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The Changing Nature of Supply and Demand in Hospitality During COVID-19

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Hospitality is one of the industries which can boast itself as both a necessity and a luxury. Travel and accommodation have always gone hand in hand, and in a global economy, it is impossible to imagine what life would be like without either.

The pandemic however has hit hard both industries, with hotels being shut down or limited in function due to restrictions. Potential guests are naturally wary of travelling during a global pandemic, and this is beginning to take a toll on the industry at large.

We can use the following questions to try and make sense of how the tables will turn for the foreseeable future:


What groups are most likely to travel during COVID-19?

Independent young travellers, aged 25 to 35, are the group with the highest travel mobility during the pandemic. External factors such as housing situations and income security play the biggest role in determining who will be most likely to travel, so while everyone will eventually undertake a road trip or a vacation, it’s Millenials who are likely to travel long distances and with greater frequency.

Concerts had to reschedule with tour dates pushed back a year or so, and any large scale public events that still take place (races, sports events, exhibitions, etc.) do so under much scrutiny and restrictions. If a hotel relies heavily on revenue from such bookings, you would need to consider alternative approaches to guest acquisition.

Is recreation still a priority for guests?

More so than ever, guests are looking to get away from their everyday routine, but they are doing so with caution. Locations in demand are mostly local hotel chains, which either afford a shuttle or accommodate their own parking space. Guests will want to avoid public transit for the foreseeable future, meaning that they will rely on their own means of transportation.

Guests are tired by quarantine life, and regardless of the state of restrictions are going to be looking for a safe getaway. With public events cancelled, you are likely to be put in the position of providing guests with on-premise entertainment. If you are a chain with locations at a beach or near a mountain, this will be fairly straightforward, however business hotels in industrial areas are not going to be as lucky.

Is the wedding industry going to pull back from large scale events?

Weddings offer the hospitality industry some of its biggest paydays, hence why so many venues offer their own wedding planners, decoration, and live music for the reception. They are certainly going to be coupled wary of proceeding with their wedding plans but for most guests, a wedding is a huge investment and are unlikely to call it off unless they are forced to. As far as future scheduling goes, the pandemic has forced couples to look ahead to the the third quarter of 2021 for wedding planning. If anything next year might see a rise in wedding compensation for this one.


Will the pandemic render online travel agencies obsolete?

While some of the popular sites like Booking.com and AirB&B are seeing a significant hit in interest, they have a unifying function which consumers appreciate, so with travel picking up once again, so will OTA bookings.

COVID-19, however, has greatly thinned out the competition on such sites. With fewer properties available per region you are looking at better chances of restoring your establishment’s financial stability.

Will the rise of operation costs and consequent layoffs undermine the quality of service?

While running an establishment with reduced staff can be a challenge, it is hardly one which cannot be handled by most experienced hoteliers. Most hoteliers have used lockdown to try out new hotel software solutions and upgrade some of their more outdated practices to find a more cost efficient way to perform daily operations. For some this doesn’t even involve layoffs, but rather deferring from hiring seasonal staff.

How will job uncertainty affect staff loyalty?

If anything COVID-19 has created a necessity for employer-employee loyalty. Your staff feel the need to remain faithful in this uncertain job climate, and while automation can be of aid in some respects of the job, hospitality is still a very personal industry which would not be as successful if it were not for the people who work in it.

The low demand and consequent reduced average daily rate are going to compensate for the lack of competition. It is truly a matter of adaptability and at least partially a bit of sheer luck in terms of whether you were one of the reigns hit the hardest, that will determine whether you will make a profit or simply keep out of debt.

COVID-19 has made everyone in hospitality throw out the playbook and go with the flow. Obviously, every business model depends on some constants and when their value is shot by unprecedented circumstances, there is only so much that can be done about it. No segment in hospitality is safe from the current demand draught. And the best choice for every business will be idiosyncratic - if there is no chance of making a profit, wait it out, if there is at least a chance of staying afloat - act on it.

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