COVID-19 | Impact on the hospitality industry
Summary
TLDRThe pandemic has severely impacted the hospitality industry, with many hotels and restaurants struggling due to reduced customer numbers and restrictions on gatherings. Derrick Martin, CEO of Trev Par Data Analytics, highlights the industry's reliance on short-notice bookings and the significant financial hit from the lack of alcohol sales and events. He calls for clear government communication and a sense of security through testing to encourage people to return to hospitality venues, noting a drastic drop in revenue and the potential long-term effects on the industry.
Takeaways
- 🏨 The hospitality industry has been severely impacted by the pandemic, with many hotels, lodges, and guest houses closing due to lack of customers and cash flow.
- 🍽️ Restaurants are struggling as people are reluctant to dine out, preferring the safety of their homes, which has led to a decrease in customers.
- 🔍 Derrick Martin, CEO and founder of Trevi Data Analytics, discusses the challenges faced by the hospitality industry on ABC News Channel.
- 📉 The pandemic has caused a significant drop in short lead time business, which is crucial for hotels to maintain cash flow and cover fixed costs.
- 💔 The inability to host guests has led to a loss of income for businesses within the hospitality industry, affecting everyone from hotel owners to craft market sellers.
- 🚫 The ban on alcohol sales for on-site consumption has affected celebrations, which are a significant part of the hospitality industry, leading to further decline in bookings.
- 🎉 The lifting of the ban on alcohol sales was short-lived, and the reinstatement of restrictions has again negatively impacted the industry.
- 👥 Social distancing measures, such as the limit of 50 people for gatherings, have reduced the viability of conferences and events, impacting the industry's revenue.
- 📊 Derrick Martin's company has quantified the impact, showing a drastic drop in room revenues from 2.1 billion rand in February to less than 250 million rand in June and July.
- 🚫 The uncertainty and lack of clear guidelines from the government are causing confusion, fear, and anger among business owners and customers.
- 📈 The industry is calling for more common sense and logic in government approaches, as well as clear communication and deadlines to help businesses plan and recover.
Q & A
How has the pandemic affected the hospitality industry according to Derrick Martin?
-The pandemic has been catastrophic for the hospitality industry, with many hotels, guesthouses, and B&Bs closing due to a lack of cash flow and the inability to host guests, which has led to a significant trickle-down effect impacting everyone from hotel owners to craft market sellers.
What is the significance of short lead time business in the hospitality industry?
-Short lead time business is significant because it represents the bulk of the industry's revenue. With most business coming in last minute, the need to refund these bookings due to the pandemic has left many hotels with no cash flow to cover their fixed costs.
How does the ban on alcohol sales for on-site consumption impact the hospitality industry?
-The ban on alcohol sales has a significant impact because celebrations, which often involve alcohol, are a major part of the hospitality industry. Without the ability to offer drinks as part of celebrations, the industry loses a key aspect of its service, which deters people from booking holidays or dining out.
What is the current limitation on gatherings in the context of the hospitality industry?
-The current limitation is that only 50 people are allowed to gather together, which greatly reduces the number of conferences and events that can be booked, impacting the viability of the industry.
How does the 50-person conference allowance affect the broader hospitality industry?
-The 50-person conference allowance does not fully help the industry as it eliminates 50 to 60% of potential business, affecting not just conference venues but also suppliers, travel agents, tour guides, and local markets that rely on the tourism generated by larger events.
What is the public's response to the reopening of restaurants and their willingness to dine out?
-The public is reluctant to dine out due to anxiety and fear of infection. This is evident in the low turnout at restaurants, with many choosing to opt for takeaway instead of dining in.
What measures are being taken to provide a sense of security for people to feel safe going out?
-Efforts are being made to introduce rapid testing, which is seen as a crucial step towards providing a sense of security. The approval of such tests is expected to help dissipate the fear of going out.
What is the Restaurant Association of South Africa's approach to addressing government handling of the pandemic?
-The Restaurant Association of South Africa is organizing a peaceful demonstration to express dissatisfaction with the government's handling of the situation and to advocate for more sensible and logical measures.
What does Derrick Martin suggest as a potential approach for the government to assist the hospitality industry?
-Derrick Martin suggests that the government should apply more common sense and logic in their approach, treating similar situations equally and providing clear guidelines to reduce confusion, fear, and anger.
How has the pandemic impacted the financial performance of the hospitality industry in South Africa?
-The pandemic has led to a drastic drop in revenue. For example, in February, the industry saw 2.1 billion rand in room revenue, whereas in June and July, it was less than 250 million rand, indicating a significant collapse in financial performance.
What is the typical business model of the hospitality industry that has been affected by the pandemic?
-The hospitality industry typically relies on last-minute bookings and short lead time business, which has been severely impacted by the pandemic as people are less likely to make spontaneous travel decisions.
Outlines
🏨 Impact of Pandemic on Hospitality Industry
The COVID-19 pandemic has severely affected the hospitality industry, with many hotels, lodges, and guest houses closing due to a lack of customers. Derrick Martin, CEO and founder of Trevi Data Analytics, explains the trickle-down effect on businesses within the industry, highlighting the cash flow issues caused by refunds and the fixed costs of maintaining properties. The ban on alcohol sales for on-site consumption has further impacted celebrations and events, which are significant components of hospitality services. The restrictions on gatherings have also limited the viability of conferences and other large events, affecting not only the hospitality venues but also related businesses such as travel agents and tour guides.
📉 Economic Downturn and Public Anxiety in Hospitality
The script discusses the reluctance of people to dine out and the significant drop in revenue for restaurants and hotels. The government's handling of the situation has been criticized by the Restaurant Association of South Africa, which is planning a peaceful demonstration. The industry is calling for clearer guidelines and a sense of security to help alleviate public fear and encourage patronage. The lack of a clear trajectory or deadline is causing uncertainty, which is detrimental to both the financial and emotional well-being of those in the hospitality sector. The script also mentions the potential of rapid testing as a way to provide a sense of safety. Derrick Martin provides data showing a drastic decrease in room revenues from February to June and July, emphasizing the industry's reliance on last-minute bookings and the difficulty of adapting to the new normal.
Mindmap
Keywords
💡Hospitality Industry
💡Pandemic Impact
💡Trickle-down Effect
💡Alcohol Sales Ban
💡Celebrations
💡Conference Limitations
💡Customer Reluctance
💡Government Response
💡Data Analytics
💡Economic Collapse
Highlights
The hospitality industry has been severely impacted by the pandemic, with many hotels, lodges, and guest houses closing down.
Restaurants are experiencing a decline in customers due to people's reluctance to leave the comfort of their homes.
Derrick Martin, CEO and founder of Trev Pardata analytics company, discusses the industry's challenges on ABC News Channel.
The pandemic has caused a catastrophic effect on the hospitality industry due to the trickle-down impact.
Most businesses in the industry rely on short lead time, which has led to significant cash flow issues.
The inability to host guests has resulted in a loss of income for businesses and a significant economic impact.
Alcohol sales restrictions have affected celebrations, a key aspect of hospitality, leading to further decline.
The ban on alcohol sales in public spaces has removed a central element of social gatherings and celebrations.
The 50-person limit for gatherings has significantly reduced the viability of conferences and large events.
Smaller establishments with simple check-in and checkout procedures may be less affected than larger venues.
The impact on ancillary services like travel agents, tour guides, and local markets has been devastating.
People's fear of going out is affecting the business of restaurants and other dining establishments.
The development of a rapid testing solution is seen as a potential way to alleviate public fear and anxiety.
The government's response and handling of the situation have been criticized by the Restaurant Association of South Africa.
The hospitality industry needs clear guidelines and a sense of security to start planning for recovery.
The industry has experienced a significant financial collapse, with room revenues dropping from 2.1 billion to less than 250 million rand.
The reliance on last-minute bookings has been a double-edged sword, leaving the industry vulnerable to sudden downturns.
Adapting to the new normal is challenging for the hospitality industry, which requires immediate and clear communication.
Transcripts
the hospitality industry has been hot
heated by the pandemic with many hotels
lodges and guest houses are closing as a
result
moreover restaurants have less customers
as people are reluctant to go outside
the comfort of their homes
Derrick Martin is the CEO in the founder
of Trev pas data analytics company
within the hospitality industry and he
joins me now live via Skype good
afternoon to mr. Martin thank you so
much for joining us here on the ABC News
Channel now restaurants and hotels have
only reopened for about two weeks now
let's just look at how the pandemic has
impacted on the hospitality industry as
a whole industry has been catastrophic
for most hotels guesthouses B&B lodgers
and the list goes on purely because
there's such a trickle-down effect
within our hospitality industry we've
seen most of our business coming in
short lead time business any business we
have had in had to be refunded so that
kind of left most of the hotels with no
cash flow with fixed the costs to
continue to maintain we've seen that the
inability to host our guests means the
inability to generate an income for the
separate businesses and as mentioned the
trickle-down effect is huge it impacts
everyone from the hotel owners to the
craft market sellers as if no guests on
also travel there is no economy in our
industry so now with the alcohol sales
because I remember initially from the
first of June the alcohol sales were
permitted for home consumption that was
the first four weeks of June so with
last week's announcement by the
president the bending of alcohol sale
again how do you think this will impact
on the hospitality industry once more so
hospitality is very very much associated
with celebrations we go on holiday to
celebrate anniversaries we go to parties
we got a new conferencing we celebrate
and celebrations are often included by
having a nice glass of champagne or
a few drinks or cocktails as part of
their celebration that now has literally
been taken away from us which means why
would people actually go and book a
holiday oh and celebrate at a restaurant
they actually can't have a drink with a
with their meal or more importantly with
their celebration so the impact of
alcohol on our industry has been really
really big because a lot of what we do
is revolved around catering in terms of
alcohol or food and beverage there is a
very big part of being hospitable and
hospitality in its own right and I
suppose this world effect that people
are not together in their large numbers
only 50 people are also allowed together
it certainly means that even values for
conferences are not being booked that of
course impacts once again on the
viability I suppose off of the industry
correct so hos largest guest houses are
all separate so if you're looking at the
kind of establishment being offered it
will impact the direct revenue impact of
the pandemic venues such as wedding
venues wedding suppliers large
conference events will be more hard hits
than hospitality industries with a very
simple check-in checkout procedure
however when looking at a 50 persons per
conference we are actually eliminating
50 to 60% of our industry what about the
lodgers what about the travel agents
what about the tour guides what about
the local tour guides that take around
that the leisure travelers in the
markets you go experience are a great
country they have all been eliminated so
a 50-person conference allowance doesn't
really help us as industry it maybe
helps 50 percent of the industry and as
you rightly mentioned why we actually
have a conference if we can't have the
full experience or the service but how
has the response been from from from
from the people as I said on my
introduction that a whole lot of people
are reluctant to go to their favorite
restaurants now I was at a restaurant
two days ago and just to go grab a
takeaway and it was literally
empty so people are so anxious to go out
and eat and
everything retain affect the businesses
of course there is going to be an
inherent fear until at least we have a
vaccine in place or some form of rapid
color test so the epic of the test is
quite cool and something we've been
working on getting approved in the
country in the last three months or so
however this is very very close to
happening and we just need that sense of
security we just need the sense of
knowing that is actually safe to go out
once we have established that then I see
the fear dissipating I have a right now
there is a inherent fear of going out
especially as the numbers keep rising we
are going to become hermit crabs and
stay at home even more because of safety
issues but what do you think government
can do to sort of mitigate the effects
of covered 19 I've actually seen a media
release from the Restaurant Association
of South Africa saying that they having
a peaceful demonstration on Wednesday
because they not happy with how things
are being handled by the government's
but how do you think government can
assist at the hospitality industry going
forward see it's just a very very simple
approach though what the Restaurant
Association is doing I feel that's
absolutely brilliant because having 15
tables with 15 individual people in
front of your restaurant in the streets
is actually safer than having a hundred
percent capacity taxi so I think what we
can do is potentially just start
applying a little bit more common sense
and logic in the approach and actually
saying well what's good for the goose is
good for the gander and make it
understandable for the people I mean we
find it really difficult to understand
that I can take a taxi to my hotel but I
cannot check into a private room that
has been fully sanitized by myself so
there's a lot of confusion out there at
the moment and the confusion is driving
fear and anger we just need some form of
trajectory a date a certain deadline
then I think everyone can start planning
at the unknown for such a long period of
time it's not only starting to think
that industry financially to the point
of collapse and it's also sorry to
affect the emotional emotional and
thought process of our Italia's of our
tourism special
is getting to a point of no return now
and we really need to get some form of
communication of yes you can do this no
you can't do this uncertainty is not
helping the cause but are we able to
sort of quantify the impact that this
covered 19 has a head on your restaurant
you your guest houses your hotels and so
on are we able to put numbers to the
loss yes we can so as being a data
company we've been looking at big big
data for the last five years into South
Africa I'm sure a lot of people have
already mentioned that January in
February were the highest room revenues
into South Africa in the last five years
looking at just those numbers in the
example so Africa across over a thousand
hotels in February the 2.1 billion rand
in room revenue turnover that's got
nothing to do with conferencing food
drinks events just room revenue 2.1
billion rain in one month when I look
back and I look into June and July we're
looking at less than 250 million rand so
from a numbers point of view we have
literally collapsed and as already
mentioned we are a short lead to
business and industry you don't plan 910
months in advance for a certain weekend
you decide last minute you're going away
and poke your trips and that is the
reality of our industry we rely on the
last minute business in order to
generate the revenues we need to stay
open all right so basically it's
difficult to adopt this new normal we
thank you so much for your time
that's the CEO in the founder of a drift
pod Eric Martin joining us via Skype to
hook it the impact that so coronavirus
has had on the hospitality industry
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