COVID-19 | Impact on the hospitality industry

Summary

The 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

00:00

🏨 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.

05:01

📉 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.

Keywords

💡Hospitality Industry

The hospitality industry refers to the sector that includes businesses providing lodging, food services, and event planning, such as hotels, restaurants, and conference centers. In the video, the hospitality industry is the primary focus, discussing how it has been severely impacted by the COVID-19 pandemic, leading to the closure of many establishments and a sharp decline in customer demand.

💡Pandemic Impact

The pandemic impact refers to the wide-ranging negative effects of the COVID-19 pandemic on various sectors, particularly the hospitality industry. In the video, Derrick Martin explains how the pandemic has led to significant financial losses, closures, and a trickle-down effect that affects not just hotels and restaurants, but also related businesses like craft markets and tour guides.

💡Trickle-down Effect

The trickle-down effect in this context describes how the financial hardships experienced by the hospitality industry during the pandemic have cascading effects on other businesses and workers within the sector. For example, the closure of hotels affects not just the owners but also suppliers, tour guides, and local markets, illustrating the interconnected nature of the industry.

💡Alcohol Sales Ban

The alcohol sales ban refers to government-imposed restrictions on the sale of alcohol during the pandemic, which have negatively impacted the hospitality industry. Derrick Martin explains that since celebrations and events in hotels and restaurants often involve alcohol, the ban has further reduced customer interest in booking these services, thereby exacerbating the industry's financial woes.

💡Celebrations

Celebrations refer to events like anniversaries, parties, and conferences that are typically associated with gatherings at hotels and restaurants. The video highlights how the inability to hold such celebrations due to restrictions on alcohol and large gatherings has severely impacted the hospitality industry's revenue streams.

💡Conference Limitations

Conference limitations pertain to the restrictions placed on the number of people allowed to attend conferences and events during the pandemic. The video mentions that these limitations, such as capping attendance at 50 people, have drastically reduced the demand for large event venues, further harming the hospitality sector.

💡Customer Reluctance

Customer reluctance describes the hesitancy of people to return to restaurants and hotels due to fears related to COVID-19. The video emphasizes that this reluctance, driven by concerns over safety, has led to empty restaurants and reduced bookings, further challenging the financial viability of businesses in the hospitality industry.

💡Government Response

Government response refers to the actions taken by the government to manage the effects of the pandemic, particularly in the hospitality sector. The video discusses how the hospitality industry feels that the government's response has been inadequate, with restrictions like the alcohol ban and limited guidance causing confusion and further financial strain on businesses.

💡Data Analytics

Data analytics in this context refers to the use of large datasets to understand and predict trends within the hospitality industry. Derrick Martin, the CEO of a data analytics company, discusses how analyzing data from the industry has revealed the drastic drop in revenue and business activity due to the pandemic, underscoring the severe impact on the sector.

💡Economic Collapse

Economic collapse in the video refers to the dramatic decline in revenue and business viability within the hospitality industry as a result of the pandemic. Derrick Martin highlights how revenue in the sector has fallen from billions to just millions, indicating a near-total collapse of the industry’s financial health.

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