Postpone Don't Cancel!

The Impact of COVID-19 on Hotels

Written by Rebekah Moss 01 Apr 2020 - 5 Minutes reading time

Since COVID-19 was declared a global pandemic, there has been a rolling impact across the hospitality network; as travel bans were implemented worldwide and domestic lockdowns ultimately halted tourism on any kind of scale.

In the UK, some hoteliers found their hotels being repurposed for NHS workers and the homeless, in an effort to cope with social distancing and quarantine measures.

Before lockdown and repurposing measures began, hotel performance across London alone showed a fall in revenue per room by 27.7% between March 1st through to the 7th, when compared to the same period the year before. Data such as this, pushed the government to move to include the hospitality sector in its government aid packages.

Alongside government pledges to cover 80% of employee wages up to £2500 a month (using the PAYE scheme) as part of a retention scheme where businesses cannot provide work; hotels and other hospitality businesses have been included in a 100% reduction on business rates through to 2021.

Further government support includes the coronavirus business interruption loan scheme, supporting smaller hospitality businesses with access to loans and finance to the value of £5 million over 6 years. However, these businesses will remain liable for the loan and it is only eligible where they are unable to source a loan elsewhere. The scheme does not provide cover for businesses registered outside of the UK, nor to those that turnover more than £45 million per year. Through the retail and hospitality grant scheme, some businesses will also be able to apply for a grant of up to £25,000 per property.

COVID’s Impact So Far:

The impact that coronavirus has had so far varies from country to country as the outbreak continues to have a domino effect on each domestic economy; affecting the global outlook even more as it does. That being said, the future isn’t bleak. As the coronavirus cycles continue, countries affected at the beginning of the outbreak, are beginning to hit or even recover from the peak.

On a global scale, COVID-19 has continued to be devasting, but in looking at data from China, we can see that the tourism industry is not a lost cause.

The Negatives:

Sadly, the World Travel and Tourism Council has projected that up to 50 million jobs could be lost due to the COVID-19 pandemic, causing the travel sector to shrink by 25% in 2020. The UN World tourism organisation further cautioned that there will be a 3% decline in global tourism, with aviation taking a major hit due to the pandemic - an estimated loss across the board of $50 billion USD.

As a point of contingency, businesses of all sizes are trying to remain solvent, and with travel in a point of lockdown, a predicted 15% decline in travel ad revenue through Facebook and Google is predicted for this quarter; increasing to 20% by Q2. Across the board, traffic for travel sites has also decreased by 47% as coronavirus continues to make its way across the world.

Recovering Statistics:

China is currently known to be the country of origin for Coronavirus. Compared to data taken prior to containment measures in Shanghai and Hong Kong, demand for hotels were 50% and 10% lower. Since the outbreak has reached a level of containment in China, travel searches have increased by 230%.

In the United States, where the outbreak is arguably struggling to be contained - as New York holds more than 7% of the world’s confirmed cases - frequent travellers are still unlikely to be deterred by the uncertainty of the coronavirus, and it is estimated that 55% of frequent travellers in the US, will still be likely to book a vacation during self-isolation periods.

However, this percentage fell drastically if the booking date was within 4 weeks, and there was an increased preference for refundable options well into a 9-month time frame.

Domestic travel, however, has been affected. Revenue per room in the US is predicted to drop 50.6% across 2020 due to the global COVID-19 outbreak, setting the hotel industry for a year of non-growth.

Postpone Don’t Cancel:

Thankfully, there seems to be a global response to the efforts to support businesses around the world; with a keen awareness of how the economy will suffer in the wake of COVID-19.

As the economy continues takes a drastic hit across the board, businesses are asking travellers to postpone their plans and not to cancel them.

As part of this outreach for support, it is almost certain that many will embrace a hedonistic surge for travel after restrictions have lifted when this pandemic, ultimately does pass. Postponing plans allows hotels - particularly small ones - to maintain revenue projections and fight the threat of shutting down.

As 10% of the workforce works in the tourism industry, a key proponent of the economy arguably relies on sustaining businesses across the hospitality sector; including protecting the jobs of the employees that may be isolating alongside all of us.

What Support Is There For Customers?

OTAs such as Booking.com and Expedia are known to be waiving cancellation fees in some cases, however, there has been reported confusion as to who is responsible for a customer’s booking. Equally, customer service channels are reportedly overwhelmed during this time.

"When things go wrong like this it can be a little bit trickier if you have booked using OTAs rather than directly...You have to go through the OTA, and it takes a little bit longer." - Scott Keyes (Scott’s Cheap Flights).

It would prove more beneficial to contact your hotel directly to amend your booking if you choose not to cancel it.

Additionally, bigger chain hotels such as the Hilton and many others are amending their loyalty schemes by either extending the expiry on their points schemes or altering the requirements on their member tier status; to increase customer retention.

Whilst it’s still too early to see what the lasting impact of COVID-19 will be on the hospitality industry, the demand for travel will be sustained. Whether the services to facilitate this demand will continue to affordably exist, relies heavily on both government and public support throughout these times of hardship.

Total Processing is a leading provider of acquiring flexibility and processing solutions. Partnered with HotelTime Solutions and the Insitute of Hospitality, we’re proudly bringing ease of integration and the adoption of diverse payment methods to the hospitality industry across the world.

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