Sunday, April 25, 2021 /06:00 AM / By Proshare Research / Header Image Credit: EcoGraphics
"Bad companies are destroyed by a crisis; good companies survive the crisis, but great companies are defined by a crisis" - Andy Grove
The effect of the unprecedented changes caused by the coronavirus pandemic hurt most economies and businesses. The pandemic caused an emergence of winners which include technology companies like Amazon, Facebook, Tesla, etc, and losers such as the hospitality sector, aviation sector, tourism sector, etc. Businesses that are concerned with staying afloat during the tough times had to re-imagine, re-strategize, and rethink their business model to adapt and stay relevant during the pandemic.
The hospitality sector was badly hit by the impact of the coronavirus pandemic. The restrictions of the movement of people both internationally and locally had a devasting impact on the sector (see Illustration 3). Most companies that operate in the hospitality sector struggled in 2020 while countries that depend on the tourism and travel sector such as Kenya, Greece, Iceland, etc, also struggled as they recorded a decline in their revenues.
Illustration 3: Restricting the Virus
The hospitality sector in Nigeria was not left out of the global crisis. The lockdown and social distancing measures pursued by the Federal and various state governments affected businesses involved in the hospitality ecosystem. Hotels recorded declines in their occupancy rates, profits, and patronage in most of their business segments while tourist companies recorded low tourist arrivals both domestically and internationally. All the hotels listed on the Nigeria Stock Exchange (NSE) recorded losses in 2020. Ikeja hotels recorded a loss of N1.75bn in 2020 while Capital Hotels Plc and Transcorp Hotels Plc recorded losses of N266m and N8.93bn, respectively. Some analysts believe that the fortunes of these companies would improve in 2021 on the back of a full re-opening of the economy, widespread COVID-19 vaccination, and an increase in travel. On the flip side, other analysts believe that the growth in the hospitality sector would be slow in 2021 hampered by the slow growth of the economy (estimated in some quarters to be between 2.1% and 2.5% in 2021), a decline in consumers disposable income, slow start to COVID-19 inoculation, a decline in consumer confidence and the enforcement of social distancing rules, etc.
The impact of the coronavirus pandemic sector has necessitated the need for hotels to adapt to the "new normal" to stay afloat and remain competitive. The hospitality market will need to rethink its operation and build anew. In the future, stakeholders in the hospitality sector will need to adapt to fit the new status-quo which is the "new normal" and forgo any hope of going back to "normal". For example, hotels that provide spaces for conference centers would record little patronage as most companies, government agencies, and stakeholders have resorted to hosting their events online. Hence, hotels that would remain relevant after the heat of the coronavirus pandemic cools off would need to invest aggressively in their digital future, rethink their marketing strategy, make bold moves towards innovation, etc. Therefore, the new thinking should be visionary and involve bold steps to adapt strategy to new trends in the hospitality sector.
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
Related News on Ikeja Hotels Plc
Related News on Transcorp Hotels Plc
Related News on Capital Hotel Plc
Related News on Tourist Company of Nigeria Plc