Critical Analysis in an International Business PDF

UNIVERSITY OF DERBY
DERBY BUSINESS SCHOOL
Critical Analysis in an International Business
Context
(6EC506)
The impact of COVID-19 on the Hospitality industry

Student I.D. 100540135
Date Submitted: 12th November 2020
Coursework 1 Word Count:1590
Introduction
COVID-19 is an infectious diseases that has spread rapidly around the world since
2019. It has spread to more than 140 countries, with more than with over 48 million
confirmed cases as of November 2020 (Hafsa, 2020). The epidemic has had a
ravaging impact on the global economy, and in particular, the hospitality industry.
From reduced bookings to closures, hotels have been hardest hit by the covid-19.
Evidence shows that sales in the UK hospitality sector plummeted 87% in the second
quarter with the same period last year (Bloomberg, 2020).
Based on the above information, this essay seeks to examine the impact of covid-19 in
the hospitality industry. To achieve this aim, the essay is divided into three key parts.
The first part assesses the key impact of covid-19 on the hospitality industry. Next, the
essay presents some suggestions on how the hospitality industry can mitigate the
adverse effects of the pandemic. Lastly, the conclusion summarises the key findings
of the essay.
Effects of covid-19 on hospitality industry
Reducing occupancy rates
The emergence of covid-19 have led to the reduction of occupancy rates among
various hotels around the world (Nan, 2020), which have adversely affected their
revenues. In China, the nationwide travel ban, just before the New Year 2020 caused
1

hotel occupancy rates to reduce to 7.4%, with some hotels closing their businesses
owing to low sustainability of operations (Hot Stats, 2020). Elsewhere, in Australia,
the travel bans implemented in March saw the Hyatt Regency’s 892 rooms remain
unoccupied since then (Djeebet, 2020).
Overall, the occupancy rates among hotels is used to measure hotel performance
(Hotel News Now, 2020). When this figure dropping, it can cause a decline in
Revenue Per Available Room (RevPAR). Even though their income decreases, there
are still a lot of huge fixed expenses such as labour costs, water and electricity
charges, rent, and various taxes. Hence many hotels will face the crisis of capital
chain rupture and then may go bankruptcy or lay off staffs, once there is a serious
imbalance between revenue and expenditure for a long time. Moreover, World Health
Organization and many epidemic experts presented that the second wave worldwide
has been coming and it will not endknot be over by the end of this year (World Health
Organisation, 2020). It can be explained that negative influence brought by COVID-
19 will last a longer time. Therefore the global epidemic has seriously battered the
annual performance of the industry.
Job losses
The hospitality sector have experienced high job losses due to pandemic. With very
few people visiting hotels, it means that employees had little to do (Baum et al, 2015).
Therefore high labour costs and declining profits make management realize that it
uneconomical to keep employees in the workplace. This leads to a social
phenomenon. Specifically enterprises need to choose between "retaining talents and
cost surge", while employees should choose between "leaving or changing jobs, and
remaining a basic salary" (Wang, 2020). Overall, once employment loss, it will
increase the work volume of human resources department and the management
difficulty, and then affect the companies' efficiency. The core staffs leaving maybe
make the original customer resources of the hotel follow the staff to the competitors.
2