Industry Update
Opinion Article20 July 2020

COVID-19: Impact On The Hospitality Workforce

By Sukrit Dogra, Consultant at EHL Advisory Services, Lausanne Office

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The ruthless march of COVID-19 throughout the globe is first and foremost a human tragedy, affecting the health of hundreds of thousands of people. The consequences of measures taken worldwide to curb the pandemic are having a growing impact on the global economy. This article aims to offer key highlights on the impact being felt by the industry due to factors including, but not limited to, the migratory nature of the hospitality workforce and the pause on global travel, tourism and restaurant services.

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Business impact on travel and tourism

Accounting for the unprecedented travel restrictions, the United Nations World Tourism Organization expects that international tourists will be down by 20% to 30% in 2020, when compared to the last year. To put this into context, they also drew a comparison from the SARS outbreak in 2009, which led to a decline of just 0.4% of the international tourist market. The hospitality industry accounts for 10% of the global GDP.

Disruptions to production, initially in Asia, have now spread to supply chains across the world. All businesses, regardless of size, are facing serious challenges, especially those in the aviation, tourism and hospitality industries, with a real threat of significant declines in revenue, insolvencies and job losses in specific sectors. Sustaining business operations will be particularly difficult for small and medium enterprises.

In India: The hospitality industry is likely to be hit hard. Experts suggest that domestic hotel companies will face a weak Q4 FY20 and a weaker Q1 FY21. March has borne the brunt of many large-scale cancellations across the corporate, MICE and leisure segments. Tier 2 and tier 3 hotel markets in India continue to witness a small erosion in business for now. Occupancies in at least the first half of March were only partially lower despite the spread of the virus in some states,

In Europe: Industry experts have attempted to predict the effect upon the global hotel industry for 2020, estimating a profit decline of 11-29%. The KHN, which represents bars, cafés and hotels, has said that the emergency measures to limit the spread of the virus are already causing a serious impact. Cancellations have risen by almost half - the KHN survey found that hospitality owners believe that they could make losses of 33% due to the emergency measures put in place by the government.

In China: Compared to 2019 figures, occupancy is down by as much as 68%. As China was the first market to deal with the coronavirus, it is also the first to show signs of stabilization. As per data, 87% percent of the country's hotels are now open and occupancy is beginning to rise.

Other countries: Hotels across the U.S. are experiencing unprecedented booking cancellations due to the pandemic, which could eliminate up to four million posts (this accounts for 50% of all hotel jobs in America). The average occupancy in Italy is down by 96% ; the United Kingdom is down by 67%.


Impact on
jobs in hospitality

The World Travel & Tourism Council has recently warned the COVID-19 pandemic could lead to a cut 50 million jobs worldwide in the travel and tourism industry. As per an Oxford economics study, Asia is expected to be the worst affected and data suggests the industry could take many months to recover.

Following travel bans, border closures and quarantine measures, many workers cannot move to their places of work or carry out their jobs which has effects on incomes, particularly for informal and casually employed workers. Given the current environment of uncertainty and fear, enterprises are likely to delay investments, purchases of goods and the hiring of workers. As per data, the impact on the Indian hospitality industry could render a majority of the people in hospitality in India, jobless. As a result of this pandemic, the Indian tourism industry is looking at pan India bankruptcies, closure of businesses and mass unemployment.

Overall, it may be that the nature of hotels and restaurants will change to leaner and more efficient operations, where a balance between smart and skilled labour is sought after. Due to fear, a large part of the labour force is seeing a domestic-mass immigration, which means a majority of the front line staff at hotels will have moved back to their native areas. Temporary work forces will be the first to shrink, afterwhich the impact will be felt by permanent employees as hospitality companies may be hard-pressed to cut costs. This may lead to a large number of people changing their industry to go where the cash flow is quicker. This global exodus could have a severe impact on the talent pool and may not recover until confidence is reinforced by employers and governments alike. Only through a compassionate approach taken by businesses can the workforce be saved.


Reversing the impact on the talent pool

With the incumbent lay-offs, it is possible to offer upskilling opportunities to front-line staff, so as to beef up their resumes and increase their probability in securing a job at the time of the market up-turn. This could curb mass-migration to the other industries that could increase the gestation period of the hospitality market's recovery phase by reducing specialized workforce. In this scenario, the training and upskilling of a replacement batch would take a longer time to recover - causing companies innumerable issues. However, innovative methods can be applied to aid the market in boosting and preserving the numbers for when the market finally normalizes.


Opportunities to
upgrade the skillset

Up-skill

Creating opportunities for hotel employees to add value to their skill-sets could build confidence in hotel companies, as layoffs can be expected by all major and minor hotel companies. Hyper-local hotels may see the largest number of layoffs due to the popular asset-light model, where large number of operating units, scattered across countries, could be written off all at once. This will bleed out a vast number of hospitality employees into an already difficult market. Individuals who can upgrade their skill sets by way of enrolling in speciality-specific courses could benefit greatly.

Re-skill

Offering routes such as 'Recognition of Prior Learning' opportunities to qualified hospitality front-line professionals could accelerate the process in re-skilling individuals, hence preparing them for roles in hotels and other hospitality-related operations in an environment where lean, yet skilled operations will be required.


Other innovations

Continuous education

Hosting online classes in order to make up for lost time during this period could be highly advantageous for students and institutions. This would allow institutions to re-group and conduct live sessions, ensuring some cash flow and reducing the stress on their respective plans for their cohorts. Modern Learning Management Systems allow the hosting and remote delivery of their content via a simple self-learning approach or a one-to-many classroom-style delivery. Technology that is currently available to us allows for a lot of creative methods to ensure continuity in learning that will surely see the light of day as necessity always breeds innovation.


Summary

At no point in history has such an incident occurred, where businesses in almost 200 countries have been paralyzed due to a common factor. Only time will truly tell the full impact of COVID-19 on the global business scenario. The landscape of hospitality could possibly change forever, and in order to stay relevant, we must find creative ways to secure our industry. A vast amount of research on global hospitality trends is being shared on the internet, which can help inspire paradigm-shifting ideas. However, adoption of those ideas by the market will be key in finding the light at the end of the tunnel. It is possible that employers and governments who remain connected and concerned about their resources decide to retain a majority of their people, thereby reducing the stress on their HR cycle and giving them the competitive advantage.

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Sukrit Dogra

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