The Coronavirus effects on the  Hospitality Industry and its SC

According to recent reports, due to the high impact of the COVID crisis, the Hospitality sector conf...

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Posted by Dave Food on May 4, 2021 3:09:24 PM
Dave Food

According to recent reports, due to the high impact of the COVID crisis, the Hospitality sector confronts financial insolvency, putting at risk thousands of jobs if they stop receiving urgent governments’ financial support.  

Some crucial facts: 

·       Hospitality organisations are currently entirely devastated by the COVID crisis, mainly those supplying hotels, restaurants, pubs, permeating right down the whole SC.  

·       The Hospitality whole process depends on its SC, so the need to support it.

·       Suppliers workforce lost 1 in 5 jobs since February 2020.  The SC already lost one in five positions, and a significant number of employees are currently at risk of being fired unless there is immediate financial support.

·       1 in 3 businesses received no Government financial support or loans.  

·       With no support, 2 in 5 businesses will have to close.

·        Hospitality positions will urgently need to begin the business with at least 59% of normal operating levels to make supplier services sustainable.

·       The Hospitality industry requires governments to use the upcoming budget to guarantee that supplier businesses benefit from the crucial financial support. 

·       Hospitality SC requires a significant national grant fund to grant workable organisations finance in goods and services essential to a compelling start over.

·       The Government must provide a backing-invoice-factoring system to set free resources for investing to lessen some of the trading risks throughout the start over.

According to Oxford Economics recent research, the Hotel Industry would lose millions on:

·       Room nights.

·       Total business sales.

·       Direct hotel operations jobs.

·       Total jobs and billions of wages, including SC.

·       Loss on Gross Domestic Product.

·       On guest spending.

For instance, the Coronavirus has more effects on the US hotel industry than the Great Recession combined with the September 11 terrorist attacks. 

Data from the American Hotel & Lodging Association (AHLA) shows a historic drop in room demand, with hotels operating at 25 per cent occupancy since mid-February 2020; estimations of nearly 3.9 million job losses. They are on the borderline of collapsing.  

Among the top states in the USA, breakdowns and overall job losses are: California (-414,069), Florida (-305.146) and Texas (-268,797.)  Sackings and unpaid leaves affect more than 80 % of hotel personnel, so thousands of small businesses are at immediate risk of going out of business.  The Hospitality Industry is summoning direct funding to workers and guarantees them to have the right to low-interest loans or release them from their mortgage payments. 

Several hotels chains decided to fund employee’s layoffs, realising that many employees live paycheck to paycheck.  The ones hired by the hour often live on tips, or they might be immigrants with no family frame to support them.  Not many have savings, so they could be forced to stop paying rent or decide to leave the city or even the country.

In Europe, Hospitality leaders estimated that 76 % of hotels were closed last year.  Spain, a country most reliant on tourism, and due to numerous restraints during the first three weeks of June 2020, barely 35.4 % of hotels were open; they offered a low per cent of bed-places, and overnight stays in hotel venues fell by 95.1 % in 2020.

SCs tackles two types of risks.  One is the operational risks which can cause conflicts like demand variabilities and safety issues, or inconvenience to tourists such as electricity outage, computer system disruption, lack of quality food supply, or natural disasters.

Conclusions: disruption risks in the Hospitality Industry SC are high-impact events typified by a long-term-escalating business disruption, as it is happening with the COVID-19 pandemic effects, representing a domino effect. 

The Government has to understand this and provide the support these businesses desperately need at the budget. The Hospitality sector can show the way for the revival of the economy.  Organisations’ objectives should direct to an effective SC management vital in achieving competitiveness. 

Is it possible to keep economically supporting your workforce?

 

 

 

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