The global impact of COVID-19: How long is it going to last and what you can do to keep your hospitality business healthy?

The coronavirus (from the Latin word “corona”, meaning crown or halo) is a virus, that causes illnesses like the common cold or more severe diseases, similar to the SARS and MERS.

The first outbreak of the disease was in the Chinese city of Wuhan and since the end of December 2019, it has infected more than 119,000 people and caused the death of 4,200 people worldwide, as the numbers continue to go up.

It is officially named COVID-19 and until now little is known about it, other than it is transmitted from human to human via droplets from sneezing and coughing. The main symptoms include fever, cough, and breathing difficulties, but many people can be asymptomatic, and not show any symptoms despite having the virus in their bodies. The incubation period is 1 to 14 days.

The new virus is often compared with SARS or MERS and although the number of deaths, related to COVID-19 sounds alarming, the mortality rate is considerably lower (approximately 2%, according to WHO). However, due to the more aggressive spreading of COVID-19 many more people are already infected, and more will follow. This means the total number of casualties is going to be dramatically higher.

The virus spreads no longer at the place of its outbreak – China and the Hubei province. The international hot spots outside of China are currently South Korea, Iran, and Italy.

So what is the global response? A vaccine will need at least a year until it reaches the shelves. Meanwhile, China has put the whole city of Wuhan under quarantine and has restricted travel to and from several other cities, affecting around 760 million people. Chinese citizens are banned from some countries and several international airlines have canceled flights to China.

The impact of the virus is increasing daily, together with the number of infected people and the number of deaths and it affects the hospitality sector – airlines, cruise ships, hotels, tour operators.

Travelers worldwide are canceling their trips to the infected regions, as well as major world events are being questioned. Some countries have banned events with more than 1,000 people attending.

Quick facts on the impact of the COVID-19 s on the global hospitality industry:

  • The government in China imposed a lockdown in Wuhan and other cities in Hubei Province to quarantine the epicenter of the outbreak.
  • All of Italy, a country of 60 million people, is currently under lockdown until at least April 3.
  • Many airlines, including American, United, Delta, Air France, and British Airways, have canceled all flights to mainland China. The resume date of the flights is constantly postponed.
  • Lufthansa has canceled 7,100 European flights for March, mostly within Germany or on routes to Italy, accounting for about 25% of its total capacity.
  • Many flights to and from Milan, Italy and other infected areas are canceled as well.

  • Wyndham Hotels and Resorts has closed about 1,000 of its hotels in China. This could mean a $5 million loss in the first quarter of an $8-12 million drop in adjusted EBITDA for the full year.
  • Hilton has closed about 150 hotels in China.
  • Most Hong Kong hotels record single-digit occupancy.
  • The number of tourists arriving in Hong Kong has dropped from 200,000 in February 2019 to 3,000 in February 2020.
  • Hyatt has closed 26 of its 86 properties in China.
  • Marriott has closed approximately 90 of 375 properties in Greater China (mainland China, Hong Kong, Taiwan, and Macau), expected in about $25 million loss per month in first-quarter.
  • Daily passenger volume is circa 40% lower, than the expectations, one week after the start of the Chinese New Year holiday, according to IATA reports.

  • 29% increase in the cancellations of bookings in China in January.
  • 75% decline in hotel bookings for February, March, and April in China.
  • 16% cancellations for properties in the Middle East.
  • 3,000 hotel rooms have been canceled by Chinese tourists between January and March in Northern Ireland.
  • Expedia allows customers to cancel hotel and flight bookings without any penalties.
  • Airbnb has blocked bookings in Beijing through the end of April.
  • MGM has closed its casinos in Macau.
  • More than 40,000 hotel bookings on the Indonesian island of Bali have been canceled and the virus could cause up to 0.3% points of the country’s GDP growth.
  • 5% is the global slowdown in outbound travel bookings for March and April (according to forwarding Keys), excluding trips to and from China and Hong Kong.
  • It is estimated that the global airline industry would lose $113 billion due to the virus outbreak.

  • A cruise ship in the Caribbean has been turned away from two ports over fears of the COVID-19.
  • The Olympic Summer Games might be threatened by the virus.
  • The world’s biggest travel show, ITB, taking place in Berlin in March has been canceled.
  • The Geneva International Motor Show has been canceled.

These are just a few of the facts that prove that the whole travel industry worldwide is dramatically affected or will be soon.

Moreover, a long-term effect in the Airbnb hosted apartments is expected. In many countries, residents get bank loans to buy a secondary property and rent it via the platform. As they pay the installments with the incomings from the guests from Airbnb and the number of guests fell and will continue to fall dramatically, the locals are facing the impossibility to pay their installments.

The average hotel occupancy rate worldwide is around 65-70% and taking into account the expected global slowdown, the global turnovers are expected to drop down around 10%.

5 tips on how to navigate the coronavirus, if you are running a hospitality business

How to fight the situation is one of the questions many will ask? Sadly, the loss of revenue is hard to overcome, but the good news is that people forget quickly and once the situations settle down, they will start to travel again. And another reason is people love to travel and they will resume in a relatively shorter time.

Well, obviously if people are scared, sick or under quarantine, they won’t travel now, no matter how tempting your offer is. But what about the future? There will be NYE 2020, Christmas 2020, Valentine’s Day 2021, etc., so why not offer them discounted rates in return for immediate non-refundable payments if they book and pay now and travel in months when the outbreak is under control. In this way, you can continue operating, with smaller loss and generate some business for the upcoming months.

The ultimate issue, you will be facing as a business will be the decline in cash flows, caused by the reduced bookings now and a further reduction in bookings until the end of the year. This will prevent you from making the necessary investments in technology and innovation and once the economy recovers, you will find yourself weak and difficult to catch up with the competition.

 What should be your response, if you are owning a hospitality business? 

  1. Work on your website

Use the time to update, upgrade or renew your website. Make it mobile-native if you haven’t done that yet. Refresh the pictures and text and think about concise typography and the use of emoticons and special characters. Add or remove sections, that you might no longer need and update the services you provide. Include social media integrations if you haven’t done this so far. Why not create a blog section to post some news about your city or area? Include interesting sights, worth visiting, industry-relevant news or curious facts to entertain your visitors.

  1. Invest in Social Media

Forgot the passwords? Never bothered to create a nice Instagram profile? It’s time to do this now.

Millennials and Generation Z need social proof and if they don’t find you on social media, it means you don’t exist. And they are a large group of holiday bookers. Create profiles on all relevant social platforms and use them often. Post updates, high-quality pictures and short videos of your venue and the area, promotions, deals, special offers and contests to increase engagement. Use stories to ask questions, run polls or sneak a peek into your work life. Use YouTube to upload your videos, touring the hotel, testimonials or live events.

  1. Get cool pics and interesting videos
  • Your hotel in the vineyards looks so much more enticing from above – get a professional videographer and go for some dramatic drone footage.
  • You run a boutique hotel in an up- and coming city? Great! Show your customers how nice the interior is, how expansive the roof terrace is and how this art-deco wallpaper corresponds with this uber-cool marble floor. An experienced photographer can showcase the beauty of your property.
  • Have you ever thought of virtual or augmented reality? Why not implement it in your venue? This is a way how guests can get to your hotel when they actually cannot physically get to your hotel.
  1. Promotions
  • Maximize your existing database customers by offering them upgrades, lower rates for bookings with prepayments and freebies. Involve special prices and events. Think free golf course, free winery tour, free spa treatments, or even free flight ticket to your destination (conditions may apply).
  • Be where the market is. Ensure you cover the markets still looking to book and travel.
  • Be flexible in your rates and give more discounts if your guests are willing to book well in advance and pay now. Focus more on added-value offers or the flexibility, rather than the very strong reduction of the rates.
  • When people are cautious about traveling internationally, invite the domestic market to travel locally. Focus your marketing efforts on the domestic audience and your fellow countrymen, who are still willing to travel, but afraid to do so in the infected areas.
  • You can also target your loyal and repeat customers, be it from home or from abroad. Offer them special discounts, or their favorite services for free, or bonus points, if you have a bonus-rewarding system implemented.
  1. Act responsibly and educate – declare COVID-19– free (if you are of course), keep a close connection with the medical authorities, post regular updates about the situation in your city, state or country. Highlight that you are ensuring guest safety by deep cleaning rooms etc. and that you are following local government guidelines and best practices. Educate your employees about an important topic they never had time to learn about before and how to contain higher than the usual hygiene standards and to avoid contamination.

To understand more about Aryxe`s Services and Solutions in the hospitality industry, please do not hesitate to contact us and send your non-binding inquiry

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