How will the Hospitality Industry be Affected by COVID-19?

Throughout our history, hospitality and the union of food, shelter, and safety has evolved from a wandering traveler staying in someone’s home, to ultra-luxury lodging, pristine country clubs, and restaurants that test the boundaries of what and how food may be created. This evolution has grown alongside consumer demand to create one of the largest industries in the world with a global GDP of approximately of $2.9 trillion U.S. dollars in 2019; with the United States contributing $570 billion.

Hospitality has survived, and ultimately, thrived after many periods of hardship and uncertainty. Plagues, world wars, and devasting natural disasters have all impacted the industry, necessitating a drive first for survival and then, rebuilding.

Survival First

With drastically reduced travel, COVID-19 has hit the hospitality industry very hard. As of early May 2020, the hospitality industry had the highest unemployment rate of any industry, with almost 47% of its employees hitting unemployment; roughly 7.7 million people. As of April 29, 2020, the U.S. hospitality and tourism industry had lost over $84 billion in revenues during this pandemic, and as a result, businesses are forecasting 40-50% less than their anticipated yearly revenues. In the face of COVID-19, many hospitality organizations have pivoted to offer new services to members to help survive. Many of these new offerings, such as pantry staples sold in a marketplace, may continue to persist past the pandemic and become a new standard.

The initial shock of uncertainty around the pandemic has subsided, but cases continue to climb, and we are realizing that this disease will be with us for a while. Hospitality must rebuild by implementing new processes to allow people to come together to socialize in a way that is safe and helps to increase consumer trust and confidence.

Rebuilding Together

With time, communities will step back outside to seek the companionship of their families and neighbors. This will be done in pubs, restaurants, sports venues, hotels, country clubs, and many more hospitality sectors that unite the community. But until we have a vaccine, turnout will be much lower than pre-pandemic levels. It may take until 2022 to see demand return to normal levels.

As a result, many businesses will not survive the storm. This will leave fewer options for consumers. In the short term, this limited option pool will be just fine to accommodate a much smaller demand than before the pandemic hit. However, as the future unfolds and people become more comfortable congregating, people will be looking for more variety and options. This will drive new investments in local businesses.

So while in the short-term, hospitality may see more closures, job loss, and hardship, in the longer term we will see a renewed and reinvigorated industry with more new concepts appearing that can meet the needs of the modern, post-pandemic consumer. And the businesses that can withstand the storm will be stronger than before.

But how?

The hospitality industry will need to change, and many standardized procedures will be affected. So much of the industry and services provided are reliant upon the close proximity of people, the exchanging of items from hand to hand, or the sharing of communal spaces. The industry will first look to these touchpoints and seek to understand alternative, safer processes.

While some of these changes will be physical in nature, such as spacing tables further apart, investing in outdoor eating spaces and erecting plastic or glass divider walls, many of the changes needed will necessitate new technology.

A Renewed Focus on Technology

Technology in the hospitality industry had a slow start until the mid to late 2000’s. Since that time, the trust from business owners in technology and the desire to make it part of the overall guest experience has evolved at a progressive rate. Starting with simple reservation systems, to robust Point of Sale systems, to inventory tracking, to customer relationship modules, and so on, the industry has seen great growth and competition.

Hospitality after COVID-19 will see technology once again thrust to the forefront. Contactless technology in hospitality such as viewing a menu on your personal device instead of being handed a menu, receiving a text or notification when your table is ready instead of sitting in waiting area to hear your name, or ordering tableside via a voice application; all of these items will progress from a simple thought to an actionable solution within the next year.

Another technology that has accelerated are location services such as Beacon location technology or RFID’s. These technologies will now be utilized more than ever to keep guests and members safe and allow for services to continue with less physical interaction. Location technology will allow for mobile ordering while on the golf course or seated at the pool; it could hail your vehicle from valet based upon your proximity to the valet stand. Understanding when and where guests or members utilize your facility through location services enhances the operations anticipation of business levels, or staffing needed, and in doing so, the operation can be better prepared to provide exceptional services.

Private clubs and residential communities would also do well to think about contact and activity tracing to help keep members safe. As coronavirus continues to be with us, there will be a definitive need to isolate those who become sick, and identify the people or places they interacted with prior to becoming ill. This allows for the quick and decisive action to locate and isolate those that have been exposed. This is especially valuable in private clubs and communities where members interact with each other often. Country club management software that can provide a quick, easy to understand snapshot of all the member’s recent activities such as dining, golfing, etc., and which other members were in the party or nearby, is highly valuable. A country club would be able to react proactively and confidently, informing members of potential interactions with those that have been exposed to the illness to help stop the spread.

What about the “Experience”?

Some hospitality businesses, such as country clubs who cater to older guests, have been slow to roll out some new member-facing technology. But the pandemic may be a tipping point that causes enough guests to become comfortable with these technologies, as they encounter them more frequently in other places. The idea is not to replace the workforce with robots and cut costs; but to maintain the balance of safety, efficiency, and a sense of uniqueness that will keep the members or guests coming back.

What Does the Future Hold for Hospitality?

The world’s psyche continues to be hit with a devastating punch, and the aftermath of social isolation, fear of public places and unprecedented levels of job loss that has affected 42 million Americans as of June will certainly create a long-lasting economic slowdown for many industries, in particular those who serve as public gathering places such as hospitality. While many businesses may not survive, the hospitality industry overall will be better than it was before by learning and adapting to changing times, just as it has throughout history.

Through new offerings to serve members’ essential needs, investment into local communities and clubs, and the renewed importance of technology to support new practices, the hospitality industry after the pandemic will regain its previous strength and continue adapting to new social norms.

Sources:

https://www.statista.com/topics/962/global-tourism/
https://www.economicmodeling.com/2020/04/29/economic-impact-of-covid-19-on-hospitality/
https://www.cnbc.com/2020/05/08/these-industries-suffered-the-biggest-job-losses-in-april-2020.html

 

Mitch Little

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