The hospitality industry is one of the economy’s leading sectors that offers customers services. The industry depends mainly on tourism and visitation, and the sudden outbreak of COVID-19 posed a detrimental effect on the hospitality industry. This paper will highlight the impact of the COVID-19 pandemic on hotels, restaurants, bars, and events and how this impact can affect the future of these business operations.
Impact of COVID-19 on Hotels
The COVID-19 pandemic has impacted hotel companies directly, and the effect has lasted for quite a long time as the companies are still working towards regaining their financial status. This effect has led to low-income revenue and a decreased profit margin in the hotel business. Governments enacted COVID-19 measures, regulations, and codes of conduct on the hospitality industry negatively impacted their business operation. These measures include; an increased sense of hygiene, sanitation, social distancing, and other health measures for better crisis preparedness in the public sector to combat the spread of the virus.
In the wake of the COVID-19 pandemic, travel restrictions at national and international levels, the traveling bans enacted, such as border, and airline closures, international summit cancellations, quarantine, and fear of contracting the virus, posed a severe impact on the hospitality sector. International travel regulations put by governments and humanitarian organizations prominently reduced the desire for leisure travel and the search for hotel destinations. As a result, the hospitality industry generated low incomes and ran bankrupt because people’s fears of traveling and getaways were high. Hotels were getting very little reservation during the pandemic compared to the previous years when the industry was booming and looting hefty profits from their operations. The profit margin for big hotel chains like Hilton and Marriot recorded a low-profit margin over the pandemic and past pandemic periods.
During the pandemic, visitation and leisure travel declined, and travel bans and restrictions put by the Government caused a lot of fear and anxiety; hence people could not travel as much as before. The hospitality industry contributes to the global GDP, so any decline in the sector will directly affect the GDP globally and the business operations, whether small-scale, medium, or large-scale. The pandemic has impacted many businesses related to hospitality. Consequentially, the businesses, service industry, and production sector were threatened by the changed consumer habits due to government regulatory measures resulting in significant losses. Hilton said it suspended operations at 275 properties, mainly in the United States and Europe, during the first quarter due to the pandemic, compared with about 730 properties a year earlier, resulting in losses in the company’s revenues and profit margins.
The issue of hygiene and sanitation in the hospitality industry puts much strain on the resources in the sector. Upcoming hotels that were not financially established to cope with the situation ran out of financial resources and eventually closed their business operations because the pressure to cope was overwhelming (Duarte, Paulo, et al. 1-14). Effective management and requirements such as wearing face masks, temperature recording, maintaining social distancing, and frequent sanitization was costly for the business. Hospitality management, key stakeholders, and decision-makers had a hard time contemplating the issue of vaccination for both employees and hotel visitors, and tourists. International hotels like Hilton and Marriott were hit hard, and the impact was not lesser in domestic hotels, tourism and leisure activities dropped significantly, resulting in meager revenues and income such that it was not sustainable for the businesses. In Europe, most of the hotel profit margins went very low during the pandemic, and operations did not get much better after businesses had resumed as per the government directives (Sukhdev et al .23).
Impact of COVID-19 on Restaurants
Restaurant business flourishes when tourism and leisure traveling is booming, pre-COVID-19, the hospitality industry was thriving well because there were no travel restrictions and social gathering restrictions. During the pandemic, many restaurant businesses recorded low revenue and profit margin due to travel restrictions, decreased leisure activities, and when the social gathering was prohibited. Many people were not going out for social events such as dates, birthdays, and dinners as before. Most restaurants that did not meet the required standards put across by the health sectors and Government were shut down (Spiegel et al. 17.2), thus recording high losses and low-profit margins during that period. Low income and high cost of operation led to strained workforce management by business owners. Most employees in the industry lost their jobs during the pandemic because the resources to maintain and remunerate the employees were limited, and the operation costs were accelerating. Reducing the workforce rendered most people jobless. Post-COVID-19 impact on business in restaurants led to the temporary closure. Most restaurants were operating at a small fraction of capacity, if not shut down entirely due to government orders. Most business owners claim that they recorded a high decrease in sales volume (Zwanka et al. 58-67).
The impact of the pandemic has been enormous and unpredictable on both revenue and supply chains in the hospitality industry. Directives to close restaurants and suspension of social events such as weddings, parties, conferences, and international summits have distracted business operations. Most restaurants recorded a high number of event cancellations at the onset of the pandemic and during the pandemic. Because the Government had banned social gatherings, occasional drinking and getaways had been suspended. A decline in revenue and profit in the restaurant businesses caused a strain on business sustenance in operations, the businesses become financially restrained, leading to bankruptcy and insolvencies of some restaurants (Vatanen et al. 32).
Curfew and total lockdown in some regions created a precarious business environment, especially in restaurants, reduced hours of business operation led to low income and profit generation since the business is dependent on visitors, social events, and tourism. These impacts led to a drop in reservations, and this impact on the global economy wreaked the hospitality industry and its financial freedom. The infection caused a lot of anxiety in people, government regulations such as social distancing deterred mobility and many people weren’t going to social places as much as before. The pandemic changed people’s spending habits since some people had been temporarily laid off, much money wasn’t spent on eating outside, and people also because overly conscious about taking food from restaurants.
In Europe and Asia, restaurant businesses have recorded a lesser profit than other years of the pandemic. Many reservations were cancelled, and social events were suspended until later, after the pandemic spread started to decline (Gomes, Conceição, et al. 14.18). The government’s stay-at-home policy was not favorable for the business’s operations since the business mainly depended on traffic. Countries like Switzerland, whose larger economy is partly dependent on tourism and hospitality, have reported a significant drop in revenue and profit margin leading to great losses for many hospitality companies in the country and significantly affecting the industry’s performance.
Impact of COVID-19 on Bars and events
The outbreak of the pandemic led to a lot of social restrictions that were put by the Government to curb the spread of the infection. As a result, the performance of bar businesses decreased significantly, leading to low-profit margins, bar owners running bankrupt and insolvent, and some business owners opting to close down their businesses until the spread of the infection has been subsidized. During the pandemic social gathering was prohibited, and people could not meet together to enjoy a drink as before, as a result, most bar businesses recorded low sales volume during that year than the previous years before the pandemic.
During the COVID-19 pandemic, people have significantly changed their drinking habits, shifting places of consumption from bars and restaurants to home. For many people, alcohol is part of their social life, a life that has been significantly disrupted by COVID-19 due suspension of social gatherings and events, curfew and total lockdown in some regions. Most people changed how much they drank as the pandemic had also interfered with their spending habits. People consume less alcohol than before the pandemic, and as a result, the sales volume went very low. (Poupart).
Bars are mostly highly functional during evening hours when people are from work and meet up to have a drink and rejuvenate. The introduction of curfews and lockdowns made these social events unheard of during the pandemic. People could not travel from one town to another for drinking and socializing like before. Many bars were operating on very minimal returns as the profit margin was really low during that time. The COVID-19 outbreak led to event cancellation, most event companies did not perform well in the business due to low sales volume, which resulted in the companies making low-profit margins and revenues. When the pandemic hit, the ministry of health and World Health Organizations put across measures that helped to curb the spread of the virus. Social events were closed, and curfew and lockdown did not allow people to go away from their homes. There were very minimal events and attendance was restricted to a specific number of people, thereby reducing the company’s sales volume.
The pandemic altered people’s spending habits (Calina et al. 8) many people did not have social drinking during that time. Bar businesses went as consumption of alcohol was overly discouraged based on presumptions that it heightens the impact of the infection Healthwise. This made business bar owners record very low sales volume that led to a decrease in the profit margin and revenues realized. Some businesses couldn’t continue with their operations because the losses were so high and the profit was very low. Generally, lock dawn and curfews did more harm to bar business because social drinking is mostly in the evening when people are from their jobs.
The sudden outbreak of COVID-19 posed a detrimental effect on the hospitality industry. The current post-COVID economic environment of financial instability is still affecting the hospitality industry, the financial recovery of the sector to regain its previous state requires a lot of effort and intervention from other sectors of the economy such as the tourism and transport industry and health or the industry’s performance will continue to decline. It is also determined by government intervention in terms of taxes and other subsidies and incentives the Government can offer in an attempt to uplift the sector. The future of the hospitality sector is determined by relentless efforts by all the responsible keyholders to keep it thriving. Local tourism and hospitality industry flourish based on patterns of visitation, leisure time such as occasional drinking events and efforts put in by decision makers to attract visitors to invest in the sector and enhance the multiplier effect on the industry.
Although the pandemic has brought more harm than good to the hospitality industry, there is a possibility for growth in the industry. Local promotions and campaigns are providing an essential boost to aid establish many hotels and restaurants and event businesses, this is a major step in recovery in reviving the industry’s performance. The Government’s effort to recover the sector has been taken into consideration by key stakeholders and decision-makers in the hospitality industry (McCartney, Glenn et al 47-68). The hospitality industry globally is one of the most severely affected by the pandemic. Managers have felt the need to prepare for unforeseeable calamities in the future, including employee support services to avoid laying off the workforce, service innovation, and ploughing back profits to enhance resilience and financial recovery in the sector. The pandemic’s impact on the hospitality industry will be long-lasting if people still hold on to the past, however, if the companies take advantage of the available economies of scale and incentives from the Government and ministries, recovery is possible.
The industry should prepare in advance for possible trends such as COVID-19 to prevent adverse effects on its operations. If hospitality companies set aside funds to cater for such emergencies, bankruptcy and insolvency in the sector will be unheard of in their business operations. The impact of COVID-19 on the industry will leave a historical impact because of the deficits that the company and the industry have gotten during the pandemic. Although financial recovery is possible, it is not a one-day process. Much effort is needed to restore the performance of the industry to its previous stage or even do better.
Work Cited
Calina, Daniela, et al. “COVID-19 pandemic and alcohol consumption: Impacts and interconnections.” Toxicology reports 8 (2021): 529-535.
Duarte, Paulo, et al. “Is it possible to feel safe in hotels during the COVID-19? Key factors in hotel guests’ risk and safety perception.” Anatolia (2022): 1-14.
Gomes, Conceição, et al. “COVID-19’s Impact on the Restaurant Industry.” Sustainability 14.18 (2022): 11544.
McCartney, Glenn, Carolina Oi Lam Ung, and José Ferreira Pinto. “Living with COVID-19 and Sustaining a Tourism Recovery—Adopting a Front-Line Collaborative Response between the Tourism Industry and Community Pharmacists.” Tourism and Hospitality 3.1 (2022): 47-68.
Poupart, Ashley. Comparative Wine Consumer Trends and Associated Impacts of the COVID-19 Pandemic on the Texas Wine and Grape Industry. Diss. Prescott College, 2022.
Spiegel, Matthew, and Heather Tookes. “All or nothing? Partial business shutdowns and COVID-19 fatality growth.” PloS one 17.2 (2022): e0262925.
Vatanen, Matias. “The Impact of COVID-19 on Finnish SMEs.” (2021).
Zwanka, Russell J., and Cheryl Buff. “COVID-19 generation: A conceptual framework of the consumer behavioural shifts to be caused by the COVID-19 pandemic.” Journal of International Consumer Marketing 33.1 (2021): 58-67.
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