This is the Coronavirus Case Studies series. Every post in this series will talk about how the coronavirus pandemic of 2020 will affect different businesses for years to come. We’re all still processing this massive, life-changing event. This week, we talk about how coronavirus will affect the hospitality industry.

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What is the Hospitality Industry?

Two weeks ago, we talked about the restaurant industry. Despite the glum conclusion and how unbelievably hard it is to spell the word “restaurant,” that was in many ways, an easier article to write. Part of that is because everybody knows what a restaurant is, but defining the hospitality industry is tougher.

To answer this question, we used the most intellectual of all sources – Wikipedia – which soon led us to the United States Department of Labor Standard Industry Classification (SIC). It defines the hospitality industry as consisting of:

  • Hotels, motels, cabins, cottages, bed and breakfasts, inns, hostels, lodges, and resorts
  • Camps and RV parks
  • Restaurants and bars

For the sake of simplicity, we are going to focus on that first bullet point. We covered restaurants and bars previously. Camps and RV parks may, if anything, benefit from the coronavirus.

People Aren’t Travelling Much & That’s Bad News

In this March 20, 2020 file photo, extremely light traffic moves along the 110 Harbor Freeway toward downtown mid afternoon, in Los Angeles. For the millions of Americans living under some form of lockdown to curb the spread of the new coronavirus, not knowing when the restrictions will end is a major source of anxiety. (AP Photo/Mark J. Terrill)

The hospitality industry goes hand-in-hand with the travel industry. As people venture out, they inevitably will need places to stay. This is true whether you’re talking about a nasty, run-down Motel 6 or a fancy Sandals resort. Early reports showed that revenues for hotels crashed by a double-digit percentage between March 1 and March 7, 2020. That was really early, too. I couldn’t find high-quality data that was more recent than that.

Worse still, the aviation industry is on-track to lose up to $252 billion worldwide, which would represent a 44% drop in revenue from 2019’s numbers. The photo at the top of this section shows an empty Los Angeles freeway in the middle of the day.

People aren’t flying and they’re not driving, so they don’t need places to stay. This is likely to continue for the duration of the pandemic to varying degrees of severity.

The Short-Term Problems Were Worse for Hotels than Restaurants

The hospitality industry is badly struggling right now. This is true whether you’re thinking on a global scale or a local one. The statistics we cited above show a brutal, uncompromisingly grim reality for the hospitality industry right now.

Because people are not traveling, they are not booking hotels or visiting restaurants as much. This leads to a shortfall in revenue. On top of that, people are also canceling on short notice, with many customers demanding refunds. Many customers, indeed, are entitled to getting their money back per the contracts agreed upon when booking in advance. This can even lead to a situation where hotels are making negative revenue.

It doesn’t matter if the place is run by a hotel chain like Hilton, Hyatt, Mariott, or Wyndham; is an old-fashioned bed and breakfast in Appalachia; or a little AirBNB. The effects are global and unmistakable. No hotel is spared.

The Long-Term Outlook Could Go One of Two Ways

At this point, take a deep breath. The hospitality industry is not screwed forever, and many of the business owners in the crossfire of this terrible pandemic will survive. The question, though, is how precisely the hospitality industry will proceed.

In the US, there are five major hotel groups: Hilton, Hyatt, Marriot, IHG, and Wyndham. Basically every brand name hotel you can think of will fall under these five conglomerates.

  • Hilton: DoubleTree, Embassy Suits, Garden Inn, Hampton, Homewood, Home2
  • Hyatt: Anything with the name Hyatt in it
  • Marriott: Marriott Hotels, Ritz-Carlton, Aloft, Le Meridien, Autograph Collection Hotels, Renaissance Hotels, AC Hotels, Moxy Hotels, Courtyard, Springhill Suites, Fairfield Inn, Residence Inn, Towneplace Suites, Four Points, Westin, Sheraton
  • IHG: Crowne Plaza, InterContinental, Holiday Inn (Express), Candlewood Suites
  • Wyndham: Anything with the name Wyndham in it, Wingate, Microtel, Ramada, Days Inn, Super 8, Howard Johnson, Travelodge

In early 2019, AirBNB owned about 20% of the consumer lodging market, making it a formidable opponent to traditional hotel chains. The industry was beginning to change rapidly and it looked like AirBNB was the way of the future.

It might still be, too. We could be looking at a decentralized hospitality industry in the future, where a plurality or the majority of lodging is provided by sole proprietors and small businesses through apps like AirBNB.

Alternatively, we could see a lot of people close their spare homes to strangers, cutting off the supply of properties on AirBNB. Some of the hotel chains could merge, further centralizing the hotel industry, not unlike airlines.

Honestly, I don’t know which way it’s going to go. We’re at a crossroads and anything could happen. Much of the impact could come down to the government’s economic response in the coming months and years.

Either Way, The Hospitality Industry Will Blossom Once More

No matter which of the two divergent paths that the hospitality industry will take, rest assured that the industry will rise again. Restaurants and bars might take a long time to recover, but they’ve been around for most of civilized human history.

Hotels and similar businesses, though, will recover much faster. They provide a necessary service for which there is no substitute. If you can’t eat out, you can always eat at home. If you can’t find a hotel or an AirBNB, there is no substitute, except for perhaps sleeping in your car, which I have done and do not recommend.

Restaurants and bars may struggle for years to come as people’s habits change. Yet as soon as travel picks back up, the rest of the hospitality industry should come back to life. Whether the quality is the same remains to be seen, as does whether it will be handled by megacorproations or sole proprietors. But rest assured that no matter what, the industry must return.

What do you think the future holds for the hospitality industry? Do you think this article is spot-on or off-base? (Much like with my restaurant post, I hope I’m very wrong.)

Let me know in the comments below. I’d love to hear what you have to say so we can process this together.

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Michael DeFren · June 29, 2020 at 10:01 am

This actually is what I been saying before the pandemic even happened, im a germaphobe an this quarantine i was ready, great info though

Tars shipoee · June 29, 2020 at 10:03 am

The industry suffered and some businesses don’t make it

Maria Teresa Fernandez Ferreira · June 29, 2020 at 11:30 am

It is a big problem in that sector since most people think that everything is over and do not want to continue with precautions, so in that sector they have to be very aware of everything.

    Brandon Rollins · July 6, 2020 at 11:21 am

    Yeah, and the constant awareness of pathogens has got to be very draining for already stretched-thin business owners.

Esco Garcia · June 29, 2020 at 12:19 pm

Muy mal, yo trabajo en hosteleria y de momento la cosa pinta mal.
Hasta que no llege la vacuna, no seremos libre.

Paulo Oliveira · June 29, 2020 at 4:13 pm

Very pertinent subject, I work in Tourism, I am like fish in the water …

    Melissa Alvarado · June 30, 2020 at 7:28 pm

    We are all very concerned how this will pan out, thanks for the input

    Brandon Rollins · July 6, 2020 at 11:26 am

    I hope things go well for you in your line of work. Even if now isn’t a good time for travel, a good day will come again someday!

Michael Christofield · June 29, 2020 at 6:56 pm

People are eager to travel and it’s true that the industry will rebound, but it definitely is tough right now. I had rented a house to spend a couple weeks on a lake this summer, but I had to cancel.

    Brandon Rollins · July 6, 2020 at 11:27 am

    I hope in ’22 or whenever this whole thing blows over – which I hope to be mercifully soon – that people will want to travel so badly that the industry will recover from a huge surge of tourists. But only time can really tell.

Yasmin Mukhi · June 30, 2020 at 5:15 am

1st priority of customers is to avoid eating n roaming outside in this pandemic time & stay safe so it will hit hard to hospitality, it will time to recover but it will bounce back soon.

terry murphy · June 30, 2020 at 7:54 am

hard but necessary information, thank you

Chetan Kona Yerukunondu · June 30, 2020 at 9:19 am

This is exactly why most governments are going for self sustainability. Relying solely on tourism can severely cripple you in the face of a pandemic.

    Brandon Rollins · July 6, 2020 at 11:30 am

    Hopefully governments have the wisdom to apply that mindset to other areas like energy and agriculture as well. Coronavirus has shown that our interconnected global system, for all the myriad benefits it brings, is kinda fragile.

Spiros · June 30, 2020 at 12:11 pm

I think things will return to normal if there are no coronovirus cases from 2022

Melissa Alvarado · June 30, 2020 at 7:29 pm

We are all very concerned how this will pan out, this new normal is most unwelcome. Thanks for the input

Liz Kilcher · July 2, 2020 at 10:01 am

great info, thanks much!!

LucidBread · July 2, 2020 at 1:11 pm

COVID 19 will leave far more deep marks on every professional sector than any other previous pandemics. Indeed every industry has to return to its normalcy after this but the hospitality industry will have to cope up with substantially more losses than any other professional sector in my opinion.

    Brandon Rollins · July 7, 2020 at 8:41 am

    Yeah, hospitality is going to have a long, slow crawl back to normal.

Lula Ruger · July 2, 2020 at 1:32 pm

So devastating for small buisnesses

Ruslan Sokolov · July 3, 2020 at 12:05 am

Hard times, many people unfortunately will lose their job. Hotels need to make accommodations for the next two years.

Crystal Bean · July 3, 2020 at 8:39 am

Corona has proven that it will affect everyone in some way. You may not catch the virus but you will feel it financially in some way. The hospitality industry has taken a hard hit. Sadly, until the cure is found, I think it will continue to be hurt by Corona.

Deepak S · July 3, 2020 at 2:40 pm

Yes during this pandemic many restaurants and cafe are in trouble.they are surviving by delivery of food.but this is not enough.lets see what future holds

sachin jankar · July 4, 2020 at 8:22 am

Every customer has to take care of themselves
Cary your sanitation and other health care products

Aubrey Daniels · July 5, 2020 at 2:13 pm

Great information. Thanks for sharing

Kakhaber Khmelidze · July 5, 2020 at 4:12 pm

Love travelling. Very interesting article. Thanks.

Scott Cady · July 5, 2020 at 4:38 pm

Very good article. Look forward to travelling again.

Hemant Gupta · July 6, 2020 at 4:39 am

Hi Pangea Marketing.
This was a really interesting piece. It firstly reminded me of the great times before the pandemic and the fun one had while travelling, and also gave me hope for future travels, even though everything seems grim right now.
Thank you

Richard Hicks · July 7, 2020 at 7:20 am

The industry will be very slow to recover in my opinion. Until people feel safe they will minimize trips.

Susan Parent · July 8, 2020 at 7:29 am

Very interesting and informative articles.

Javier Vallejo · July 8, 2020 at 3:18 pm

Like any moment of crisis, some businesses are more affected than others.
Luckily some grow and take advantage of this situation, but they are in the minority.
Unfortunately, the hospitality industry moves a lot of business around it and affects many families.

Sultan Mohammad · July 9, 2020 at 4:09 am

Thanks for the amazing article. I love traveling.. Wish to visit my favorite places after this pandemic

Mansi · July 9, 2020 at 7:02 am

I feel it maybe a slack for timebeing but trust me there will be a huge boom once things are normal as people are dying to travel. It will show maximum boom in domestic travels and once international travels are safe that will also increase. It can be more cheaper hence more people will also travel..

    Brandon Rollins · July 9, 2020 at 8:44 am

    I’m hoping we see cheap travel sometime soon, too. It’d be a good way to get the industry back on its feet again.

StefanoIceCubeR · July 10, 2020 at 9:32 am

In Italy we have a lot to see without going far away

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