled or changed every day - if you thought it was impossible to track before during more stable times, it’s unbelievably hard now - and critical as you need to be constantly updating your forecasts and operational plans. We are working with some of the world’s largest hotel and food chains, which ingest our demand intelligence into their forecasting models so they can factor in every relevant event that will drive demand up or down. They need to know about new events, as well as when impactful events are postponed. When you have hundreds or thousands of properties like these companies and stores do, the way in which cities, counties, states and countries differ in their events and demand is intensely complex.
Have any countries had to reverse course yet when it comes to events? Is this likely to be a trend in 2021?
This is a great example of what we were mentioning before about the dynamic nature of events being postponed, cancelled or active, the significant economic impact on businesses and how impossible that is to track manually. In 2019 we had a few thousand events postponed and cancelled, whereas in 2020 we had to deal with more than 480,000 worldwide. This year won’t be like the mass postponement and cancellation of 2020, it will be more diversified, and hyper-local, creating opportunities for smart forecasters to leverage perfect storms of demand in very specific locations. With this shift in demand patterns, it’s definitely going to keep demand planners on their toes, or underwater if they don’t have access to scalable forecast-grade data to help.
Both the fact an event is occurring or an event you were relying on to spike demand not occurring or being pushed back by a month or two is important for demand planning to avoid rooms mispriced, staff over-rostered and inventory wasting away, Spikes you were relying on may have been postponed by a month or two, and the staff and inventory you’ve ordered to meet that spike will be wasted if you don’t move that demand planning to the real date. In such uncertain times, we are giving our customers certainty in a time of uncertainty, and the confidence to invest and plan for what will actually occur.
I’m confident the second half of 2021 will be less stop-start than 2020 was in terms of demand and economic recovery, as the vaccine rolling out will be a game changer. However, it’s going to be an even more competitive landscape than before as businesses look to claw back losses from 2020. Therefore knowing about the pockets of demand, and the rate of recovery in each geo, is going to be a driver of competitive advantage.
Outside of the countries already in full swing and having mass events, we are already seeing events being booked for later in the year, especially larger events. As the vaccine is distributed and consumer confidence begins to return, there will be a surge in pent-up demand, especially for travel after so many Americans have been home for most of the last 12 months.
For example, I live in the U.S. now but I’m from New Zealand, one of the first countries to get on top of the pandemic. It was encouraging to see big sporting events return, but especially to see record numbers of fans packing out the stadiums.
It’s also worth considering that not only will businesses and people be keen for big events to return at scale, but so too will governments (who are also becoming customers of ours), which can incentivize this in a range of ways. Events are major drivers of demand for business and so they are a major factor in economic recovery. The leadership in Japan summed this up nicely, when they explained why they were slow to shut down or limit large events in 2020.
What kind of spikes in demand for hospitality businesses are these events causing? Are these spikes similar to 2019 levels?
It’ll vary per business and location, but into the second half of 2021 we should start seeing a wider spread return of larger attended events, similar to those held in 2019. However, right now businesses are still being impacted by school holidays, academic events, public holidays, Live TV Events (a new category we added for our food and beverage customers to better predict demand generated by the broadcasting of sporting events). That’s why it’s really important that companies rely on more than just historical data to forecast their demand, because that never worked as well as many thought it did. For example, there were more than 20,000 major conferences each year, but 85% of recurring events change their dates or locations each time they are scheduled. So if you were expecting a surge in Atlanta in March because there was a conference of 26,000 dentists there last year, you’re going to overprice for Atlanta and underprice for its new location in Boston.
That’s why every year, and especially in 2021, you need to build resilience and intelligence into your forecasts and strategy around external demand impact data, which can provide certainty in an intense time. This year is going to be different from 2020 thankfully, but also nothing like 2019 in the sense it won’t bounce back immediately and it’s going to be a highly localized and fragmented recovery. State by state will vary, as well as different target audiences. McKinsey is forecasting occupancy recovering to over 50% but also that luxury or higher end hotels will need 1.5x the amount of demand that economy properties will.
Beyond the vaccine roll out, another watershed moment will be when international travel returns. The US welcomed more than 75 million international visitors in 2019, for everything from leisure trips to concerts and festivals, through to work conferences and expos. A return of even some of that demand will be very welcome.
What will impact demand the most?
Beyond the vaccine roll out, what will impact the demand a hospitality business receives is how ready they are for it. As attended events are coming back in different geographies at different times, but there are a slew of many impactful events occurring that businesses always need to know about so they can have a competitive advantage in the next normal.
The obvious steps are around marketing, as well as pricing and packaging. But also key is ensuring you have the right amount of staff and inventory on hand, with minimal waste, to deliver exceptional service, which is critical since customers will be more hygiene conscious than before.
Any other comments?
A lot of demand planners, especially at accommodation companies, are losing hours each week simply and uneconomically googling for events either in their city or nearby hotels. But now more than ever, clusters of smaller events that combine to create outsize impact need to be factored into forecasts and operational plans too, and these are very easy to miss without a data-driven approach. For example in Fort Myers, Florida in mid January, there was a small but considerable perfect storm of demand when The Home and Garden Show on the 9th and 10th of January happened with around 7,000 people, at the same time as around 9,000 Florida Gulf Coast University students came back for Spring Session starting 11 January.