Covid 19 has brought world economic growth to a screeching halt. By the end of 2020, the world’s GDP is estimated to be 7% lower than it would have been without the pandemic. More than 15 percent of people working in the traveling industry have lost jobs to the COVID-19.
Widespread lockdowns have turbocharged changes in all subdomains of the hospitality sector. How companies adapt to seismic changes would determine how well the hospitality sector will fare in the future.
This insight critically evaluates the impacts of covid 19 on the hospitality and travel sector. Furthermore, it considers the immediate response of leading companies like booking.com to the covid-19.
Post covid world and the hospitality sector
While the global economy and all other sectors are recovering rapidly after the vaccination drives have started in various parts of the world, the hospitality sector is still managing to stay afloat somehow.
According to some predictions, hotels worldwide would only see 30% occupancy until early next year. What lies ahead and what governments can do to uplift the sector is in focus. Below are the details of the sectors related to hospitality in light of the pandemic.
1) HOW COVID-19 AFFECTED THE TRAVELLING INDUSTRY
The only viable option for governments to curb the pandemic spread was to introduce measures like lockdowns and travel ban. So, the government did not show any hesitation to introduce these restrictions. However, in the short run, these measures proved conducive to deal with the pandemic. In the long run, it caused economic unrest.
The travel industry was one of many sectors that bear the brunt of these restrictions. Like all other industries, the travel sector was not prepared beforehand to deal with the
pandemic. Therefore, the inability to forecast the pandemic coupled with the lack of resources was at the forefront among many other challenges.
Impact of covid-19 on Aviation
- Global restriction on travel
- Multiple restrictions have been imposed on airline transport, which led to a notable setback on the global airline industry. This principally affected the EU region and other regions of the world. Therefore, the pandemic subsided airline mobility by over 40% globally.
Unemployment in the aviation sector
- Direct aviation-related jobs dropped by 4.8 million
- Airlines across the globe had to arrange for emergency repatriation flights to take nearly 5.4 million citizens back home.
Transportation of Medical emergency equipment
- Almost 46,400 special cargo flights Transported medical equipment as a response to the pandemic.
A case study of Airport of Zagreb:
It is a commercial airport in Europe which deals with about more than 3.4 million passengers per year. It is the most crucial airport in Croatia, with over 45,000 flights per year. Pandemic hit airports hard. Zagreb faced about a 55% reduction in its number of passengers.
Split is a seasonal airport on the Mediterranean coast. It deals with more than 3.3 million passengers per year, with peaks in the summer.
Number of passengers for ZAGREB and SPLIT airports
Airliners face severe economic and social instability caused by COVID-19, which has led to bankruptcy for many airlines in this sector. Therefore, air transport mobility and strategies need to be improved and become more effective.
Strategies adopted by airlines to overcome the turmoil generated by Covid-19
After the severity of the pandemic was lessen, these airlines adopted strategies to make their airlines a safe choice to travel safely.
Compliance of SOPs and allowing limited passengers
- This was done by complying with the SOPs judiciously in both airlines. They make it a compulsion for every passenger to wear a medical face mask and appropriate sanitizers.
- Also, a COVID-19 negative test was obligatory to travel. It must be issued within two days before departure.
- Retrenchment was the immediate response strategy of airlines. Here, persevering was the only option left. Croatian airlines aim to preserve the organization’s status by efficiently using their resources, mainly external resources, to overcome the loss.
- Immediate response: Converting passenger aircraft to cargo ones. Another reaction to the pandemic was innovation that refers to the strategic renewal of the organization during the crisis. Most European airlines have shown the hybrid response by converting passenger aircraft into cargo transporters, which was a great move.
- Furthermore, seeking help from the government: these airlines asked for the benefit of the national government. The government played its roles as leaders, grantees, or investors to overcome the loss.
How are leading airlines dealing with challenges posed by the pandemic: A Case study of Croatian Airlines?
Initially, Croatian airlines were unable to do anything regarding the loss they suffered due to COVID-19. This was because the pandemic was unexpected, and the airline companies were genuinely unaware of it. According to the Euro control association, everything will get normal within a year.
Comparison of air traffic mobility for ZAGREB airport
Comparison of air traffic mobility for SPLIT airport
2) How Covid-19 affected the Hotels/ Hospitality sector (including vacation rental)
Due to the COVID-19 pandemic, most nations have imposed lockdowns, border closures, the cancellation of flights, returning of traveling citizens to their homes, and mandatory quarantine. These orders led to a notable decline in both domestic as well as international in just a few days.
Impacts of covid 19 on the hospitality sector
Almost all restaurants, hotels, and parks were placed under restrictions. Only take away facility was allowed at food outlets. Resultantly, the services sector incurred a colossal financial loss.
Post covid challenges for hospitability sector
As the restrictions on the hospitality sector are easing. Resultantly the industry is marred with two essential questions.
Are customers willing to return
If not, what strategies must be adopted to attract customers?
Strategies to rejuvenate hospitality sector in post covid scenario
a. Introducing discounts on dine-in, open air dining facilities must be upgraded to allure customers. Usually, customers feel safe to dine in open space as the chances of spreading COVID are minimal in the open air.
b. Use social media to spread awareness that things have returned to normal. Social media can wreak havoc in a moment and bring things back to normal in a moment. That is the power of social media. The hospitality sector must use this advantage to get things back to normal via positive campaigning and digital advertisements.
c. Introducing affordable packages at hotels to attract customers
In the last year and a half, people have adapted their lifestyle according to the lockdown scenario. Now sitting at home, working from home has become a comfort zone for people. Restaurants, hotels, and travel industries need to
invest money in advertising and discount packages to bring people out of their homes.
d. An event planner must follow SOPs to ensure people that they are safe
e. Restaurants, bars, and parks must be allowed to operate 24/7 to recover from the impacts of covid-19
A case study of Spain’s hospitality industry
How the pandemic affected the hospitality industry in Spain?
Tourism is a significant contributing factor to Spain’s economy, thereby generating considerable revenue for Spain annually. Like other nations, Spain was also mishit by the novel Coronavirus. Consequently, the tourism and hospitality industry underwent a recorded setback. Reduction in the income and unemployment of many people is also a significant factor hindering the operations of this sector.
How Spain hospitality industry faced the pandemic?
For the revival of the tourism industry, the role of the European Union is overwhelming. European Union supported the sector to emerge again, thereby conferring significant financial resources. Also, all the nations get united and committed to getting over the loss by economic, labor, and fiscal approaches.
Even after the uplifting of lockdown, there was about a 58% reduction in the tourist’s number. This was due to the fear of getting infected. The travel industry of Spain reacquired the tourists’ confidence by protecting them against the virus.
In Spain, The Secretary of State for Tourism has proclaimed the action protocols for companies in the travel and hospitality industry. Additionally, the hospitality sector is following its approaches for protection. The five best Spanish hotel chains have preceded action programs against the virus. These approaches helped Spain to overcome the losses by efficient planning.
How the pandemic affected the hospitality industry in Vietnam?
Most countries have enforced travel restrictions, both nationally and internationally, which negatively affected the tourism industry. For instance, cancellation of events, transport and cruise restrictions, closed accommodation, hotels, and restaurants. In this regard, few hotels and restaurant switched their services to takeaways and continued operating; these responses have caused negative outgrowths to the economy of every country.
Vietnam is an Asian country that had comparatively more minor cases of Covid-19. However, travelers visiting Vietnam were quarantined for 14 days in mid-March. Among them were also returning Vietnamese. The government also efficiently controlled the spread of this virus.
Since the first case of the virus, the Vietnamese hospitality industry has faced some severe challenges. This includes a decline in the number of tourism as well as the shortage of human resources. The drop in tourists was from significant markets such as UK, China, the USA, and South Korea. All the large and small hotels were closed, impacting the food and beverage industry adversely.
How Vietnamese hospitality industry faced the pandemic?
Vietnamese hotels have implemented efficient strategies such as paid quarantine service for international travelers in Vietnam to subdue the loss. Moreover, they received government support and were focused on the job security and profitability of the hotel staff members. This decreased the accommodation needed for the institutional quarantine by the government. Also, the pressure on the healthcare sector was lessened by the provision of more comfortable accommodation with exceptional service quality, thereby satisfying the customers who are willing to pay more for the quality services.
Furthermore, this strategy prevailed specific opportunities for inspiring employees and managers to participate in this paid quarantine program. They will be able to get appropriate training, support, and pay.
Travel booking/Travel agencies:
As mentioned above, the pandemic has led to the instability of the tourism industry adversely and resulted in a significant setback. Likewise, travel booking agencies have equally suffered. The three most popular travel agencies are as follow:
1. Booking Holdings Inc.
2. Expedia group
3. Trip.com Group Ltd
These travel companies represent OTC particularly. They deal with tourism services, accommodation, and the transportation sector. The pandemic outbreak has tremendously increased the investment risks by several times for these travel agencies. Surprisingly, trip.com Group Ltd and Booking Holdings Inc. shared prices started to fall abruptly even before implementing lockdown. In contrast, the Expedia Group prices fell slightly during the lockdown period in Wuhan.
The travel agencies are working hard to make their comeback stronger than their setback.
Strategies of leading travel companies to come out of Covid crisis:
A Case study of booking.com
- Appropriate marketing strategies have been helpful in this situation. For instance, Bookings.com plans to sponsor medical research to help the health care centers in the vaccination process. Undoubtedly, this strategy will help the company revive the business sooner and increase its reputation by corporate social responsibility engagement.
- Moreover, these firms are thinking of incorporate applications of Artificial intelligence for efficient working. After the lockdown, everything will get normalize, and companies will reacquire their loss.
The way forward: What strategies must be incorporated for the revival of the travel sector in post covid era?
- Travel agencies must focus on digitalization as today is the digital world.
- Launching apps to ensure safety measures. These apps must be updated regularly with more user-friendly features to provide customers ease of access.
- Collaborating with WHO to launch massive vaccination campaigns in low-income countries as middle and low-income countries are crucial to keep the global economy moving.
The pandemic of COVID-19 has adversely affected the cruise industry. It will be hard for the companies to get over these effects. This loss may affect the industries in the long run. The cruise industry is one of the most rapidly growing and profitable sectors of the travel industry. Its demand has been increased by about 20.5% during the last five years. The statistics below show the number of passengers who booked cruises in the subsequent years.
Adverse effects of COVID-19 on the Cruise industry:
Cruise Industry started declining when more than 700 passengers were infected by COVID-19 onboard the cruise ship Diamond Princess, with about 14 deaths. There are fears regarding this industry that the impact of the COVID-19 pandemic will affect the overall sales for an extended period, especially in the Asian markets, which are essential for cruise companies in recent years. Following are the three big players in the cruise industry:
- Norwegian cruise line
- Royal Caribbean
All these cruise companies had to cancel their Asian voyages amidst this pandemic until the end of September. At the same time, other cruises canceled their schedules in October. Many cruise ships were also re-routed with changed schedules. Rescheduling was a better option than canceling the bookings. Still, it is a complex process to change the cruise ship’s itinerary. It depends mainly on the availability of port and berth. Also, this requires infrastructure. Besides, the tourists from Europe and the Eastern region may get annoyed by altering schedules and their holiday plans. This
impacts the small cruise companies more severely as compared to the big ones. They may be decided to exit the market due to the loss.
Norwegian cruise lines, Royal Caribbean, and the Carnival all faced a significant decline in business. None of them exactly knew the continuance of this pandemic and how much loss they have to bear.
How Cruise Industries tried to cope up with the loss?
Due to the loss and revival of their services, these cruise lines adopted several marketing strategies, such as lowering the prices for increasing the customers. They decided to pay their customers substantial payments in compensations, refunds, and cancellation fees, subject to the concerned ticket terms of services. Royal Caribbean published updates regarding the health protocols, including the denial to the board and full refunds for the guests from mainland Hong Kong, China, Iran, Italy, South Korea, and Macau in the 15 days before boarding.
Carnival then made the same announcement on March 3 as they stated that they would continue to work closely with the concerned port and health departments at their destination”.
As far as future strategies are concerned, it is still hard to say anything as the pandemic has not ended. There are numerous uncertainties and variables which need to be considered before making plans.
In a nutshell, COVID-19 affected the society and the economy of countries adversely and unpredictably. Many companies tried to implement various strategies but have not received an adequate response and compensation for their loss. Some companies faced the challenge in a good way, thereby ensuring the negligible loss.