An Equitable Approach: Finding Answers to COVID-19’s Economic Impact

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March 17, 2020 - Published in Hospitality Technology - The damaging effects of the novel Coronavirus are already upon us, and no country – nor industry – is safe from its reckoning.


On March 11, the World Health Organization confirmed the alarming reality by officially declaring COVID-19 to be a global pandemic. With cases growing by the hour, widespread societal impact is in full effect. It’s dominating the 24/7 news cycle. Schools and churches are closed. Professional sports seasons and music festivals like SXSW and Coachella were called off. And now, restaurants in some states have been ordered to close their dining rooms.


Those only exemplify a few drops in the bucket that is life in America as we know it.


When Guests Stop Coming

Hospitality and restaurants are among the most vulnerable industries to a global pandemic. People are reluctant to travel, stay in hotels, dine at local restaurants, and interact in public settings, coupled with new government directives to reduce group size of public gatherings. International travel and tourism, which accounted for 10.4% of the Global GDP in 2018, has been hit especially hard. 


According to the AHLA, the hospitality industry has already experienced a loss of 4.5 points in occupancy and a 15% decrease in revenue. The sharp decline has forced hotels and restaurants to make tough decisions on staff numbers. Staff reductions generally are done through layoffs, but it’s not that simple right now. On one hand, staff or hour reduction is often necessary for organizations to meet their financial goals. Though on the other, slimming down your employee pool may not account for the external circumstances imposed by COVID-19.


For example, maybe a portion of your workforce is experiencing red-flag symptoms and must undergo 14-day in-home quarantine protocols. Or, maybe their young children ­­– who are usually accounted for during daytime hours – are now home from school and require constant care In other service industries, a remote work policy would be a quick fix. But in hospitality and restaurants, working from home simply isn’t possible. So, if you cut your staff by 20% or more, will you still have enough manpower to cover shifts in case of emergency? Probably not.


That is where volume decline reflects a double-edged sword. Yes, you won’t need as many employee hours to meet customer needs, but the risk of staff shortages due to absenteeism simultaneously exists.


From a restaurant perspective, the New York Times reported that high-end restaurant profits are down by 20% from a year ago. In efforts to streamline operations, restaurants ­that previously didn’t offer delivery and takeout services are starting to do so with the hope of staying afloat.


Finding the Right Solutions


With that being said, management should consider reducing hours across the board before turning to layoffs. Completely cutting ties with employees doesn’t just eliminate costs. It drastically damages lives. A lot of people in the industry live paycheck to paycheck, and with their primary job experience being in hospitality or restaurants, it might be difficult to find work elsewhere right now without additional training.


Instead, consider cutting full-time hours back to 20, 24 or 28 hours per-week,. The bottom line will always remain the top priority, but companies who equally prioritize their staff will reap both short and long-term benefits; meaning more resources to combat shortages now, and a better chance of retaining top talent once the outbreak is over. Another proactive solution could be partnering with understaffed hospitals to create employee exchange programs that keep more people earning livable wages. Government assistance might be available for additional training.


Technology can play an important hand in success or failure. From coordinating scheduling changes and monitoring employee health status to remaining in consistent company-wide contact from the top-down, the use of mobile technology is a dynamic multi-channel tool that managers can use to adjust and adapt on the fly. Furthermore, software applications can quickly forecast trends to help formulate sustainable financial strategies.


As we continue to weather the impact of COVID-19, it is vital that we keep the proper perspective in mind. It’s one thing to effectively control costs during an emergency downtrend, and it’s another to do so with an equitable approach that takes all sides into account.


Read the original article in Hospitality Technology

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