Covid-19 business disruption

COVID-19 Business Disruption: What’s in Store for Hospitality?

While COVID-19 is dealing a crippling blow to hospitality businesses, companies that have adopted collaboration tools will be quicker to adapt to business disruptions.

The COVID-19 pandemic is dealing a crippling blow to the hospitality and aviation industry. International borders are being closed, nationwide curfews have been implemented, flights have been grounded and some hotels are forced by law to close temporarily. The number of reservations is rapidly going down and revenue losses for the entire Indian hospitality industry are currently estimated between USD 5.5 billion to USD 6.2 billion. It is anticipated that the hospitality industry could take years to recover from the COVID-19 pandemic and the situation will likely get worse before it gets better.

Companies that have already adopted flexible productivity, virtual collaboration tools and processes will adapt to covid-19 business disruptions with a much higher degree of speed and efficiency compared to companies that have resisted remote working and collaboration. Interaction among teams has shifted from physical to virtual platforms such as Microsoft Teams, Zoom, Slack and Cisco WebEx Teams.

 

As companies adapt to their remote work structures, the pandemic is having a lasting impact on how work is conducted.

 

Remote working is an example of a business transformation that serves the needs of individual employees, provides companies with robust and flexible ways to engage with their ecosystem and deliver economic value. Digital transformation does not merely refer to using an online tool you stumbled upon recently, it is more about people, culture and company mindset where technology acts as a facilitator. Different industries and businesses have unique challenges and so are their solutions. Understanding your unique business challenge and opportunity is as important as choosing which technology solution you must implement.

Digital transformation is here to stay and is having profound impacts across industries and sectors. The hospitality industry has been historically reluctant at implementing technological advancements owing to capital investments and organisational restructuring. Whereas, the leaders and early adopters within this industry set the standards by embracing digital transformation to offer unique and effortless experiences to their guests.

 

As luxuries become necessities, companies that fail to take advantage of further advancements through digital transformation may become companies transformed out of the industry.

 

Do you understand your digital landscape and are you adapting accordingly? How do you benefit from digital disruptions and turn them to your company’s competitive advantage? How do you incorporate technological advancements to boost productivity, engagement and efficiency across all levels within your company?

1. The theory of digital disruption

The idea of digital disruption aims to determine the degree of additional change businesses will experience in the coming years: how to leverage digital opportunities by organising the business process and use digital technology to unlock its potential. Online travel agents, smartphones, customer review sites, connected devices and social media have revolutionised customer interactions and engagements in hospitality. Large hotel chains such as the Marriott, Hilton, IHG and Accor now seek to connect with their guests on a personal level. Artificial intelligence, connected devices, robotics and big data are shaping the hospitality industry as we speak. Millennials are becoming a significant customer segment and driving hotels to change the way they operate. Extensive use of social media, smart devices and sharing economy has driven companies in the hospitality sector to revisit their business models.

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2. Digital disruptions shaping the future of hospitality

Success in the hospitality industry today is dependent on the continuously connected population (Gen C). They are married to their devices, accustomed to virtual rather than face-to-face interactions, have the desire to base their choices on pre-stay experiences and are empowered to share experiences, and hence, influence sales.

The Internet of Things (IoT) has swiftly moved into the hospitality industry. It has facilitated smart automation, thereby improving the convenience and comfort standards for guests and reduced costs for the business itself. citizenM hotels embraced technological advancements through smart rooms and hotel services that guests access seamlessly through an iPad or their smartphones. Community-focused digital platforms such as Airbnb and Uber have also changed the hospitality and travel industry. While Marriott took 63 years to build 697,000 rooms, Airbnb reached virtually the same level in 4 years. What made Airbnb successful is excellent imagery on its website, being hyperlocal and having concierges who write great content about the locality of where you are going to stay. That is how digital disruptors and start-ups like Airbnb built a community.

3. Emerging opportunities and threats

The next generation of robots (handling a range of services from food preparation and delivery to housekeeping), cloud storage and predictive analytics have all ensured widespread automation in this industry. However, the question about a post-digital era where digitisation becomes an essential part of all facets of life is still unanswered. Will the hospitality industry also suffer from a job losses as a result of digitisation and automation? Will the replacement of widely accepted human/interactive service offerings by Digi-gadgets act as a boon for the hospitality industry or a bane? This remains to be seen.

Many cities will expand to the magnitude of countries by 2030, Shanghai’s population is due to surpass Australia, London will be more populated than Greece, while Tokyo may become more dense than Malaysia. Cities will have to become ‘smart,’ and their infrastructure will have to be digitized, distributed, efficient and adaptive to support the needs of the growing populace while acknowledging the sustainability aspect of resources.

 

To keep up with the brand offering of the destination and meet the growing needs of the ‘smart’ customer targeting ‘smart’ destinations, hotels will have to keep transforming digitally.

 

Digitization is an entirely new way of offering services and experiences to customers. It requires a substantial capital investment in technologically-advanced features and an omnichannel strategy, amongst other things. As a result, smaller (already existing) hotel chains are struggling to cope with the pace of disruption.

While COVID-19 has brought the hospitality industry to a standstill, it is providing companies with an opportunity to step back, evaluate their position within the market and charter the course ahead. Whether you choose to operate in a reactive environment or take this opportunity to embrace the covid-19 business disruption, staying ahead of the curve, will determine your future in the industry.

 

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Avik Bhattacharya
About the author

Avik Bhattacharya is working as a Junior Consultant with EHL Advisory Services based in Gurgram, India.

EHL Advisory services includes Development of Hospitality & Tourism Education Learning Centres, Certification of Hospitality & Tourism Education Learning Centres, Vocational Education & Training for the Hospitality & Services industries, Strategic Hospitality Advisory and Service DNA (People & Process Development for Hospitality and non-Hospitality businesses).

Avik has completed his MBA from Strathclyde Business School, the UK with a distinction and has also worked with Marriott International for over 6years across departments in managerial roles.