Almost 365 days ago to the day last year, America first realized what life looked like without everything that we’d always taken for granted.
California’s sweeping stay-at-home edict on March 19th started it all at first, which quickly went viral nationwide. By the beginning of April, all but a few red-hot, Southern Republican states had locked down entirely, shutting restaurants, bars, theaters, stadiums, night clubs, arts and music venues, and pretty much everything else that most Americans associated with life and having fun outside of work virtually overnight.
A full year later, America’s natural abilities to adapt, survive, and find opportunities in crisis are everywhere to be found.
While perhaps never going full stop reverse back to normal, most businesses have pulled through (albeit brutally), financial markets haven’t tanked, the U.S. housing market is on fire, innovative new businesses are booming, and tens of millions of now remote workers are finding an unexpectedly pleasant new groove clocking in from home.
The outlook for hospitality and entertainment isn’t quite as sanguine, however, notwithstanding Tom Brady’s 7th Super Bowl victory in Tampa last month or Novak Djokovic’s 18th Grand Slam title at the Australian Open, both of which went off without catalyzing a viral super spreader event.
Sports, unlike hospitality and entertainment, still deliver on their essential promise to consumers virtually since most of us are already used to watching matches on television in the first place. Taylor Swift and John Legend concerts are a different story altogether. James Beard-winning cuisine and 98-point wine flights don’t translate particularly well into the virtual economy either.
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All of which means that Americans’ pent-up demand for travel, room service, martini bars, dinner parties, and flip flop summer concerts is at a critical mass, all-time high right now, which should be the best new for the hospitality and entertainment industries all year.
Yet, as it turns out, there’s no practically easy switch to light back up travel and entertainment in a post-pandemic world.
Hundreds of cities and local governments in all but a few states that have recently rescinded blanket economic restrictions, such as Texas, Mississippi, and Iowa, still have heavy-handed limitations in place for high-concentration, low-ventilation businesses, like nightclubs, catering halls, and concert arenas. And despite the introduction of multiple coronavirus vaccines, consumer confidence won’t be earned back overnight, particularly among the tens of millions of higher-risk Baby Boomers currently holding 53% of America’s discretionary spending on the sidelines.
So what does the future of hospitality and entertainment hold in 2021? I asked five leading experts across hotels, restaurants, bars, live music, and short-term rentals for their predictions on what comes next in America’s first post-pandemic year.
Overall, the good news is that any business left standing now that the pandemic has swept through has survived the worst of it. Almost everyone I spoke with believed that the only thing holding hospitality and entertainment back now is time.
“The new normal for hospitality isn’t going to look drastically different than it did in 2019 before the pandemic started,” predicts Brian De Lowe, co-founder and President of LA-based Proper Hotels. “People still want what they want and in many respects they want it even more now. That said, the new normal likely isn’t going to return until there is a widely distributed vaccine, and even then, it’s going to take longer for demand to fully recover. Depending on the market, most of our projections assume it’s going to take until at least 2023 to get back to the same levels of revenue and profitability that our industry saw in 2019. That’s still a pretty long way to go.”
Leisure and recreational travel, which has remained strong throughout the pandemic, will lead the road ahead, adds De Lowe, mostly due to pent-up demand.
“Americans’ desire to travel has only intensified as the pandemic has dragged on, and we’re all now looking to make up for a lost year,” De Lowe says. “But travel confidence in 2021 is all going to be tied to safety. So long as the vaccines are safe and effective and cases start to go down by Q1/Q2 2021 that likely means a major pick up in travel by late spring. By summer, I’m still confident that we’ll see a significant return in travel and hospitality demand back towards historic levels.”
Business travel, however, has a longer, more painful road back, says De Lowe.
“Group and corporate travel will likely be last to fully recover,” he predicts. “Conventions and sales meetings will take on a radically new look and we still don’t know what that is yet. Hotels, however, will in some ways benefit from the decentralization of the corporate workforce since there will likely be significantly more travel for work-from-home employees who no longer live near the main office but need to come back from places like Bozeman, Montana or Reno, Nevada to HQ in New York or Seattle a few times a year to be reminded what company culture is all about.”
For legacy hotel brands as well as the hundreds of more boutique, “alt-hospitality” start-ups that proliferated after the Great Recession—along with the restaurants, bars, event companies, and tour operators who locally support them—that means 2021 has all the trappings of a turnaround year. But that all depends on where you’re located, cautions De Lowe.
“The biggest hospitality winners in 2020 were places that benefitted from the massive increase in demand for drive-to locations with space to run,” De Lowe says. “And that’s not going to slow down in 2021. That includes short-term rentals and hotels in locations like Lake Tahoe, Charleston, desert towns, and places close to national parks. A ton of travelers who didn’t feel safe leaving home at all in 2020 are finally going to dip their toe back into travel in 2021 by taking a drive-to-vacation that they saw on their Instagram feed throughout COVID and that’s going to unleash a wave of pent-up demand for places that offer great design, incredible food and bars, and a great overall vibe that motivates people to hit the road again. Humans need community. They need stimulation. They want to eat drink and be merry again.”
COVID’s new hospitality normal also will mean major adjustments to expectations, says Montage Hotels’ Founder and CEO Alan Fuerstman, most of which the industry has internalized already. For consumers, however, that adjustment period likely will take more time to acclimate to.
“The vaccines will aid in the recovery of the hospitality industry by bringing back confidence for travelers,” says Fuerstman. “But there’s also something more emotional that has to happen. Twenty years after 9/11, we’re still taking off our shoes at the airport and locking the cockpit door. COVID’s going to have the same long-term effects on hospitality that people are going to have to get used to which could be around for a while, like masking and social distancing.”
Hyper-hygiene and virus testing protocols likely aren’t going anywhere any time soon either, according to Fuerstman.
“We’ve learned so much throughout this pandemic. Focus on sanitation protocols and creating an environment where guests can feel safe will obviously continue to be top of mind for us. More widespread testing will also play a tremendous role in improving the overall confidence of travelers. It will take time to return to full occupancy. But times of crisis also bring new innovations, and I’m sure that we’ll see new technologies introduced and other ideas come to fruition that quickly will become standard operating procedures.”
That shift away from staff and bodies to more contactless, efficient “prop tech” (property technology) already was well under way before the pandemic. Now, however, those digital problem-solvers look like they’re no longer an optional luxury.
“A lot of things that were early trends without a ton of first adopters before will continue to pick up steam in 2021 because of the pandemic,” says Proper’s De Lowe. “Improvements in hotel technology platforms that allow companies to improve guest engagement and recognition and operational performance will become standard because we now don’t have any other option. In addition, contactless technology made mainstream during COVID—like automated phone check-ins, QR codes, no menus, and no food and beverage checks that require contact—will also remain and be improved. This new digital luxury hotel experience will be an essential part of what brings travel back.”
When it comes to a similar quick-fire revival of the live entertainment business, industry veterans aren’t quite as optimistic.
“I don’t think there’s a new normal yet when it comes to live entertainment since the whole situation is still constantly changing,” says Ken Levitan, a four-decade music industry legend and founder of Vector Management, which represents the likes of Kid Rock, Willie Nelson, and Kings Of Leon.
“Anyone associated with live music was crushed when COVID hit,” Levitan continues. “Artists, musicians, roadies, rehearsal facilities, agents, business managers, concert promoters, the venues themselves—they all took massive hits. Billions of dollars were lost. Unemployment is still high across the industry. Then there’s the older artists who may only be looking at a few years of touring left along with their core fan base who also may be higher risk. How do you get all of these people back?”
Levitan, like almost everyone else in travel, hospitality, and entertainment, is pegging his bet on the vaccine rollout, which while promising widespread herd immunity by July 4th according to the Biden Administration, remains riddled with distribution uncertainties along with confusing CDC advice on what activities are safe and permissible even once people are vaccinated.
“We still have to see how many people take the vaccine, how effectively it’s distributed, and how fast concert promoters, venues, and artists feel comfortable playing live again even once that happens based on public health guidance,” says Levitan. “That slow return to normal may not be this year, but we will get there. Amphitheaters will have a much easier time getting back to business first since they’re outside and naturally socially-distanced. Packed indoor arenas and stadium shows are going be a lot tougher. But people are so hungry to hear live music again. So if we get close to delivering an environment and experience that people feel safe with, they will come back.”
Neck and neck with experiencing live music again, most Americans also just want to grab dinner and a martini without feeling like they’re walking into a Level-3 virology lab.
Which makes restaurants and bars the next first place Americans want a return to normalcy again. But that might not be roaring back in 2021 either, says celebrity chef Jonathan Waxman, who’s widely credited with inventing “California cuisine” and now owns and operates more than two dozen restaurants nationwide.
“I’d have to purchase a Baccarat crystal ball to have insight on what comes next for restaurants at this point,” says Waxman. “Many cities saw another dark winter through early 2021 which trickled down to every restaurant and bar. And right now, we’re all still in a hibernation mode in so many respects since the restrictions and rules vary state by state and city by city and still keep changing. Ultimately, this ‘new normal’ that everyone keeps talking about when it comes to restaurants has yet to be written. But if the vaccines arrive this year the way we hope they do, then I’m confident we finally will start to see some upswing.”
That’s a strong vote of confidence for food’s return from an industry legend. But it also will come with a heavy dose of reinvention, Waxman adds.
“If we’re going to bring people back the way it used to be, we as restauranteurs need to remember our core values. That means passion, hospitality, creativity, being unexpected, and attention to details need to be front and center. There also needs to be a coordinated, central COVID message from restaurants nationwide that we understand the problems and peoples’ concerns. We need to communicate that with ingenuity, inventiveness, resourcing, and sheer hard work and dedication to the craft that we love, we can allay the fears that our customers are feeling and solidify their collective confidence. As an industry, we’ve all suffered. The most important thing now is to form an indelible bond with each other, and to help form a better restaurant future that’s sustainable for everyone.”
That sustainability in the short-term at least also will require some canny adaptation.
“Restaurants have always had to spin on a dime and recreate our business models to succeed. But this time around it’s all for different reasons,” says Waxman. “Food trucks will play a big part of the future in my opinion. They will help the industry by providing jobs, infrastructure, and a way for suppliers to augment their resource outlets. I think outdoor dining will also see a huge surge. This advent of outdoor café culture in America is a really amazing pandemic revolution, like the cafes in Rome, Paris and Barcelona that are always packed at any time of the year. These hopefully will help to form a new permanent part of our business model which opens up entirely new opportunities.”
Those opportunities, says Waxman, also could catalyze new restaurant concepts and innovations which, despite the ravages of the pandemic, could give the industry better footing to weather the next global blindside.
“Everyone in the restaurant industry already knew what survival meant before the pandemic,” says Waxman. “Now we just know it better. A ton of people naively thought that this all would pass quickly or at the worst, last a few months. But like in 1918, we’re seeing a virtual repeat. The restaurant industry is the second largest employer in the U.S., and as an industry is so important to our national economic success. To survive, all of us need to keep coming up with great ideas to demonstrate a future that’s viable. I love my industry. It’s my life. I know that amazing things will come out of this. We just need to practice some serious patience right now until that happens.”
Not all hospitality businesses have Waxman’s runway for patience, however, particularly across the short-term rental space which thanks to billions in recent VC funding has been disrupting traditional hotel and travel paradigms long before COVID.
“It’s impossible to predict when things will become more ‘normal’ again,” says Francis Davidson, founder of hospitality start-up up Sonder, which repositions multi-family apartment buildings into hotel-like destinations through technology without the typical overhead of a traditional hotel. “The pandemic has sped up so many aspects of transformative travel, including virtual experiences, brands that deliver contactless touch points, and those catering to the ‘digital nomad’ lifestyle who stay long-term and work remotely from different locations.”
Ground-breaking business and tech models notwithstanding, travelers hitting the road in 2021 aren’t likely to gamble on untested brands without a strong dose of trust.
“Consumers are going to remain cautious about their travel this year,” says Davidson. “Which means that all hospitality brands including Sonder need to keep focusing on creating the safest possible environment and providing complete transparency. We need to be flexible, understand why people cancel reservations if they’re not comfortable, and continue to prioritize contactless amenities, like digital check-in, and features such as high-speed internet and food delivery partnerships that create a strong set-up for remote work and longer-term stays. Tech-enabled hospitality and particularly contactless solutions will become an even more essential part of travel now and since the pandemic we’ve doubled down on this. Brands that haven’t invested in this future, or believe it’s only here for the short-term, will likely fall behind.”
Sonder’s doubling down on technology partnerships, at least for now, seems like a solid bet.
“It’s more crucial now than ever for hospitality brands to be able to quickly respond to travelers’ needs,” says Davidson. “So for example, with road trips becoming the travel choice for many Americans in 2021, we recently launched a partnership with SpotHero, which allows our guests to reserve and pay for parking spaces in advance of their stay through the Sonder app, helping to further limit face-to-face interactions. Self-contained spaces that have amenities like full kitchens, in-unit laundry, and other essential amenities will also continue to increase in demand.”
For the time being, however, it’s a travelers’ market as hotels, restaurants, and event venues look to rebound in 2021. Better take advantage of it while you can.