Impact of Covid-19 on SMEs in UK Hospitality Sector

This study examines the impact of Covid-19 on small and medium-sized enterprises in the UK hospitality sector, with a focus on Capital hotel. It analyzes the factors affecting SMEs, the impact of Covid-19 on the hospitality industry, and strategies for SMEs to deal with the pandemic. The research methodology includes qualitative analysis and thematic perception test technique. Recommendations will be provided to help SMEs recover from the disruption caused by Covid-19.

BUSINESS RESEARCH
PROJECT

Table of Contents
INTRODUCTION...........................................................................................................................3
Background of study....................................................................................................................3
Research aim and objectives........................................................................................................3
Research questions.......................................................................................................................4
Rationale of the study..................................................................................................................4
Literature review..............................................................................................................................4
Factors affecting SME's...............................................................................................................4
Impact of Covid on Hospitality sector.........................................................................................5
Strategies of SME's to deal with Covid.......................................................................................6
RESEARCH METHODOLOGY.....................................................................................................6
Research type...............................................................................................................................6
Research approach.......................................................................................................................7
Research philosophy:...................................................................................................................7
Data collection.............................................................................................................................8
Data analysis................................................................................................................................8
Research limitations.....................................................................................................................8
Ethical consideration....................................................................................................................9
Data analysis....................................................................................................................................9
Challenges faced by SME's due to changes in business environment.........................................9
Covid and its effects on hospitality industry..............................................................................10
SME's and its methods of dealing with Covid pandemic..........................................................10
CONCLUSION..............................................................................................................................11
Recommendations......................................................................................................................12
REFERENCES................................................................................................................................1

Topic: To access the impact of covid 19 disruption on small and medium-sized enterprises in
UK hospitality sector. A study on Capital hotel.
INTRODUCTION
Background of study
The hospitality sector of UK is booming and contributing in the economic growth of the
country. The hospitality sector of UK provides employment opportunities to many citizens.
Covid 19 adversely affected the small and medium-sized enterprises and some of them also shut
down because of no business due to the pandemic and some other major problems which this
pandemic has caused are supply chain disruptions, demand decreased, shortages of raw material,
transportation disruptions etc. not only the hospitality industry but every industry are facing the
impact of covid 19 on their businesses but it is also agreed that the major victims of coronavirus
are the small and medium-sized enterprises as compare to large companies as small enterprises
does not have sufficient resources and are not prepared for such pandemic because these
enterprises are majorly dependent on their daily transactions and customer base.
MSME contribute major in economy which provide employment to many people globally
(Bartik and et.al., 2020). In the hospitality sector their earnings are from guests who visit and
stay at their hotel but due to covid 19 lock down happened which restricted the free movement of
people globally and no people means no sales and no profit so MSME faced huge loss because of
it they reduce the number of workforce appointed and also stopped many services which earlier
they were providing. Capital hotel is a small hotel in UK which is known for the good quality of
services provided by them, proper hygiene is also provided by the hotel. This study will discuss
the aims and objectives of the research along with the research questions and rationale of study.
Further will tell about literature review, research methodology and data analysis by constructing
themes. This study will also give recommendations which will complete the investigation.
Research aim and objectives
Aim
The aim of current investigation is to ascertain the impact of covid 19 on small and medium-
sized enterprises like Capital hotel.
Objectives
By considering the above aim following objectives are made:

 To analyse the factors which impact the small and medium-sized enterprises within
hospitality sector.
 To access the influence of covid 19 on small and medium-sized enterprises with regard
to Capital hotel.
 To evaluate the positive responses for SME in order to recover from covid 19.
 To recommend effectual strategies to MSME against covid 19 disruption.
Research questions
Q1 What are the positive response of SME to recover from covid 19 ?
Q2 Which factors has impact the small and medium-sized enterprises with regards to hospitality
sector?
Q3 What is the extend to which covid 19 influence the Capital hotel?
Rationale of the study
The major reason for doing this research is to know that how covid 19 has impacted the
MSME. This is the research issue because in this pandemic conducting research is not easy
(Fairlie, 2020). So through thematic perception test technique research will shed light on the
level of covid 19 which has impacted small and medium companies.
Literature review
Factors affecting SME's
As per the views of Jones and Comfort, (2020), SME's are mainly affected due to the
changes in the environmental factors. As the environment is highly volatile external factor which
continuous changes. Due to the changing environmental factors the working of SME's got
affected. Covid-19 being a part of environmental factor affected the SME's sector at a larger
scale. Covid-19 along with its impact has also threatened the base of SME's in terms of major
losses or shutting of business. On the other hand Matti and Zhou, (2017) said that working of
SME's got majorly affected due to the changes of political factor. Brexit in UK brings a major
political change that affected the working of SME's in terms of imposition of restriction on
performing the trade activity between UK and European Union. Political factor not only affected
the business or operation of SME's but it has also affected its sales and objectives.
According to Bartik, (2020), SME's got majorly affected due to technological
environment. Being working on smaller scale with low investment capacity, SME's found many
difficulty in adopting and upgrading the technology. Due to this SME's and its business faces

many losses in terms of low sales and loosing of customers due to non ability of providing the
technological advanced services. However, Heald and Hodges, (2020) critics that instead of
technological environment, economic factors are the main contributor for affecting the working
of SME's. Covid pandemic along with its associated impacts give rise to economic crises across
all the sector of economy. Economic crises leads to the sudden raise in the prices of raw material,
raise in the interest rate along with reducing the income of government which also reduces the
amount of government grants also affected the SME's at a wider scale. As a result SME's found
very difficult to operate its business.
Impact of Covid on Hospitality sector
Huang, (2020) favours that Covid has extreme impact over the business of small
companies and specially the hospitality industry. Covid along with its prohibitions or the rules of
government concerning Covid situation has stopped the movement of tourist along with local
customers in UK. And being a tourist dependent industry or an industry which is fully based on
local and outside customers, hospitality sector has got severely affected. However Dube, Nhamo
and Chikodzi, (2020) argues that Covid pandemic not only affected SME's in terms of restriction
regarding the movement of tourist but it is also affected the UK economy at a larger scale.
Tourism being a major contributor of GDP of any country and due to the putting of restriction
not only the business of SME's being affected but it also brings a major influence over the
economy of UK in terms of lowering the GDP.
According to Uğur and Akbıyık, (2020) SME's being a dealer of small scale or working
at a small scale has been come to the stage of closure due to Covid situation. Covid pandemic
being a great affecter over all the sectors, but the hospitality being the first one. While big brands
found somewhat easy to survive in the competitive market while small companies caught in the
situation of closure or the force closure. While Blustein, (2020) criticizes that Covid has not only
affected the small companies in terms of shutting business but it has also affected to those
workers or employees who are being associated with those companies. Covid has lead to that
situation which affect their lives at a drastic level in terms of non-performing their routine life or
non getting of their food. Covid has affected very badly the hospitality industry it reduces the
footfall of customers which drastically decrease the sales of the companies and also the profit.
The growth which is planned by the company before covid 19 is not achieved rather than
company moved downwards and can be said that hospitality sector has affected much because it

deals with the customers face to face and due to pandemic customer had stopped stepping out
from their home. The pandemic has impacted the cash flows of the companies adversely.
Strategies of SME's to deal with Covid
According to Rachinger, (2019) Covid arises many challenges in front of SME's. Their
whole way of working got changes. Operations of SME's and hospitality in terms of dealing with
guest or customers got a drastic change in the form of more dependency or influence of
digitalization. While before the Covid situation hospitality industry deals with the customers
through direct channel but Covid has lead the increase use of technology while running the
operations of the business. This has not only being implemented to run the daily operations but it
has on the one side raises the speed of working for SME's. However Kurmann, Lalé and Ta,
(2020) critic that SME's or hospitality being a major adopter of technological advancement in the
form of digitalization got badly affected in terms of raising the expenses. Since technological
advancement requires a lot of money for execution. Thus, it has raises the expenditure of the
SME's on a major note.
Sun and Zhai, (2020) said that Covid-19 has lead the thorough change in the working or
expenditure of SME's. This is because on the one hand it raises the expenses in the form of
adopting the precautionary measures through the use of sanitizers or adopting the practice of
hygiene. While on the other hand it moults the working practice of SME's in the forms of
operating the business through the concept of social distancing. On a critical note Seetharaman,
(2020) argues that as SME's are bringing changes to deal or cope with Covid situation but with
the same pace it also adds on the expenses or decreasing their sales percentage. Since many
customers are now got conscious regarding the hygiene factor and as a result they themselves
start reducing the consumption of food products offered by hotels. Thus, in-spite of adopting the
changes, hospitality sector has yet faced a direct reduction of sales and profit percentages.
RESEARCH METHODOLOGY
Research type
It will tell that what research type will be used in the study and the research types are of
two types qualitative research and quantitative research.
Qualitative research:
Qualitative research is used when analysing the non number based data to understand the
concepts, ideas and experiences. This research is also used in doing the in depth study or to

generate innovative ideas for the research. This is opposite of quantitative research as in
qualitative research numerical data is collected. The main purpose of this research is used to
understand the experiences of people in the world. Qualitative research are very flexible and is
also considered as the first-hand research. This research can be done through observation
regarding what is seen or heard or interview taken from groups.
Quantitative research:
Quantitative research involves that investigation under which the numerical data like percentage
or statistics is collected from the customers through surveys etc. data collected through this
research are reliable and precise and are also easy to evaluate (Humphries, Neilson and Ulyssea,
2020).
For knowing the impact of covid 19 on small-medium enterprises qualitative research type will
be chosen. Moreover, the aspect of covid 19 and MSME are theoretical so which can be
explained through qualitative research.
Research approach
Research approaches are the steps for the research and which are of two types inductive
research approach and deductive research approach.
Inductive research approach:
Inductive approach which is also called inductive reasoning which include observations, patterns
and theories. This approach is the systematic process for evaluating the qualitative data under
this the analysis are guided by the specific objectives.
Deductive research approach:
Deductive research which is called deductive reasoning deals with the development of the
hypothesis which is based on the theory and after that research strategy is designed for
hypothesis testing.
In order to analyse the impact of covid 19 on Capital hotel inductive research approach will be
applied (Aspers and Corte, 2019). As this approach will help finding and formulation of
assessment of the qualitative research.
Research philosophy:
Research philosophy is the belief that how the data should be collected and analysed and
it of two types interpretivism philosophy and positivism philosophy.
Interpretivism philosophy:

This research philosophy states that the observation of the researcher in observing the world is
different. That is why this research is based on the opinions and interest of the researchers and
thus this study involves human interests. This philosophy is based on qualitative analysis.
Positivism philosophy:
Positivism philosophy is a theory which says that the proper knowledge about any topic is get
from the experience only, this philosophy is based on quantitative analysis.
For the present research interpretivism philosophy will be used for accessing the qualitative data
and under this study qualitative investigation will be done (Mohajan, 2018).
Data collection
Data collection is the tool for collecting the information on variables and which is further
used to draw the outcomes or answer the questions. In all the research study data collection is
must and have different methods of collecting data and the methods are based on the research.
For addressing this research data will be collected from the secondary sources and for the
secondary sources literature review will be conducted.
Data analysis
Data analysis means investigating or modelling data to find out the useful information
which help the business in the decision-making process. It is of two types thematic perception
test technique and statistical package for social science (SPSS).
In this study thematic perception test technique will be used as this technique will be helpful in
evaluating the qualitative data and according to that themes will be made.
Research limitations
The main limitations while doing the current study are time, money and the unavailability
of the sources because of the limited time and money SPSS which is the quantitative technique
has no been chosen so to avoid this limitation thematic analysis is chosen and the current
problem is also matched with the qualitative aspect so the tool which is chosen is suitable (Alase,
2017). Further, in this study scholarly articles will also be selected which will help in solving the
problem which is regarding unavailability of the sources.
Ethical consideration
In the end of the research reference list will be added which will show that the work is
not copied from anywhere and authenticity of the research will be maintained by considering the
scholarly articles in the study (Galdas, 2017).

Data analysis
Challenges faced by SME's due to changes in business environment
It is being analysed form the literature review that business environment plays a very
important role in operating the business of the SME's. Any changes in the political factor may
bring or affect SME's at severe level. It is being observed that any changes in the policies of the
country will have direct influence over the business operation of SME's in terms of decrease in
its sales or profit percentages. Brexit being one of the major political factor affects the SME's
and hospitality sector in restricting its trade activities or dealing with European union. However,
it is also being analysed that apart from changes in political policies, environmental factors are
the major element which raises challenges in the path of SME's. Being a hospitality oriented
industry it is being majorly affected due to Covid and its restrictions.
Since, Covid being a major element of the environmental factor brings many challenges
to the hospitality industry. On the one hand due to Covid the expenses of the SME's got raise
while at the same time it affected the sales and revenues of this sector. Due to the restriction of
tourist or tight precautionary measures hospitality industry being majorly affected. It is also
being discusses that environmental factors in additions to raising difficulty to SME's also
affected their future policies related with expansion. Due to the imposition of restriction in every
country it becomes very difficult for SME's to expand or plan to expand their business.
It is also being analysed form the literature review that apart from the above factors
technological environment become the major contributor in raising the challenges to SME's.
Being possessing weak financial background or low investment capacity of SME's it becomes
very difficult for them to walk as per the speed of technology (Alonso, 2020). It is also being
noted that Covid has also leaded to rise in the technological advancement for the SME's to carry
out their operations. Due to their low financial capacity it raises two big challenges for SME's in
the form of being technologically advanced or to dealt with the situation of Covid.
It is also being discussed that in addition to the above changes in the business environment any
major changes in the economic environment in the form of raising of interest rate or changes in
the economic situation in the form of inflation or deflation also affects the SME's at a greater
extent. This will also raise challenges in the form of availing the amount of investment from the
market or to run their business in the economy.

Covid and its effects on hospitality industry
Hospitality industries being a tourism based sector greatly affected due to Covid
pandemic. As per the discussion in literature review Covid has put restriction over the movement
of people from one country to other. This has severely affected the hospitality sector. Being a
major dependency on tourism it faces the situation of shutting down its business. Hospitality
sector or the small enterprises being a major provider of employment in UK has been
extraordinary affected due to Covid-19 pandemic. It is also being discussed that Covid has not
only affected this sector but the people associated with it are also being affected at a broader
scale. It has crated the situation of unemployment for them (Fairlie, 2020). Many middle class
people who are engaged with SME's or hospitality sector had got unemployed. However, it is
also found that Covid-19 has not only leaded to unemployment but it has affected the growth of
economy of UK.
As this sector brings major revenue to support the GDP of the economy in the form of
foreign investment or tourism income and due to the prohibition on tourism the growth of the
economy also got affected. It is also discussed that Covid has raised the expenses of the
hospitality sector to the next level. Being raising consciousness among the people regarding the
health now the hospitality sector have to spend a high percentage of their expense towards
meeting such needs and regulations. This would also be right to said that it has double up its
expenses in the form of meeting the precautionary measures along with bearing of fixed
expenses in the form of rent, staff salary, insurance and various others. It is also being discussed
that the impact of Covid is majorly seen over the sales of the hospitality sector (Ozili and Arun,
2020). This means that the sales proportions of hospitality industry faces a serious decline which
a highly negative impact on its working operations in the form of fewer bookings of guests.
SME's and its methods of dealing with Covid pandemic
It is being analysed from the literature review that due to the various methods or modes
adopted by SME's the impact of Covid has now stared to be minimized. Digitalization or
technological advancement plays a major role in this. SME's after being more technologically
advanced or after adopted digital mode of business trying to find success in reducing the impacts
of Covid on them. It is being common fact that wherever there is problem at the same time there
is also an existence of solution. SME's being the foremost affecter of Covid now started different
strategies to deal with the situation and being digitalized is one of them. It is also being analysed

that SME's by bringing changes in the working operations could start finding its ways to deal
with Covid situation. It is also being noted that they also bring and adopted changes in the form
or dealing through online platform or adopting the practice of no contact delivery which will not
only helps them in fighting against the situation of Covid but it also helps them in carrying out
their business operations.
From the literature review it is observed that SME's or the hospitality sector my moulding
its way of working start attracting the customers along with coming on the track of raising the
sales and revenue. Hospitality industry by adopting the precautionary modes in the form of
hygiene or sanitization started a fight against Covid and its impacts (Fabeil, Pazim and Langgat,
2020). Being revolutionized their practices or adopting the practice of social distancing while
dealing with guest start generating revenue for them. It is also being discussed that as on the one
hand Covid has brought negative outcomes in the form of affecting the business or the
economy's situation but at the same side it has taught the new concept to hospitality sector or the
real life. It helps the SME's to understand the need of technology along with changing the trends
to dealt with customers. It is also being found that as Covid lead to the shutting of the business
and affected the economy but at the same side it has benefited to those companies or sectors
who have calibre to do something new for the customer. It gives chance and opportunities to
those industries who are well dedicated to do work and at the same time clear the market by
removing the unwanted or untalented industries from the market. Thus, it would not be wrong to
said that it initially it has major impact over the economy but later it only helps the economy for
achieving a future growth and development.
CONCLUSION
Through this research it can be concluded that covid 19 has impacted negatively on small
and medium-sized enterprises and in this study hospitality industry has taken and this industry
has faced huge loss due to coronavirus as there sales speedy goes down which has shaken their
revenue and small and medium enterprise got more affected as compare to large enterprises as
the large enterprises have the capacity to fight against such issues but small to medium
enterprises do not have such strength as these firms are dependent on existing customers and
daily transactions and as compare to other industry in small medium firms hospitality industry
got affected much as its business is providing services to the customers and in this pandemic

customer has stopped visited so for some companies even survival has become the biggest task.
So it is identified that the objectives of this research are analysing the factors which has impacted
small and medium firms and evaluating the positive responses which is necessary to come out
from this pandemic.
Qualitative research type is used in this investigation as it has theoretical information so this
research type is suitable for this and inductive research approach is applied on this study and this
approach is used in this research because it is helpful in finding the qualitative data.
Interpretivism research philosophy is used over positivism research philosophy because
qualitative study is conducted and positivism philosophy is used when conducting the
quantitative research study. In this research data is collected from secondary sources only and
not from primary sources, primary sources are ignored because of the pandemic as in the primary
sources data is collected from questionnaire which has to be filled from the participants and the
guidelines of WHO says that social distancing is to be maintained so that it why in this research
secondary sources are considered. Thematic perception test technique is used in this research as
this study is based on qualitative research and thematic tool is always selected when quality is
taken into consideration but all the limitations are identified and tried to fill gaps like for
secondary research scholarly articles are taken so that the work will look authentic and will also
give impression that it is not copied work. All the ethical aspects are also taken consideration
while doing this research so that it why references are attached in the file.
Recommendations
Small and medium firms should take care about the health of their workers, proper
hygiene should be maintained so that can be helpful in increasing the sales because after the
pandemic, hygiene is the aspect which is considered more. These enterprises can make plan
which can be called as emergency plan also which have the solution that what steps company can
take if in future they face such outbreaks and which also involve measure for protecting the
workforce. Companies should come on digital platforms if they are not there like on social media
they should have become more active and posts on regular basis so that people will not forget
about the company and coming with good offers is also helpful for the company in increasing the
revenue as offer will attract more customers which will increase the profit of the company
(Guest, Namey and Chen, 2020). Organization should also develop the habit of dealing with all
the situations calmly because panicking over the issues will not be helpful for them.

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