How COVID-19 has impacted the hospitality industry, and how it will recover
March 26, 2020
The spread of coronavirus and the disease it causes, COVID-19, has impacted practically every industry in almost every corner of the world. Because travel restrictions were among the first measures taken in the fight against the spread of the virus, and subsequent population lockdowns—the World Health Organization estimates that one in five people around the globe are currently under lockdown—have all but put the world on pause, it can be argued that no industry has been damaged more severely than hospitality and tourism.
“As of March 25, the United States Travel Association claimed that 5.9 million jobs will be lost before May of this year,” said Nancy McGehee, department head of the Howard Feiertag Department of Hospitality and Tourism Management. “Revenue per available room, or RevPar, a common baseline statistic for the hotel industry, will decline by 37–60% in 2020, according to various sources.”
According to McGehee, no facet of the business has been free from consequences. “The meetings and event industry is absolutely reeling from cancellations, with meetingsnet.com estimating $233 billion in losses by summer.”
The industry has weathered tough times before—the aftermath of 9/11 and the Great Recession are two recent examples—although nothing of the magnitude it is currently facing. Companies were able to bounce back from past difficulties by capitalizing upon customer loyalty and benefitting from pent up demand. “After we get through this, we will be a nation, or a world, with cabin fever,” said McGehee. “People will need to get out and interact with people, see new vistas, enjoy new experiences.”
While the resilience and recovery plans that were developed in response to previous crises will no doubt assist in future recovery efforts, McGehee warns that it will not happen quickly.
“Many economists say it took three years to fully recover from 2002-04 SARS outbreak,” she said. “This will take much longer.”
Lobbying groups representing the hospitality and tourism industry recently met with President Trump and White House officials to discuss the economic impact of the pandemic and ways to assist the ailing industry. Reports show industry officials seeking $150 billion in aid.
“The industry does seem to be banding together to find ways to speak as one voice to get support quickly to help those most in need of a safety net,” explained McGehee. “They are asking for short term loan and financing options—particularly for small businesses—quick processing of unemployment benefits for their employees, an extension of tax filing deadlines, and clear delineations of essential businesses that need to remain open during times of national emergency.”
Although no one knows what the world will look like once the pandemic abates, McGehee has an idea of what the industry will look like. “The industry will undoubtedly recover, but it will be forever changed,” she said. “Those in the industry who get through this will find ways to be more sustainable, will use technology to become more efficient, use data to forecast and prepare for other global phenomena and pivot their skill set to disaster recovery and resiliency.”
Among the innovations and advancements McGehee hopes to see are businesses utilizing closer-to-home supply chains, virtual event capabilities, upgrades to travel applications to help identify epidemics sooner, and the integration of more analysts to track data globally.
Until then, however, the industry will need to remain resilient.
“This is a time for strong and steady leaders in our industry,” McGehee added. “They need to be realistic but encouraging that we will get through this. Above all, they need to be supportive of their employees and colleagues, as these are unprecedented times for all of us.”
- Written by Jeremy Norman