Winners and losers
Every business in the world is now operating in a high-risk environment and hospitality is firmly on the front-line as the economy struggles to get back on its feet. Usually, there are winners and losers coming out of any crisis. Sadly, with COVID-19, there are countless losers and hardly any winners.
Among those at the top of the ‘losers’ list is the hospitality sector, which, without question, is one of the sectors adversely affected by the COVID-19 pandemic. Floored by social distancing and lockdown measures, the industry has been battered into submission, as it faces wave after wave of closures, since the virus’s initial assault early last year.
The hotel industry reported all-time lows in occupancy and RevPAR according to year-end 2020 data just released. Joining these two metrics was the abysmally low level to which ADR sank, and, year-over-year declines were the worst on record across the aforementioned three key performance metrics. Considering all this, once the ‘profit and loss’ results are soon released, it will come as no surprise that the industry is likely to show near zero profit for the year 2020.
Looking at it from another angle, at no time in the history of the hotel industry were there so many unsold rooms last year. In the US alone the number of vacant rooms surpassed one billon.
As the world stands in near limbo, many airlines, many hotels, many tour operators and many ‘attractions’ will not make it. Even businesses that have nothing to do with the hospitality industry, except when their executives previously traveled to carry out their job-related assignments will no longer do that for some time. Consequently, these business trips and associated hotel stay expenses that prior to COVID-19, contributed enormous revenues to the global travel and hotel industry has literally dried up, diminishing financial performance for many years to come.
Then, there are the leisure travelers. Within this segment are those in the middle and lower income brackets, who, in all probability are experiencing severe financial distress because of the pandemic. As they struggle to regain their lives whilst everything around them is in near-shut down mode, traveling would be far from their minds - let alone having the means to do so. Even then, those that do travel on leisure will spend very little for the next year or so.
The hospitality sector is forecasted to have a smaller footprint in the future. One of the headaches that the industry suffered pre-pandemic was the severe staff shortage and talent dearth. Post-COVID-19, this pressure is likely to ease, given higher staff availability, leading to businesses becoming healthier and better positioned for long-term sustainability.
What COVID-19 did was to remind those in the hotel business of a fundamental business mantra: Listen to the customer. Whatever the situation be, the ultimate aim of a good hotel and its staff is to make the guest feel comfortable. It’s all about focusing on the new and not so new basics – such as adhering to health and safety standards, with cleanliness no longer hidden and implied but heavily talked about and evident nearly everywhere.
Shafeek Wahab – Editor, Hospitality Sri Lanka, Consultant, Trainer, Ex-Hotelier
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