Now that the world has experienced several months of isolation, restrictions, and all kinds of inconveniences caused by the global pandemic, there seems to be hope ahead as the economy starts to slowly ease back into action. As travel restrictions start to lift domestically, you can guarantee that there is a hungry market for travel after long months trapped indoors.

What is Revenge Spending?

So, revenge spending - what is it? Well it's a term that was used to describe an outbreak of high consumer demand in luxury goods in China during 1976. Prior to this, the country had been experiencing the cultural revolution, which led the country to poverty. This aspect plays such an important part within the Chinese economy as this sector makes about 35% of demand within the industry which then makes up 80% of its growth according to GAM investments.

When something has such a high demand, in this case for China, it was the desire for luxury goods, people are more likely to overspend in such scenarios as a means of making up for the time when they were deprived of these goods. Just recently China has started to reopen their stores, sources from Asian Review have reported that April 11 Hermes had its most spending in one day, it being 2.7 million. That's pretty much the consensus of revenge spending. But you may ask, how does this apply within the hotel industry?

How Will Revenge Spending Come into Play Now?

Just think, where have we all been these last few months? At home, in bed, eating. It's the same old routine every day. People who have planned trips for the year have been forced to cancel, and families have been separated across the globe. Overall you can see why travel would be in such high demand, as people are desperate to get out.

Have we seen any signs of revenge spending yet? Over the past two months, China has already been reported to have a 20% increase in demand according to Hospitality net. It has been predicted that there will be pent up demand and increases in prices for travel as restrictions start to ease. Statistics from Traveldailymedia show that once Covid is under wraps, 60% will start to travel,with China playing the biggest part within all hospitality sectors. This suggests that hotel sectors across the globe can start looking forward to growth in consumer numbers, which will lead the hotel industry along the road to recovery.

What Are Hotels Doing to Market During this Time?

What differentiates one hotel from another can often come down to one thing - marketing. How will hotels get people to spend money? What elements are consumers most likely to find intriguing? and what is convenient and accessible to people during this time?  As we all know, the world has spent more time online this year than ever before, with 4.57 billion internet users according to Statista, which is 59% of our global population. This is why more brands have been investing in online marketing as there is more engagement to be found within online usage.

Cvent explains how hotels and a variety of other tourist destinations are offering free virtual online wellness retreats. Not only is this a great way to market, but also an effective way to promote and attract new consumers. These retreats offer all sorts of elements ranging from fitness, health, and lifestyle, all things that a lot of people have been restricted to during these times, which is why this aspect is so attractive to consumers.

Start with the Local Market

With travel bans still in place, and international air travel only starting to open up in these initial phases - mainly for essential travel.  At the American Chamber of Commerce's recent online Tourism Forum, Singapore based Jesper Palmqvist from STR believed that real international travel wouldn't start to benefit hotels in the region until November 2020 at the earliest. Given that, for in order to generate immediate revenue flow, flow, creatively marketing to the local market is key and this is where elements that drive 'revenge spending' should be in the back of marketers' minds.

Consumers, right now are experiencing high levels of uncertainty, and want assurance. Assurance for their health and well-being, which is why these terms are so saturated across media, not just for hotels in particular, but across all hospitality sectors. Perhaps the 'New Normal' term has been overused.  If we look at revenge spending, at the heart of it, it's about people wanting to get what they have been missing out on.  People have been missing out on the old normal - eating, drinking a glass of wine with friends, spending time in nature after having been locked inside for months.  While the precepts of the 'New Normal' are important to maintain for people's safety, letting people feel a bit of the 'old normal' could be worth its weight in coin, and people may be willing to revenge spend to get it.