What It’s Like Building a Hospitality Startup in a PandemicBy Nico Barawid | Thu, 04/29/2021 - 09:04
Navigating March 2020 was one of the hardest things I’ve had to do as a co-founder. The ambiguity and anxiety of the pandemic was tough for Casai, which offers boutique apartments in Mexico City.
Our team had been monitoring the pandemic for months, unable to predict the ramifications of border closings and flight cancelations. Prior, we had relied heavily on channels like Airbnb and online travel agencies; our typical occupancy rates were 90-100 percent. In March, we began to see cancelations outstrip confirmations.
My first order of business as CEO: pour myself a scotch. I texted a picture of the empty bottle to my board as a halfhearted joke — we knew our work was cut out for us.
We desperately needed to salvage reservations. We gathered data on why people were canceling — were they nervous about sanitation? Were they fearful of flying? Was business travel affected more than leisure? What type of traveler was still coming to town? Through these questions, we knew we had to grow three teams: Data Science, Marketing and Product.
Data was integral to our strategy, because we needed to know who was traveling, where they were coming from and how they heard about us. We pulled data on road traffic in and out of Mexico City (we saw a 40 percent drop in the number of cars), airline data to determine which airlines were flying, and where they were departing to and arriving from.
The loss was noteworthy; June saw an 85 percent drop in flight arrivals globally. We used external signals and internal data to experiment quickly, which gave us a competitive advantage.
After collecting data, we needed to figure out how to increase our customer base. We reviewed what media our potential guests were consuming, including Instagram, TikTok, newspapers, and other mediums, and noticed that our customer base had shifted.
Before the pandemic, we had short-stay travelers both on business and leisure trips from cities like New York and Los Angeles. Our typical customer persona was a young, weekend traveler from California who wanted to know what the hottest vegan restaurant was.
Now, we identified three new profiles: our customers were either domestic business travelers, long-stay internationals, or children quarantining from their parents. They were older, local and more interested in grocery delivery.
Armed with this information, we hyper-targeted our new audiences. We built a new Instagram account from scratch (we were previously in stealth mode), switched our content from English to Spanish, and within a month and a half, assembled a full-blown marketing and brand function.
We had a few factors working against us. Most notably, we had much less traffic through our direct sales channels initially. Online travel agencies were unreliable during the crisis; Airbnb stopped operating for roughly a month in Mexico City. To counter this, we built out the B2B muscle of our operation and a direct sales channel; by May 2020, our sales team’s efforts meant 91 percent of our bookings came from channels other than online travel agencies. We also leveraged our team’s own network, including word-of-mouth marketing, to get guests onboard. Because of this strategy’s success, our sales are now roughly split between OTAs like Booking.com and Airbnb and direct sales from Casai.com, and we aim to keep this up post-pandemic.
Most importantly, we contacted guests to get valuable input to provide our customers with what they really wanted and needed.
After the pandemic hit, we witnessed a shift in what people expected of hospitality, and we needed to pivot quickly to provide the right amenities.
With remote work, the average length of stay at our facilities increased from four days to 30 days. In response, we provided rentals for fitness supplies and work-from-home setups, like standing desks and monitors. We also deployed technology for touchless access to units with our concierge app and smart home technology, and we overhauled our app to highlight safety, security and alternate concierge services in-line with life in quarantine.
Building Culture in Crisis
While we were changing the business aspects of our company, team motivation was a crucial part of how we stayed laser-focused during recovery — especially when there was little margin for error as a new startup.
I intended to be brutally honest with everyone. I was open about what we knew and what we didn’t. Overcommunication was key but challenging while adjusting to remote work. Our culture ultimately strengthened from the vulnerabilities that arose from radical transparency. In my experience, leaders tend to pretend like they have all the answers, but expressing my uncertainty allowed everyone to feel closer to the decision-making process.
Hospitality will never be the same. People will extend their travels, and accommodation infrastructure will need to align with remote work. As we move into a new reality of “Travel as Living,” we need to adapt and listen to our guests more than ever. We’ve since opened our spaces to more than just accommodations — we've booked photoshoots and television shows and will keep changing to meet our customers’ needs.
While last March was unpredictable and intimidating, we took a hard look at our company and value propositions. We’re now well-positioned to scale in a capital-efficient way as vaccines spur a comeback for travel. The pandemic has taught me many things, especially how to be open to new ways of building our business. You never know when you’ll need to shift perspective.