COVID-19 Impact: Can Hospitality Sector Rise From Ashes?

By Kunal Sawhney, CEO of Kalkine (www.kalkine.co.uk)

With relaxation in the lockdown in the UK, the country is slowly starting to recover, with citizens being allowed to hang around at their preferred hotels, dine at their favourite restaurants and can have drinks at the pub in their neighbourhood area while maintaining a social distance.

The UK government’s most popular “Eat Out to Help Out” scheme, which was meant for the August month, has been received well. Restaurants, lounges and bars, who took part in the scheme were offering 50 per cent discount on Monday, Tuesday and Wednesday on bills, up to a maximum of £10 throughout August.

Though it can be said that some level of normalcy is returning in the UK in terms of business activities and people’s movement but the food and drink industry has faced severe blows due to the lockdown. The restaurants and pubs witnessed an 87 per cent fall in its sales viz £30 billion between April and June.

Going forward, the challenge for the hospitality sector is myriad though some of the restaurants and pubs have resumed their operations and some are still in the dilemma of uncertain future and sales enhancement.

TACKLING THE CONFLICT WITH INSURANCE COMPANIES

Amid the resumption of restaurants and pubs in the UK, many hotel chains have been told by their insurance firms that any disruption or loss in the business activity during the lockdown is not covered under their insurance scheme. For instance, the insurance firms such as Aviva Insurance Ltd and QBE (UK) Ltd have refused to settle the claims as these companies asserted that they don’t have any policy which covers the cri- sis like the COVID-19 outbreak.

Now, if we consider the battle between some of the restaurants and pubs in the UK hospitality sector and insurance companies, it poses an extreme challenge for the hospitality industry to recover the losses. Even if the government will lift the lockdown fully then there won’t be many people who would like to visit hotels or pubs regularly because coronavirus is not mutated yet.

Coming back on the Aviva Insurance and QBE (UK) row, the policyholders formed Hospitality Insurance Group Action (HIGA) which looks after the businesses of those firms who have taken insurance from these two firms.The organisation has been established to fight for the hospitality sector.

Considering this, the hospitality industry surely is not going to have a smooth ride in the days ahead. Even though the government may announce a stimulus package for this sector, it still has miles to go to and beef up its revenue parameters.

CLOSE-KNIT COOPERATION IS NEED OF THE HOUR

As the coronavirus still has its wings spread across the globe, it is unlikely that hospitality sectors may not face pitfalls in the operations once the lockdown will be lifted to a large extent.There are around 3,70,000 businesses that have been hit by the COVID-19 wave and among them, there would be sizeable hospitality firms that may be liable to receive the claims. It could be the possibility that many of these hospitality firms may not be aware of the insurance claims. Similarly, many other firms in the hospitality industries may be thinking that it is too late to initiate any legal proceedings against insurance companies which may have informed these firms that any crisis driven by the coronavirus is not covered by them.

If we consider this, then the companies in the hospitality sector have to work in close coordination with each other to overcome any untoward situations.Though there could be several differences among various firms operating in this sector, however, at a time when the nation is grappling with a deadly virus, the strength ultimately lies in numbers.

For instance, take a case of London hospitality businesses, which comprises hotel groups, restaurant chains and others, have cooperatively written a letter to Prime Minister Boris Johnson demanding support in capital infusion since the industry has been derailed due to Covid-19.

Moving ahead, the hospitality industry including rivals pubs, restaurants and hotel chains need to join hands with each other for the betterment of the entire sector.A collective effort can surely bring positive changes in the days ahead.

DEVISING STRATEGY FOR SURVIVAL AND PUSHING INDUSTRY TO HEIGHTS

Undoubtedly, the hospitality sector may face umpteen challenges ranges from sales, revenue and profit maximization, however, it needs to play differently now, especially at a time when the virus has taken over the businesses and economy.

The government, by and large, may have its agenda when it comes to providing aid as they must be equally baffled with humongous issues such as Brexit and economic recession. Considering this, it becomes pertinent for restaurants and hotel chains to sketch a survival blueprint. Not only the hospitality sector has to devise an eye-grabbing strategy to catch the attention of the people but also generate enough revenue to compensate for the losses borne in the wake of the coronavirus pandemic.

If we look at the emerging trend of app-based transactions as this kind of platform not only provides con- tactless payments but also enables companies to connect with customers if any untoward incidents happen. For example, one can see how eating outlets such as Caffè Nero, KFC and Young’s Pub have been benefitted in terms of customer experience by employing app-based platforms.

Towards the end, it is important to understand that the hospitality industry needs to rebuild and probably revamp its business model once the coronavirus effect will nullify to a large extent.Though the process may take little time, but it will surely regain its momentum and soon turn out to be a profitable sector.