How hospitality companies coped to stay afloat

Medical gowns and face masks branded by the apparel retailer you probably have more than one piece of in your wardrobe. Protective equipment rolling out of furniture companies’ production lines. 3D printed masks and face shields manufactured by architecture, design and modern light fixes companies. Does that sound like an unfinished script of a sci fi movie? On the contrary. It is how businesses, compelled to help curb the spread of the deadly virus, reacted to the pandemic. Others, in a bid to stay afloat reshaped their models to adjust to new distribution and communication channels, cater to new types of customer or adapt their value proposition to the demand prompted by the new circumstances.

Hospitality has proved to be one of the worst hit sectors by the pandemic. The grueling statistics support this affirmation – according reports published by Statista nearly 74% of tourism and catering companies suffered liquidity problems versus 59% in other sectors in Italy. In Spain, 93% of restaurants shut down during lockdown, 5% of which not to reopen and 2% extended their scope of business to delivery services. Yet again the necessity proved to be mother of invention or, in this case, reinvention, and business owners pushed to the limit, demonstrated their resilience and resourcefulness in the dire times of the pandemic.

How did they pivot?

Communication channels have changed. Lack of tradeshows and other in person meetings have forced businesses to strengthen or develop from scratch the relationship with their clients. The use of internet has been widespread but to many, its speed was often underrated. Websites needed to be redesigned to make shopping experience smooth and partnerships with payment gateways have grown stronger. The infrastructure supporting in-person sales calls has shifted towards IT- speed, quality and ability to scale up is now the primary requirement to stay head of the competition.

Suppliers network has shrunk to local providers. Most restaurants needed to adjust their menus to local, probably less known, and smaller providers they used to deal with, in a bid to cut down delivery time and costs.

Value proposition has changed for many-shifting from a typical restaurant most places needed to transform into grab & go venues, small grocers and some night clubs threatened by expanded curfews, leveraged their kitchens or catering companies to help them transform into limited capacity daytime restaurants to make ends meet.  Some hotels became temporary shelter for medical staff who moved their residences over there during the peak of the pandemic. Expats unsure of their future in the country they selected to pursue their professional careers in, have started to call hotels their homes, as out of the necessity not to commit long term, moved to such an apartment waiting for better times to come. This trend allowed many of them enjoy double digit occupancy rates unlike some of their other competitors who called it a day for as long as there was no significant pick up in travel.

Changing value proposition contributed to reorganizing revenue streams and cost structures. By changing partnerships and suppliers, focusing on local purveyors, and forging new partnerships has impacted how money is made and at what cost. For most hotels and restaurants costs have increased due to tightened sanitization requirements, social distancing allowing fewer guests at the same time in the venue or the necessity to separate public spaces by acrylic glass shields. But despite those hurdles, businesses focusing on delivering hospitality services have managed to fill the gap that provides additional streams of revenues by renting usually deserted spaces out of peak hours such as in-house restaurants, bars and other public areas to freelancers or those eluding makeshift home offices. Others have expanded their list of services to cater to the changes in the demographics – local tourists and their preferences- usually shorter but more frequent hotel stays.

The core of the change

Many businesses have disappeared, others have seen exponential growth in the past months. Undoubtedly those who leveraged their resources and aligned them with the new needs, emerged as winners. Those companies proved to be agile, astute and innovative and as we continue see very few green shoots spouting in the coming months, these  will be the traits any company or its leadership will need to demonstrate to fill a gap in the market, respond to emerging demand trends, preferences and needs. Survive. Make profit. Grow.

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