Business Report: Hospitality sector during Covid 19 pandemic period

 Abstract

This business report briefly discusses the topic "Global hospitality industry during the Covid 19 pandemic period". The report mainly focuses on how Covid 19 pandemic impacted the industry, three significant challenges faced by the companies during this period and activities and actions the management needs to undertake to manage these challenges. In addition, after graduation, I need to express my opinion on working in the hospitality industry and self-reflection on the research findings.   

Introduction

Covid 19 pandemic negatively impacted almost whole sectors of the global economy (UNWTO, 2020). But the consequences of the Covid 19 pandemic spread is not equal in all industry; the impact is more visible in some sectors like the hospitality industry, tourism industry and other supporting industries. Due to this pandemic, the industrial growth, revenue and stock price decreased in the first quarter of the official confirmation (23rd Jan 2020) of Covid 19 spread into the global market.

Coronavirus spread created so many unexpected challenges and risks in the global hospitality sector due to lockdowns, social distancing, travel restrictions and other restrictions imposed by the various governments to control the community. Due to the new challenges like low occupancy rate, cancellation of advanced bookings, insecurity and lack of safety and health measures for employees and customers, many hospitality companies closed their business in the first quarter of the year 2020. Even after the complete lockdown in many countries, the business operated with so many restrictions like time restrictions, social distancing, wearing a mask, using sanitiser and other safety measures also resulted in decreasing demand for the hospitality services in the global market (Bartik, 2020). Companies operating in the hospitality sector must adopt new strategies and plans to meet the changing environment. When framing new plans and strategies, companies need to ensure the quality of service by taking safety and health measures for both employees and customers and customer willingness to accept their services during this period (Gössling, 2020). Based on the study conducted by the hospitality marketing and management team, it is clear that the reopening of hotels and restaurants with restrictions will not increase the demand in the hospitality industry soon (Gursoy, 2020). If we consider only the restaurant industry, more than 50% of the customer were not willing to dine at the restaurant during the first wave of Covid 19. In the case of the hotel industry majority of the customer are not ready to travel and stay in any hotel other than their home (Chi, 2020). 

Based on the study conducted by Gursoy and his team members (2020), they identified the following fact about the hospitality industry during Covid 19 pandemic period:

25% of the restaurant customers are willing to sit in the restaurant only when the government in the country can provide testing tracing and isolation facility for the Covid 19 patients. 

And in case of 18% of the global customers in the hotel industry are willing to travel to any destination and stay in hotels only when the goals have only a few Covid 19 reported cases and other facilities (Testing and isolation)

14% of the customers in the restaurant industry and 17% of the customers in the hotel business are ready to access the services only when Covid 19 vaccine is available.

Around 63.33% of the customers in the restaurant business and 60% of the customers in the hotel business are unwilling to pay any additional charges imposed by the company due to Covid 19 safety precautions. 

Considering the recent literature on the hospitality industry during the Covid 19 situation, it is clear that it will take 2 or 3 years to recover the industry from this shock fully. But full closure of the operation is not an excellent solution for the hospitality industry until everyone in the world gets vaccinated Since the breakeven point of the industry is relatively high due to high operation costs. So, in this situation, hospitality management needs to adopt alternative approaches and strategies to boost the industry's demand. For this purpose, management needs to identify and analyse the recent challenges faced by the industry. The sector can find the solution to the significant problems or difficulties. 

Major 3 challenges faced by the industry during the Covid 19 pandemic period

• Issues related to the employees : Employees are the backbone of every business organisation because business success mainly depends on performance. So, every business organisation should reasonably treat them. In the case of the hospitality industry, they can't manage daily operations without sufficient staff in the organisation. Recent research on the pandemic situations advocates that the disease spread can affect the performance and mental health of employees in every industry. The main reason for low performance on the part of the employee in this period is due to occupation uncertainty and the threat of unemployment (De Witte et al., 2016). During the Covid 19 period, the hospitality business has faced the following challenges due to the employees: Competent authorities imposed some restrictions on the number of persons working in an organisation. Travel restrictions and insufficient safety measures also cause a shortage of employees. As per the government, the regulation company must arrange to test, tracing, sanitising facility and isolation facility for all its staff, which will increase the company's operating costs. The company also needs to spend some amount: in case of staff shortage and staff training to manage the situation due to Covid 19. Decreasing demand, government restrictions and high operating costs force the company to reduce the organisation's permanent staff. It will create some problems in future. 
• Issues related to consumer: As per the new marketing concept, the business organisation should focus on the customer's needs and wants. Then only they can stay in the market in the long run. In the case of all service firms, the primary source of revenue is from providing services to the customers. During the Covid 19 pandemic period, the main challenges faced by a hospitality business were lack of demand from the final customers and changed customer Behaviour. If a company can find a solution for these problems, it can face any other challenges from the external economy. Following are the main reasons why the hospitality industry's demand decreased in the pandemic period. Travel restrictions from the regional government and travel bans imposed by the countries. Other restrictions imposed by the government are social distancing, wearing masks, triple lockdowns etc. They were not feeling comfortable travelling and dining in the restaurant till the vaccination was available. So many customers' disposable income is reduced due to restrictions on employment and a reduction in permanent employees in other industries.  Most of them are not ready to pay extra charges to the company due to the measures taken to protect customers' health. Lack of trained employees and efficient staff to manage any emergency. Unavailability of testing, tracing and isolating facilities in a particular region. 
• Challenges related to the high cost of operations: Cost control and cost reduction are the two techniques in cost and management accounting to manage cost. If the company fails to manage its total cost, it can't survive in the industry in the long run. Generally, the hospitality industry has a high operating price. In the Covid 19 situation, it increased due to complete lockdown, restrictions on operations, and measures taken by the company to ensure customer and employees' safety. But in this situation, if the company increases its price of goods and services, it will negatively affect the total demand from the customer. 

How best to prepare the companies in the industry to overcome these challenges:

1. Managers in the hospitality industry must undertake the following activities and strategies to avoid, share and reduce the impact of the challenges mentioned earlier (IDeaS and RateGain, 2020). 
2. Apply mathematical and satirical techniques to forecast the industry's demand and adjust the price of goods and services based on the forecasted demand (also consider the cost of competitors).
3. Adopt the cost controlling and reduction techniques to manage operating costs like Taking food delivery to the hotel on the lease, temporary reduction in the permanent staff, etc. 
4. Collaborations with the national and regional governments to ensure the safety of the customers
5. Provide counselling, motivation and training to manage any emergencies
6. Partnership with technological and software companies to receive any help in this situation like online booking and payment of hotels, online food delivery from the restaurant
7. Review your plans and policies weekly
8.  Concentrate on local and domestic marketing of goods and services
9. Adopt flexible booking cancellation policies, special packages and incentives to improve the demand. 
10. Take all the safety measures to prevent Covid 19 community from spreads
11. Follow all the restrictions and rules imposed by competent authorities 

Conclusion

The hospitality industry is an emerging industry with high growth potential and provides many job opportunities. Considering the above point, working within the industry is better after graduation. But if we consider the present situation, we all know that Covid 19 pandemic affected the business very badly. So, as an official in the industry, you should possess skills in the following:

• Quick decision-making skill
• Efficient communication skill
• Leadership and team management skills
• Problem-solving and situation management skills

In my case, I am good at leadership skill and problem-solving skills. But I need quick decision-making skills and efficient communication skills. 

References

Bartik, A. W. B. M. C. Z. B. G. E. L. L. M. &. S. C. T., (2020) 'How are small business adjusting to Covid 19?', National Bureau of Economic Research.

Chi, D. G. &. C. G., (2020) 'Effects of COVID-19 pandemic on hospitality industry: a review of the current situations and a research agenda', Journal of Hospitality Marketing & Management, 29(5), pp. 527-529.

De Witte, H., Pienaar, J. & de Cuyper, N., (2016) 'Review of 30 years of longitudinal studies on the association between job insecurity and health and well-being: Is there causal evidence?', Australian Psychologist, Volume 51, pp. 18-31.

Gössling, S. S. D. &. H. C. M., (2020) 'Pandemics, tourism and global change: A rapid assessment of COVID-19', Journal of Sustainable Tourism, p. 1–20.

Gursoy, D. C. C. G. &. C. O. H., (2020) 'COVID-19 Study 2 Report: Restaurant and Hotel Industry: Restaurant and hotel customers' sentiment analysis', Washington State University: Carson College of Business.

IDeaS and RateGain, (2020) 'COVID-19 & The Hospitality Industry Worldwide', Volume 2, pp. 21-23.

UNWTO, (2020) UNWTO world tourism barometer, May.18(2).