In the first episode of QUO’s ‘The Future of Travel’ series, David and Catherine speak with citizenM COO Michael Levie about how much the travel industry is likely to change as a function of COVID-19.
Michael ponders the ramifications of social distancing for a brand like citizenM, which has staked so much of its identity on communal spaces. And he considers the need to stand by the core of citizenM even as they adapt to what he anticipates to be a ‘new normal’.
TRANSCRIPT
START AUDIO
David Keen 0:09
Hi, this is David Keen. At QUO, we’ve worked for the last 20 years with many of the world’s best known travel brands. During this unprecedented global crisis, our world of travel has changed, possibly irreversibly. This series will see us speak with many global leaders to understand how they see the future of
David Keen 0:44
Welcome Michael Levy, chief operating officer of citizenM, and a great friend to the first in our series. The future of travel. The series as we’ve said Michael has dusty been precipitated by all of the events that are happening right now in the wild. I’m sitting with Catherine Monthienvichienchai, the chief branding officer at QUO. And together, we want to ask you—immediately—how much is travel going to change as a function of the virus.
Michael Levie 1:15
I think, David, first of all, the impact today on travel is—going from 100 miles an hour to an abrupt stop. So, it is something that we have never experienced or witnessed before where you basically, you know, hit a roadblock in full swing. And it takes everybody quite a bit of time to sort of recover from that tremendous hit. If we look into history to see what happened, then I don’t think there’s any comparison so what we are going to witness, moving forward is somewhat new for all of us, there’s a couple of things that we have learned however from the past is that we tend to have an extremely short memory. So terribly events that happened in the past, sort of, linger behind but we forget the depth of the impact that they had back then, and go back to a routine that is important to us.
Michael Levie 2:25
We will travel. Travel has become extremely affordable for everybody. And I think that the biggest impacts that we’re going to anticipate now is,—who because of the tremendous economic impact—are not going to survive. And are inevitably going to be airlines. There’s inevitably a large inventory of hotels. Inevitably, there will be others in the hospitality space that are so deeply impacted, that there will be a new order. And, unfortunately, there will be a new supply and demand. So the demand will come up again.
Michael Levie 3:08
The supply will reestablish itself, but there will be a shift and it will take time so this is not a switch off like we have seen, basically in just weeks. The switch on will take much more time. But I predict that there will be a time that everything is close to back to normal. Because, yeah, we have an eagerness to travel. We have an eagerness to travel around the world. And conquer, so that will come back, I believe.
David Keen 3:52
But you really believe that the time this time will will be similar to events that have happened in the last 20 years from 911 through to the tsunami to financial crisis,
Michael Levie 4:07
it will be much bigger, David, I think that—you know—we will see that because of the layoffs because of the cuts everybody has to go through, that powering back up and generating cash again to be able to expand. It is gonna take, definitely, you know, a window of a year, 18 months, two years for us to see somewhat normality I, again. I think that time for recovery is going to be longer because the structural impact economically is so deep that the government aid that is coming to companies and individuals is relatively in percentage small and comes delayed, and it will have an impact that the banking system will grab for insecurities, and that will cripple many, and unfortunately will force them to close. And then to reestablish, sort of, a pattern will take much longer in my estimation.
David Keen 5:28
You talked about supply and demand. That’s obviously critical because the supply, even with closures, the supply is going to be huge and the demand is initially going to be significantly, massively less, What is that going to impact on brand? How much is that going to impact on brand? And what the citizenM have to do, what other brands have to do in order to pivot, or change or evolve—in order to make themselves even more desirable in, let’s say, the new order.
Michael Levie 6:03
I think that true brands—so I’m not talking about a name and a logo, but true brands that people have a relationship with, people have an affection to, people are intertwined with—those true brands will be able to capture their audiences and continue the conversation.
David Keen 6:30
Re-
Michael Levie 6:31
Sorry?
David Keen 6:32
Recapture?
Michael Levie 6:34
No, continue their relationship. So I think that the logos and names that were recognisable for people, but did not have necessarily a strong brand, where people had a relationship with the brand but rather, it could have been the frequent-stay program, or it could be another reason that they were associated with the brand. They will have a tougher time, because I think that the connect to the product was not necessarily there and it was an artificial fix in order to be close to the brand. And I feel that in our hospitality industry people for years to come are going to be careful with their spend. And this depth of economic hurt is going to be felt way longer. So people are going to be smart with their money. People are going to be really careful with what they’re choosing. And I think they are going to be way closer to their needs, rather than be triggered by a frequent-stay program, or anything else that might give them a benefit that for them is really unreal at this point.
Catherine Monthienvichienchai 8:03
Hi Michael. So given the point you just made about the importance of brand going forward and after this process is over, what do you think that means for the OTAs.
Michael Levie 8:13
Well I think OTAs themselves, obviously, know brands. But OTA is a function in our booking patterns. So, they are another channel, and they are an extremely efficient channel. So they are great consolidators. They provide a lot of overview and information. They have a booking ease. And they have captured their own place in, let’s say, the patterns of booking. And so I think that that will not change because people still want to have the ease of using overviews of consolidators in order to make their choices and utilise them because of ease of use. But amongst them, there are stronger brands and weaker brands. And I think that those that have more strength, and more depth, and more cash capacity at this point will get a major advantage to recapture the booking pace quicker and more efficiently than others.
David Keen 9:31
So, in your opinion, just to finalise the OTA question, the brand of the OTA will also be that element of trust, if the consumer is actually not really knowledgeable about—and will overcome the need for the consumer to to choose a brand that they have an emotional relationship—when they’re booking through the OTA.
Michael Levie 10:02
Yeah, I think that the emotional relationship with an OTA is not necessarily there. I feel that they are a shackle in the chain, and a very efficient shackle. And some are a way easier and less friction shackle than some others. And people are in need of that overview, that consolidation, and are getting more and more savvy to work with a computer. So the one that is the easiest to smooth list that has no that has no friction, but a lot of stickiness, yeah those are the ones that are gonna win. And the ones that are complicated with friction and complication are the ones that are gonna lose.
David Keen 10:57
Will you consider elements such as humility and trust within your own brand or other brands that you’re connected with or interacting with as a function of what’s happening today.
Michael Levie 11:13
I think, in principle, the answer is yes. We would like to be extremely compassionate and empathetic in this horrible time. I do want to caution though that we need to be realistic as well. So, we have taken an oath as leaders of companies to take care of our employees, and safety of those employees comes first. And that comes also with the sacrifice of not being able to take certain business, although from a human perspective we would like to do so. So there is always choices that need to be made. So I think that, if you answered that from your heart, it is very easy. If you try to combine ration and your heart and your commitments that you provided in advance of this crisis, then, unfortunately, you see that you’re more limited
Catherine Monthienvichienchai 12:16
And Michael, within your own brand—within citizenM. And obviously citizenM was a forerunner and very much a leader in terms of social spaces, communal spaces, socialisation, small-group model with a bigger public-space model. We went through this huge movement towards communal and co-everything and now we’ve suddenly been thrown into isolation and distancing and privacy. How do we come back to this idea of socialisation event hotel spaces that has really kind of taken our industry by storm over the last few years?
Michael Levie 12:49
Yeah, I think that obviously today it has a tremendous impact because the social distancing is something that we all understand that is a necessity. We’re humans though, and humans still—our fuel is love and emotion and laughter and sharing—so, that will not go away. So, hopefully, when the depth of the rest of Corona and the pandemic sort of ebbs away, I think that will re-establish itself, but there will be a change. So when we think of co-working, where everybody was sort of sitting on top of each other. Well, maybe people are going to take a different look at that. When you talk about certain habits and customs that we had learned or come accustomed to are going to change.
Michael Levie 13:50
We do a lot from our homes right now by video-conferencing. Maybe we have become accustomed to be in each other’s living rooms and to be a little bit closer. So there will be a change, but I think that human nature is that we want to be together. We want to toast to life. We want to share. And that fundamental is not going to change, so there will be a return. But I think that it is a very good question because there is not a going back to normal. There is going to be a new normal that has impacts of this social impact, and maybe a little bit of the care. But like I said earlier, we have very short memories, and soon we will be hugging, kissing and close to each other again—like there’s no tomorrow. Maybe we wash our hands once or twice more than that, we did before, but also that will pass.
David Keen 14:54
I’m just wired about I’m gonna miss the sanitising liquid. I love that stuff.
[Laughter]
Michael Levie 15:00
You’re not supposed to drink it, David.
[Laughter]
Catherine Monthienvichienchai 15:05
What about—Michael, what about technology? I mean, citizenM, obviously again, has also led the way in terms of the way you utilise technology within your hotels—whether guest-facing or behind the scenes. How important will technology be going forward in terms of automation, in terms of avoiding contact on all these unnecessary contact? Whether it’s contactless entry. Whether it’s, you know, easy check-in procedures where guests don’t have to interact with anyone—anyone within the hotel. How will that suddenly take on an even greater importance in the future?
David Keen 15:35
And just a cap on that: Is analog once and for all—as a function of COVID-19—is analog once and for all gone forever?
Michael Levie 15:50
I think that technology is always sort of lumped together, and I always try to segregate it a little bit in the hospitality world in three areas:
There’s our world of commerce, where electronic distribution plays a major role for us, and we touched a little upon that. The automatic electronic booking will be there forever, and everything that was manual or by a voice will slowly-but-surely go to the background.
When you talk about hotel systems, I think that now more than ever, people start to realise that if your systems don’t have an appropriate architecture, There is an inability to have a better knowledge of your data and to work your data. And why do we need that? because we need to know who our customer is.
And that brings me to everything that is customer-facing and the interface of stewards to guests. So for us, when we talk about technology, opening a door or a feature is very important that it can become more important for a period of time, or it can stay to be of importance when we want to be contactless or pay contactless. There’s definitely a shift.
Michael Levie 17:18
But I think that we need to be realistic that most of the time, the challenge is that we cannot use certain guest-facing—or features—because we’re unaware enough of who our customer is and that we have the right person in front of us. And companies are going to continue to struggle with that. So, the chunk in the middle—the systems, and the ability to have your systems communicate with each other—is where the problem sits. And our industry, especially the hotels, use the property management system, the PMS, as their central connecting hub. It was never intended to be as such. And these are room-centric systems, whereas everything dealing with the customer, of course, is individual customer-centric. And we need to have a different architecture, where our middleware is allowed to connect all the data together and be able to provide us with a clean customer profile that can be used in the guest-facing and the, let’s say, the application of digital that we’re looking for. So the industry is crippled with that, and you will see a shift do that because there’s a new need.
David Keen 18:47
And the last question because otherwise. In the last couple of weeks and in the, in the weeks, going forward. Are you reconsidering evolution, not so much evolution but tweaking perception of the citizenM brand, while you have time to think about it and look at it—and/or as a function of the situation.
Michael Levie 19:15
Well, David, I think that if we’re in a crisis that we’re in, and the world is definitely going to look different and and evolve different forward, it would be silly not to take a hard look at one’s brand at the services it offers and what changes, potentially are needed or what opportunities present themselves to do things differently. But a brand—and we started with it and I think it’s maybe an appropriate way to sort of wrap up—a brand is an emotional connection between people. And we cannot walk away from the core of what we have created with citizenM. And that is genuine, honest service for a frequent business traveller, that has a particular need in a niche. And I think that that’s where we will stay, but we will evolve and take a look at how the needs have changed, and adapt where, where it’s necessary. But our commitment to what we started out is being affordable luxury for the frequent traveler—that is absolutely where we’re going to stay.
David Keen 20:30
Fantastic. Michael Levie, chief operating officer of citizenM, thank you so much for being our first guest on The Future of Travel podcast. Thank you, Michael.
Michael Levie 20:42
Thank you, David.
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