Post-COVID Economy and the Hospitality Industry

The onset of the corona pandemic hit every sector of the economy across the globe. The fear of uncertainty, the anxiety of everything being shut down, the threat of no physical networking, and the panic of the downfall of the economy alarms all the stakeholders alike.

Among all, the most affected industry is the tourism and hospitality industry that was the most thriving industry everywhere in the world in the pre-corona world. 2020 was probably the worst times in the modern history of the hospitality industry. Several studies were conducted to learn the repercussions of the pandemic over the hospitality and tourism industry. Most of them revealed severe losses and an economic downturn.

One of the McKinsey studies suggests that recovery to pre-COVID heights can take as long as 2 to 3 years if the right steps are planned, strategized, and taken in the right directions right from the beginning of 2021.

From boarding and lodging to travel and tourism and hotel and restaurant industries to casinos, cruise, cinemas, and other recreational places—all have reported huge losses and are still suffering and underperforming.

The susceptibility of the business model of the hospitality industry makes the whole sector vulnerable. After the successful shift of the SaaS, cloud computing, streaming services, gaming, digital media, and others, many other conventional big sectors are also now leaping into the arena of the subscription business model.

With Tesla, BMW, Porsche, Volvo, etc. from the automobile industry, health and education industry, EaaS and Industrial Internet of Things services providers, and other bigwigs of the market from all across the conventional and unconventional businesses’ entry in the subscription business, the hospitality industry is also stepping into the subscription avenue. The shrinking shares of the investment, as well as business, pushes the hospitality industry for the subtle or substantial shifts in the post-pandemic era.

In this article, we are geared up to learn more about the consequences of pandemic over the different segments of the hospitality industry as well as we will also examine the sets of challenges and the opportunities, hidden-behind, for the food and beverages, boarding, lodging, travelling, entertainment, and other sections of the hospitality industry. On the subscription side, we will also study the hospitality industry shift towards the subscription and then interpret what changes are on the way in the hospitality sector after the gradual transformation of the industry to the subscription economy.

Also Read: Embracing the Next-Gen Change—This is How Manufacturing Industry Is Carving and Scaling Subscription Solutions

Post-COVID Challenges and Opportunities in the Hospitality Industry

Pandemic wreaked havoc on the hospitality industry and made some tough and disappointing decisions including team, operations, future, and business process management to make their survival possible. Though, some decisions gathered them all on one platform with the agenda of growth for all. Pandemic woke up the stakeholders and made them realize the vulnerability of the hospitality business nature and their business model.

The individual as well as the collective efforts to elevate the hospitality industry from the downturn have introduced the hospitality services providers with the subscription business model and the significance of providing customer services on a recurring basis.

Loyalty is the galvanizing force behind the subscription model. It buzzes the customer and the services provider relationship pampered by the value, affordability, and availability—all the seasons, throughout the year.

A news sprut of the subscription-based growth has been observed, recently. Hospitality sectors like travel, accommodation, food and beverages, and recreations, not only have joined hands to provide cross-platform subscriptions other than their own subscription plans and products, they have also teamed up with other businesses outside their industry, such as SVOD platforms like Netflix, Amazon, Hulu, etc., spa and salon services, health and gym services, educational and corporate subscription services, etc. For instance, Airlines have started to introduce air travel subscription for frequent travellers. Some are also offering cross-platform subscriptions like accommodation, travel, and food plans and packages—all in one place.

Also Read: Gift Subscriptions—The Powerful Business Growth Approach to Grow your Customer Base and Revenue Net

Subscription Appeal Amid the Pandemic Upset Across the Hospitality Segments

The onset of the pandemic has created a great deal of challenges for the different segments of the hospitality industry. Due to lockdowns, the spread of the mass-level virus, economic downturn, government restrictions, travel bans, change in the customer behaviours, and all the factors, together, became the reason to sank the booming landscape of the hospitality industry.

Let’s have a quick look at how pandemic affected some of the major sections of the hospitality industry sections worldwide:

Food and Beverages

The risk of the spread of the virus restricted merchant as well as consumers, equally. The food and beverages division of the hospitality industry suffered throughout the activities of the business—From production to supply to sale—despite the spike in demands.

Restaurants, cafes, coffee shops, bars, tuck shops, delivery services, and other food and beverage outlets, all have faced difficulties and had to cut down on their budget and expenses and found new ways to ensure sustenance.

To avoid spoilage, job cuts, and revenue losses, restaurants, wholesalers, and delivery services teamed up to deliver ready-to-cook food, meal-kits, raw food items like vegetables, fruits, poultry, dairy, and other grocery items directly to the consumers and often on a recurring basis. When the situation relaxes, some have boosted their business more with pick-ups, card-dinning, and subscription-based meal kits to enjoy the restaurant like meals at home. This created a sort of work and earning balance and confronted the eatery business services providers to re-evaluate their business model.

Accommodation

Governments put bans on all sort of boarding and lodging facilities all over the world. Hotels, motels, guest houses, hostels, condos, resorts—all were empty and shut. These white elephants each day used to earn billions. They were not been able to continue managing the army of workers without the horde of visitors.

Many of the world-renowned chains of hotels reported an unprecedented loss and shut their doors forever and ever amidst the declining sources of investment as well as earning.

The accommodation industry found a way of survival in serving the quarantine centres for travellers coming from across the borders. Though this is the ordinary and temporary arrangement that could only help them from being vanished. To survive, hotels, resorts, hostels, and other lodgings spaces have shown interest in the accommodation subscription services.

Travel and Tourism

This is the most devastated section, even, in the hospitality industry. Airlines, road services, cruises, train services, and all other travelling services were under severe pressures due to the closed borders and travel restrictions.

The tourism industry has seen a loss that they have never seen or was not expecting in ages which is a dreadful reality. It remodels the business model of tourism. From travel agents to tourist guides to tourist places, and all the tourism services providers—all have seen the dead turmoil and tribulations. In those terrible times, the tourism industry took a sigh of breath with local tourism and travel services available on a recurring basis to establish reliable and, to some extent, a stable source of recurring income.

Recreation

Metropolitans, towns, or villages—all were closed, including the public places and recreational spaces. Cinemas, casinos, bars, cafes, theatres, sports grounds, gyms, salons, even, brothels—there was no place where people can connect physically was open. In such times, finding customers was a difficult job. It attracted the entertainment, sports, and other recreational industry to make their services available on a subscription basis. So, in all seasons, they have clients that keep the streaming of the recurring revenue.

Also Read: The Future of Print and Publishing—Is There a Light At the End of the Tunnel?

Subscription is the Road to the Revival of the Hospitality Industry

The hospitality industry has long been operated on fee-per-product or fee-per-services. It creates a lag whenever the demand for the product or service, for any reason, goes down. As the operational expenses and the demand for hospitality’s products and services are huge, the businesses cannot bear the lag even for a period of a day, only.

The stability of the demand and supply and consistency in the streaming of the recurring revenue make the subscription business model ideal for the hospitality industry.

After witnessing the unmatched success of the streaming services like Netflix, rentals, and other subscription-based products and services, finally, the hospitality industry has also started taken small and potential steps towards the subscription business model.

Leading airlines Lufthansa, Volaris, and others have started to offer subscription-based ait travel for frequent domestic travellers. This subscription allows companies and individuals to take advantage of the value of the travel.

Some of the chains of the hotel are shaking hands with the tourism industry to promote subscription-based accommodation, travelling, and tourism that allows visitors to pay one price for all the services and get one-stop billing and support in value pricing. Similarly, travel companies are offering travel subscriptions for domestic as well as cross-border travels. It can attract students, working individuals, and senior citizens.

Event management companies are also partnering up with travel companies, restaurants, hotels, and other hospitality segments to offer all-in-one subscription packages.

The hospitality industry is all set to transform and adapt to the new-age business model. All they need is to provide the customer with valued services as per their preferences. The subscription business is all about providing a great customer experience. The more they are connected with each other and with the customers, the better they can re-emerge as the most thriving industry of the economy. Combining all the stakeholders in one place for their packaged services require detailed and in-depth data insights and the robust and customized subscription business and its processes management solutions.

To learn more about the subscription opportunities in the hospitality industry and subscription management solutions, talk to the subscription experts at SubscriptionFlow.