Hospitality: COVID-19 Related Policy Shifts

Proshare

Tuesday, April 27, 2021   /06:00 AM  / By Proshare Research / Header Image Credit: EcoGraphics


Proshare Nigeria Pvt. Ltd.

 

Numerous policies have been embarked upon by different economies to help the travel and tourism sector stay afloat. For example, the Italian government approved the sum of 180m Euros towards tax credits for redevelopment and improvement of hospitality and spa sector companies, including agritourism businesses, hostels, and campsites. Also, the Australian government launched a $14.4m initiative that included two funding programs. The $10.4mn Tourism Recovery Fund provides one-off cash grants of $6,500 to up to 1,600 individual small businesses. The remaining $4m was committed towards a Tourism Business Survival Grant package, which provided grants of $25,000 to $100,000 for tourism operators. The table below provides a snapshot of some of the policies adopted by some select countries in support of the travel and tourism sector (see Table 2).

 

Table 2: COVID-19: The New Travel and Tourism Tactics

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.


Overall Economy

The performance of the overall economy, as well as the government's policy response to the coronavirus pandemic, affected the hospitality sector. For example, Nigeria's rising inflation, slow growth rate, and slow rate of vaccination are projected to affect the recovery of Nigeria's hospitality sector in 2021. Also, unlike advanced economies that have poured huge sums of stimulus into the hospitality sector, Nigeria's weak fiscal balance has limited its ability to pass a stimulus package to help trigger a quick rebound in the hospitality sector.

 

According to Mckinsey, there are nine potential scenarios for the recovery of national economies, based on the extent to which the pandemic spread is controlled, as well as the effectiveness of economic policies intended to counter the effects of a quarantine. The best economic outcome for the hospitality sector is scenario A4 where the virus is contained and there is a strong growth rebound. On the other hand, in scenario B3 where the pandemic escalates and there is a prolonged downturn without economic recovery, the hospitality sector's rebound might be longer (see Illustration 7).


 Proshare Nigeria Pvt. Ltd.


Illustration 7: COVID-19: The Many Faces of a Pandemic

Proshare Nigeria Pvt. Ltd.

 

A continuous imposition of lockdown to curtail the spread of the virus would adversely affect the hospitality sector. On the other hand, the government's rapid response in curtailing the virus and a quick rebound in the overall economy will trigger a speedy sector recovery. For example, if the virus is contained but there is a slow recovery in the economy, we will expect a slow recovery in the hospitality sector while if the virus surges and there is slow growth in the overall economy, then a rebound in the hospitality sector would be far from sight. The best possible outcome for the hospitality sector is a quick stamp down on the spread through vaccination accompanied by a quick rebound of the global economy (see Illustration 8).

 

Illustration 8: COVID-19: Hospitality and its Several Trials

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Hotel

There has been a decline in the global occupancy rate of hotels.  At the peak of the pandemic in March and April 2020, Europe was the continent with the lowest occupancy rate followed by America, Asia Pacific, and the Middle East & Africa (see Chart 5).

 

Chart 5: Hotel Occupancy Rate (%)

Proshare Nigeria Pvt. Ltd.

Source: Statista, Proshare Research

 

Most regions in the world recorded declines in the occupancy rate, Average Daily Rate (ADR), and revenue per available room (RevPAR). In Africa, occupancy and RevPAR contracted to an all-time low, as of December 2020 Africa's occupancy rate stood at 29.0%, ADR contracted by -3.3% Y-o-Y while Rev PAR declined by -54.1% Y-o-Y. There was also a decline in occupancy rate, ADR, and RevPAR in the Middle East region. As of December 2020, the occupancy rate in the Middle East stood at 45.9% a decline of -30.3% Y-o-Y while its ADR and RevPAR declined by -17.3% and -42.4% respectively.

 

On the other hand, the US economy at the peak of the pandemic as of November 2020, recorded a decline in its occupancy rate by -34.5% to 40.3%. Its ADR declined by -27.7% in November 2020 Y-0-Y while its RevPAR declined by -52.6% Y-o-Y to US$36.67 (see Table 3).


Proshare Nigeria Pvt. Ltd.


Table 3: Global Hotel Performance

Proshare Nigeria Pvt. Ltd.

 

The coronavirus pandemic has also led to a paradigm shift in global hotel operations. The old paradigm in hotel operations involved the use of human labour to do cleaning and sanitization but the new paradigm would involve the use of new generation robots equipped to clean and engage in other routine hotel housekeeping chores (see Illustration 9).

 

Illustration 9: New Paradigm Vs Old Paradigm

Proshare Nigeria Pvt. Ltd.


 Proshare Nigeria Pvt. Ltd.


Opportunities and Threats in the Hospitality Ecosystem

Despite the challenges posed by the pandemic virus, it has been noted that there are opportunities that the pandemic has created. For example, the aviation sector is currently facing liquidity crises attributed to the pandemic virus, despite the challenges, experts have noted that there are opportunities in the sector i.e., airports and airlines can gain competitive advantage by tailoring services, addressing customer needs such as health and safety and social distancing, capturing additional market share. Furthermore, airports and airlines can reduce operational costs including overheads and floor requirements by redesigning working models, adopting flexible working practices such as work from home policies, implementing virtual handovers to reduce person-to-person contact, and airports can minimize and adapt capital expenditure based on terminal runaway capacity demand.

 

The tourism sector also faced challenges in 2020; the reluctance to travel limited tourist arrivals, social distancing restricted interaction, health and safety protocols measures reduced capacity, etc. The coronavirus pandemic pushed businesses to re-think their models such as re-engineering of operational workflow, adaptation through innovation, digitization, safety, hygiene, and cleaning protocol. Also, the pandemic created opportunities for tourism operators to come up with flexibility with booking policies, refunds, and prices to stimulate local and international demand.

 

Hotels were not left out of the challenges posed by the pandemic. Some of the challenges faced by the hotels includes the increase in the cost of safety and cleaning expenses which adversely affected hotel profitability, fluctuations in demand due to a decline in consumer's disposable income, and a fall-off in revenues from general services. The pandemic presents opportunities for hoteliers to change their strategy e.g., hoteliers could focus on the switch in customer perceptions and experience and optimizing the full use of technology in business operations (see Table 4).

 

Table 4: Hospitality: Of Spots and Swots

Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.


Downloadable Version of Proshare Confidential: Hospitality Post-COVID-19: Making the Future Count

1.      Full Report: Hospitality Post-COVID-19: Making the Future Count - Apr 23, 2021

2. Executive Summary: Hospitality Post-COVID-19: Making the Future Count - Apr 23, 2021


Proshare Nigeria Pvt. Ltd.


Related Links

  1. Hospitality Before and After - The Unmaking of Hotels
  2. Hospitality: A Post-COVID-19 Reality
  3. Hospitality Post-COVID-19: Making the Future Count

Proshare Nigeria Pvt. Ltd.


Related News

  1. PwC Hospitality Outlook 2018-2022: Positioning For Future Growth
  2. Nigeria to Earn N3.63 Billion From Domestic Tourism By End of 2018 - Hospitality Report
  3. Hospitality, Still Some Room for Expansion
  4. Transnational Corporation of Nigeria Plc - Improved Earnings Outlook
  5. Hospitality and Tourism Sector contributed 4.8% to Nigeria's GDP in 2016-Jumia Travel
  6. Launch of Africa Luxury Hospitality - the 1st 4-Star Plus Hospitality Job Board in Africa
  7. Why the Recession will Grow Nigeria's Travel & Hospitality Industry
  8. Nigeria's tourism & hospitality industry may overtake the downstream sector by 2021 -Jumia Travel CM
  9. Nigeria's hospitality industry: A loser from consumer spending squeeze
  10. How Attractive is Nigeria's Hospitality Industry? - A Report
  11. Transnational Corporation Plc - Changes Sector from Hospitality to Conglomerates
  12. Transcorp Hotels Launches Aura, An Online Marketplace for Accommodation and Experiences
  13. Hotels and Recent Tax Amendments - Legal Alert
  14. Data Protection for Hotels - Legal Alert
  15. Hospitality, Still Some Room for Expansion
  16. Hospitality and Tourism Sector contributed 4.8% to Nigeria's GDP in 2016-Jumia Travel
  17. Launch of Africa Luxury Hospitality - the 1st 4-Star Plus Hospitality Job Board in Africa

Proshare Nigeria Pvt. Ltd.


Related News on Ikeja Hotels Plc

  1. IKEJA HOTEL Declares N1.7bn Loss in Q4 2020 Unaudited Results,(SP:N1.28k)
  2. IKEJAHOTEL Notifies of Board Meeting Date and Commencement of Closed Period
  3. Ikeja Hotel Plc Q3 2020 Results: Losses Rise as Coronavirus Effects Linger
  4. Ikeja Hotel to Record N4.6bn Potential Loss Due to Occupancy Revocation
  5. IKEJA HOTEL Declares N1.4bn Loss in Q3 2020 Unaudited Results,(SP:N3.15k)

 

Proshare Nigeria Pvt. Ltd.


Related News on Transcorp Hotels Plc

  1. Transcorp Hotels Launches Aura, An Online Marketplace for Accommodation and Experiences
  2. Transcorp Hotels Commemorates N10bn Rights Issue Listing With NSE Digital Closing Gong Ceremony
  3. Transcorp Hotel Plc Lists Additional Shares Arising from Rights Issue of 2.64bn Ordinary Shares
  4. TRANSCOHOT Notifies of Board Meeting Date and Commencement of Closed Period
  5. TRANSCOHOT Declares N5.6bn Loss in Q3 2020 Results, (SP:N4.00k)

Proshare Nigeria Pvt. Ltd.


Related News on Capital Hotel Plc

1.       Capital Hotels Plc Issues an Update on Its Appeal in Its Case With Alhaji Musa Abdullahi

2.         Capital Hotel Plc Notifies on Its Case with Alhaji Musa Abdullahi

3.         CAPHOTEL declares N 379.205m PAT in Q3 2018 Results,(SP:N3.10k)

4.         Capital Hotels Plc Appoints New Directors

5.         CAPHOTEL Declares N115.86m PAT in Q1 2018 Results,(SP:N3.15k)


Proshare Nigeria Pvt. Ltd.


Related News on Tourist Company of Nigeria Plc

1.          TOURIST Declares N6.5bn loss in Q4 2020 Results, (SP:N2.84k)

2.         TOURIST Declares N6.2bn loss in Q3 2020 Results SP N3.15k

3.         TOURIST Declares N4.50bn loss in Q2 2020 Results SP N3.15k

4.         TOURIST Releases 2019 Audited and Q1 2020 Results, declares N4.1bn loss in Q1 2020, (SP:N3.15k)

5.         TOURIST Declares N1.5bn loss in Q4 2019 Results SP N3.15k

 

 Proshare Nigeria Pvt. Ltd.

 

 Proshare Nigeria Pvt. Ltd.

 

READ MORE:
Related News
SCROLL TO TOP