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Covid-19 Impact: The fall and rise of the hospitality sector

The Covid-19 pandemic badly affected the hospitality sector. The imposition of lockdowns to curb spread of infection has led to a sudden, unprecedented downturn which resulted in shutdowns, fall in occupancy, sales, booking and job losses on a large scale across the globe.

The largest hospitality sector is in the Asia-Pacific region. It accounts for nearly 45% of the global market. North America following closely behind with a share of 25% to the global market and finally it is Africa that has the smallest market.

Hotels found themselves empty due to fall in bookings and cancellations, several restaurants shutdown and staff were laid off since there was no business and cost cutting measures needed to be adopted in order to survive.




As soon as the pandemic hit, Italy witnessed the highest drop in occupancy rate which was about 96%. Followed by China which saw a 68% drop and finally UK with 67%.

The North American Industry Classification System (NAICS) reported that 35% of the total jobs lost due to the pandemic in the United States belonged to the leisure and hospitality sector, that is about 16.9 million jobs.

Marriot, the largest hotel chain in the world said it incurred a net loss of $11 million in the first quarter of 2021. They also reported a decline in revenue per room by 59% in the first few months of 2021 worldwide when compared to 2019 levels for the same period.



Revenue per drop dipped by 57% in Canada and USA about 64% during the first quarter of 2021 when compared to the first quarter of 2019.

While things have now started getting better in the United States and Canada due to rapid vaccination roll outs, in Jan-Feb this year the occupancy rate touched 33% and this grew to 49% in March.

Airbnb an online market place for people to list their residences for accommodations saw a massive fall of 57% in their bookings during the initial days of the pandemic and listing of properties in the urban areas of United States fell to 20% in 2021.

It also lost over 22% of its listings in Toronto, Montreal, and Vancouver combined.

McDonald’s the largest restaurant chain around the globe had to limit its operations across the world. A few of its branches had to remain shut and about 96% of them only offered takeaways through delivery and drive thru.

Its global sales dipped by 24% in 2020. American branches alone accounted for 8.7% of the drop. And revenue fell by 30.5%. As of April 2021 it plans to shut down approximately 200 outlets worldwide.

Overall several businesses resorted to laying off workers and running with the minimum employees, cutting down on marketing expenditures and closing certain parts of the business like shutting down restaurants.

COPING MECHANISM

Several accommodation, bed and breakfasts, hotels, motels, hostels, resorts, serviced apartments opened themselves to host the stay of medical personnel and other frontline workers. Apart from this they also offered themselves as quarantine centers in order to generate revenue.




In India hotels, hostels and other accommodations started covid-19 packages which included food and stay for quarantined guests. It was one way for the hospitality sector to gain business from people who wanted to self isolate in comfort and special rates.

Several hotels converted their rooms as make shift hospital rooms due to a surge in demand.

Several businesses put in place price models and a advanced revenue management system to ensure speedy responses to developments in the market in order to retain or maximize revenue.

Through with the help of technology a lot of hotels were able to provide contactless check-ins and check -outs. This also served as a labour cost cutting measures.

Restaurants even started offering and serving food packages at minimal cost and joined hands with several delivering partners to increase sales.



THE FORECAST

The pandemic brought it several new business opportunities and models. The Asian market is the first to see a pick up in business.

In 2020, the global hospitality market stood at $3.4 trillion and is predicted to reach $4.132 trillion by the end of 2021. This increase is anticipated because of the measures adopted by companies to survive during the ongoing pandemic.

Experts have also predicted that by 2025 this market will be valued at $5.29 trillion.