In the aftermath of the COVID-19 outbreak, the global economy is still under shock, as supply chains get disrupted, the development of infrastructure is stalled and travel has only recovered to 40% of pre-COVID levels mostly due to domestic travel and staycations. This is what everyone is calling the new normal, the perennial shift to the digital workplace and the end of corporate travel as a lot of experts have predicted. Now, as the fear of the second wave grips, it is expected to remain so for the foreseeable future.
An obvious impact of such disruptions is visible on the sectors that rely on the physical infrastructure, especially the sectors such as hospitality. So, what will be the way forward for the same?
A Paradigm Shift in the ‘Novel’ Scenario
Today, the pandemic has changed a lot of things around us. Some of these changes are welcoming as they promote the adoption of digital services and payments. They also encourage healthy practices such as constant sterilization of in-use public places and other measures to contain the spread. For business, however, some of the recent changes are not so welcoming since they go way beyond social distancing measures. The COVID-19 outbreak has also changed the geopolitical alignments and hence, access to the global markets. We’ve seen a lot of activity in this area over the past few months. The direct implication of this development is a slower recovery for hospitality. Most industry experts have predicted that the industry could take upto 24 months to recover.
Nevertheless, a silver lining can be seen with deepening relationships with other economies. For instance, India opened a gateway for international flights to resume by signing bilateral agreements with the US, France, Germany, and the UK. It came with its riders – such as ‘air bubbles’ to minimize the COVID-19 transmission – but was a good start. Recently, several restrictions have been done away with. It has also opened the doors for inbound travelers from these countries for business, medical, and employment purposes. The international aviation industry has not seen the protocols that are in force right now in a long time. Thus, we can infer that the political and pandemic-led landscape together will change how the industry works.
Going by the growing political confrontations, there is no doubt that the pandemic will transform the business scenario globally. The economic conditions and hunger for evolved data about new demand pockets will lead to a paradigm shift in consumer behavior and data privacy. The socio-economic implications of the outbreak will trigger price-sensitivity for both passengers and businesses. Industry leaders will leverage new-age technologies to make crisis-proof business decisions. Investors will be cautious and may exercise frugality.
Let us try and analyze how these changes will affect the hospitality industry in terms of stability and continued operations.
The focus on unit economics and unit profitability rather than external funding
Businesses would partner with financially stable organizations backed by institutional investors, preferably, profitable. Such companies will continue to invest in R&D and create more value over time for the customers. Since the outbreak, there is a tremendous focus on unit economics and unit-level profitability. These companies will continue to be preferred by investors for future expansion.
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