Covid 19: What effect has it had in the Hospitality Industry?

Covid 19 pandemic has changed the hotel industry in Africa for good. In the short term, airlines are grounded, tour operators and travel agents are at home and hotels have closed or on a daily occupancy of less than 10%. This is not as serious as what is about to happen to the industry in future. Here is why.

For hotels to get back to business, regional and international travel has to start. We are optimistic that the situation in our destination (our country) and that of our source markets gets under control soon for us to be in business at least by mid Quarter 3. If these markets do not lift the travel restriction and approve travel into your destination, then the problem is far from over.  Another concern is, we do not expect that the travel restrictions will be lifted by the source markets all at once. Question is when will they start lifting the travel restrictions? What terms and conditions will they have in place for the travelers both outbound and inbound? and will our destination be ready for travel as well?

The other concern is who will travel? Companies have had to shut operations, or work from home. Businesses have been adversely affected. There are 2 things that will happen. One is that companies will have to recover financially and for that to happen, they will relook at their costs. Therefore, travel will be limited. What concerns me the most is that, companies have derived ways to ensure business continues even through the pandemic. They have found other means of transacting business other than having to travel. Therefore, the need to travel will be re-evaluated and this could see a massive reduction in business travel.

Will MICE business be affected? Lifting travel restrictions doesn’t mean the virus is extinct. It will mean that measures have been put in place to aid travel or/and the vaccine has been tested, approved and is readily available in the market. Organizations will avoid congregating people until they are sure that there is minimal chance of infecting or re-infecting their staff, clients or delegates. Corporates are using Zoom, Webex and other online meeting apps for meetings and this could be the trend moving forward.

Leisure travel will be the last to recover. With economic recession, leisure travel is affected. In this case, we have a recession and a pandemic. People will only travel on holiday, if they are certain that they are not putting their health and that of their families at risk. They will also need to recover financially in order to save for leisure, and ensure that the economy has stabilized before spending on leisure. The other thing that could change is the manner in which people travel for holidays. In the past, we have seen multigenerational FIT travel; where we have grandparents, parents and children doing holidays together. With the elderly being at a greater risk of mortality due to the Covid-19, their travel will be limited.

• Airlines will evaluate the profitability of their routes and this will see a number of flights grounded. This will greatly affect both business and leisure travel. Some of the not-so-busy routes are still critical to destinations whose hospitality industry relies on international travel since leisure will have a slower recovery span. It will be a challenge to travel to destinations who do not have heavy traffic because airlines will focus on those only when they stabilise in business
• A number of hotels will shut operations. Hotel chains will evaluate the profitability of each unit and will have to close those hotels that are not in business. Stand-alone properties who cannot recover will shut.
• Hotels under construction will not open as per schedule. Investors will rethink injection of funds into the projects at a time when the world is going through a recession. They will have to renegotiate terms with the financial institutions that are funding the project. As things stand today, it will be impossible to open a new hotel at least, until Q3 of 2021
• Employers will look at payroll and expenses and will need to assess their organization structure. In the past, we reduce the number of rank and file staff when business goes down. This time, the employers will have to look at the organization structure from the top. Positions will be merged or made redundant. They will look at expatriate positions and localize as many as possible.
• Remuneration packages for management will be evaluated. Over the past 6yrs, due to sudden growth in the industry and with a number of international brands coming to the market, salaries and wages went up and there has been a lot of poaching of talent, with the main bait being a handsome paycheck. This is about to change. Management will choose between a revised pay package or total loss of job….and with the situation as is, a lower paycheck will be a better deal.
• When will business be ‘back to normal’? There is no back to normal every again. The industry has revolutionized. We look at business tricking in from Q2 2021. But for travel around the world, there will be a new normal

Our HR experts will work with you to plan and implement workable HR solutions for this period

Contact us on: marketing@thehospitalityconsult.com