The coronavirus pandemic and related recession has impacted every industry, but none has been as hard-hit as hospitality, entertainment, tourism and related fields, where stay-at-home orders and cautions on travel put the sector in a virtual deep-freeze this past spring. While many states are cautiously and fitfully reopening, the hospitality sector is rebounding, albeit slowly, and with a very different normal than existed in the past.
“The hospitality industry is very heavily dependent on travel, some markets more than others. The decrease in travel has caused many hotels and restaurants to close for lack of business or to operate at very low occupancies,” says Kevin Rohani ’10 (entertainment and hospitality management), senior vice president of development for SBE, a Beverly Hills-based hospitality and entertainment company with a global portfolio of high-end properties.
“The main objective of the hospitality industry moving forward is to regain the trust of travelers. Some companies, such as ours, are finding new revenue streams through the ghost kitchen (for delivery only meals) and digital food brand phenomenon, which has accelerated during COVID-19. There are always opportunities to innovate in times of distress,” he says.
Hospitality Industry Recovery Will Some Time, Rohani Predicts
Though the long-term impacts of coronavirus on the hospitality industry are still unclear and the global and national situation is very unstable, Rohani anticipates demand for lodging will return to pre-pandemic levels in 2022, with average daily rate (ADR) – a measure of average rental revenue earned for an occupied room per day – returning to pre-crisis norms by 2023.
But the industry is seeking strategies to adapt, which may speed the recovery.
“Hotels are eliminating amenities such as turn-down service and are becoming heavily dependent on technologies such as digital keys and digital payments,” says Rohani. “Similarly, restaurants are promoting new menus and focusing on take-out delivery in an effort to generate revenue. And hotel and restaurant operators are looking for ways to manage their expenses, such as centralizing functions or outsourcing services. The goal is to identify what fixed expenses can be made variable.”
There is Still Opportunity in the Hospitality Field
In recent crises, the hospitality industry has often been among the hardest-hit, but it has also been among the most resilient.
Consider the terrorist attacks of 9/11, when occupancy rates dropped sharply but began recovering in the U.S. over five months. It took until 2004 for tourism revenues to finally catch up to pre-9/11 levels. But over time, the industry emerged stronger.
While the coronavirus crisis is even deeper, Rohani is optimistic in the long term.
“We strongly believe that the hospitality industry will recover. It’s just a matter of when and what the new ‘normal’ will consist of,” says Rohani. “This pandemic has taken the world by surprise. It has forced us all to reevaluate what the industry should look like moving forward.”
Rohani encourages young people considering careers in the hospitality field to stay focused and use this time of uncertainty to learn, strategize and innovate.
“Young adults should take this opportunity to come up with new ideas and processes that would help generate revenue or cut costs during times like these. Innovation always grows in times of disaster. What we need is the fresh perspective of young adults who can think outside the box and come up with new ways to address the impacts of a pandemic such as this one,” he says.
For More on the Hospitality Sector
Cal State Fullerton’s Mihaylo College of Business and Economics is a leader in educating the next generation of business professionals, including those seeking careers in entertainment, the hotel industry, restaurant management, music, movies and tourism.
Located in close proximity to Disneyland and Los Angeles, Mihaylo College has a unique niche in providing affordable, applied and highly respected education for the entertainment and hospitality space, with a strong alumni network creating even more opportunities for students and graduates.
The Center for Entertainment and Hospitality Management is the college’s gateway to academic and professional readiness in the field, including related degree programs, networking events, site visits and personal development.
Read more of our articles on entertainment and hospitality.