Tourism & Hospitality

The future of travel and tourism post-pandemic

It is hard to think of sectors in business harder hit by the Covid 19 pandemic than hospitality and tourism.

From airlines and travel agents to wedding venues and B&Bs, for large chunks of 2020 and 2021 there was complete shutdown. And even when restrictions were eased a little, business volumes were so limited it was hard to turn even a small profit.

Remember the rule of six people being allowed to meet at an indoor restaurant, café or bar? Or the stipulation that any number of people could meet up on the proviso that they were from a maximum of two households?

Pubs with outdoor areas were able to open at one point but those without beer gardens had to keep their doors closed.

The rules changed in line with Covid infection rates and while government efforts to help the hospitality and tourism industry were wellintentioned – think ‘Eat out to help out’ - the desired result was not always achieved.

The Eat Out to Help Out scheme in August 2020, which encouraged people to visit restaurants by offering discounted meals, has been blamed in some quarters for being ill-timed and raising Covid infection rates.

Business casualties of the pandemic

The grim reality is that by last summer, when venues were allowed to serve indoors unrestricted, thousands of business in the sector had already gone to the wall. There were almost 10% fewer restaurants to choose from, compared to before the pandemic.

Many bars and restaurants had closed for good before the end of 2020. Businesses in this sector tend to operate on very small margins and with low cash holdings, partly due to a high level of fixed costs. As a result, hospitality businesses are, and remain, more vulnerable to income disruption than other parts of the UK economy

Industry body UKHospitality estimated that 640,000 jobs were lost across the sector during 2020 despite government support, including the furlough scheme and access to loans and grants, to ease lockdown pain.

Just one example of a company which suffered is Booking.com, a leading online travel company.

Despite its brand being exceptionally well-positioned and with a presence in over 220 countries in the first quarter of 2020, its travel bookings fell by over 50% from the previous year and its revenue by almost 20%. In the fourth quarter of 2020, its sales were also down over 60% as reservations plummeted. Whether it was global business like Booking.com or local bars or B&Bs the pain was being felt.

And the sector continued to suffer through 2021 as restrictions remained in place and customer numbers stayed low.

Holiday bookings and restaurant and bar trading did pick up markedly last summer when most restrictions were lifted though most overseas tourists stayed away.

New challenges

Fast forward to Summer 2022 and after all restrictions were lifted in February, the sector is fully open.

The main problem now is not virus related but economic – the UK and

most other countries are feeling the impact of rocketing inflation. The cost-of-living crisis due to the war in Ukraine and subsequent energy price hikes, means that spending on non-essentials like eating out, theatre, weekend breaks and family holidays are being examined.

Even if consumers do not forego their customary treats, they may scale back on their frequency. A week abroad rather than a fortnight; staycation rather than a package tour, self-catering rather than a hotel; picnics rather than meals out.

The other concern for tourism and hospitality sector is recruitment. The newspapers have been filled with stories of airlines having to cancel flights due to shortage of flight crew and baggage handlers.

Bartenders, waiters, hotel porters, cleaners and chefs are also in high demand. The impact of Brexit and Covid (when overseas workers returned home) has resulted in huge numbers of vacancies across the industry.

At times this has meant hotels reducing the number of rooms available for booking (due to cleaning staff shortages) and reducing catering options for guests.

After years struggling with a pandemic the sector is having to adapt to another major challenge.

There are of course positives – tourism plays a vital part in London’s social and economic life - it supports as many as one in seven jobs in the capital and contributes almost 12% of London’s GDP. The city with its unique attractions will always appeal to visitors.

And there has been a marked pick up since 2021 in tourist numbers to the capital resulting in greater spending in bars and restaurants.

But this needs to be taken in context, as 2021 was a year impacted by Covid.

According to the office of the Mayor of London, tourism in London may not return to prepandemic levels until the middle of the decade,

It is estimated that it could take until at least 2025 for domestic and international visitor overnight numbers to return to the levels seen in 2019, with spending predicted to take until 2026 to surpass pre-pandemic levels.

What the future looks like

Without the ability to physically serve customers, many restaurants relied upon technology to survive during Covid through delivery apps and ghost kitchens.

It may have been a steep learning curve to embrace tech to such an extent, but restaurants at least know now how to turn an eat-in business into a delivery service. The option to run these services in tandem may provide an expansion opportunity – assuming they can find the staff.

Due to these recruitment pressures the industry will have to offer higher pay and better working conditions to attract hospitality workers. This will mean rising costs for businesses which they will either have to absorb or pass on to customers already feeling the pinch.

Business travel is a huge moneyspinner for the sector and it still remains substantially below 2019 levels. Zoom and Team meetings during the pandemic have highlighted how meetings and seminars can be conducted efficiently remotely and at a fraction of the cost. Can a flight (with its carbon footprint) from Cape Town to London really be justified?

Corporations are likely to lower their travel expenses partly from a sustainability perspective but also as result of cost-cutting generally during an economic downturn.

Will events at hotels and conference centres be on the same scale as they were before?

Perhaps they will have to adapt, concentrate more on local business meeting/events – maybe even becoming hubs.

With more companies letting employees work from home, extended-stay hotels could benefit. For instance, offering day passes, allowing guests to work in the hotel from 6am to 6 pm or stay pass, where guests can extend the day pass with an overnight stay.

Offering quiet, comfortable workspaces with excellent connectivity and in some cases on-site gyms and pools, this may be just the ticket for the nonoffice-based worker.

It is no secret that the hospitality sector suffered greatly through the pandemic, here at the Holiday Inn Brentford Lock, we kept open as long as we could, and when we were able to re-open we helped accommodate essential workers, including the NHS. We are now returning to normal, hotel bookings are coming in and corporate bookings are beginning to return. We are looking forward to the build up to Christmas …

Matthew Merrick | Director of Sales | Holiday Inn London - Brentford Lock