Assessing the Impact of the COVID-19 Pandemic on Revenue Generation in the UK Hospitality Industry Sample

CHAPTER ONE: Introduction to Assessing the Impact of the COVID-19 Pandemic on Revenue Generation in the UK Hospitality Industry: A Comparative Study Pre- and Post-Pandemic

1.1 Research Background

The pandemic was a global epidemic which occurred in the whole world and the resulting output created drastic effects on the working of the companies. The world economy was affected due to the pandemic and as a result of this many businesses were shut down. This is due to the reason that when the pandemic hit the countries then there was an economic shutdown and consequently the companies and their profitability were impacted (Bello and Bello, 2021). The pandemic has created negative effects on almost all industries but particularly the hospitality was affected to a great extent. It was due to the reason that due to the pandemic, there was a lockdown and people were not allowed to travel. As a result of this, the hospitality companies were shut and many of the companies closed down their operations permanently as they were having losses. With the analysis of the reports, it was analysed that the hospitality sector faced many of the restrictions due to the pandemic. This majorly resulted in the businesses closing down and nearly 1650000 employees were on furlough and the businesses were shut during the pandemic.

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The current study is based on the UK hospitality industry which has seen the major impact of the pandemic on working and profitability to a great extent. However, because of the shutdown the businesses were not operating and consequently the work was affected. Thus, as a result of this, the overall industry and its profitability were hampered (Ntounis et al, 2022). The current study will analyse the impacts of current COVID-19 on the profits of the company. Also, the comparison of the profitability before and after the pandemic will be done as it will assist the scholar in understanding the actual effects of COVID-19 on the working of the business.

1.2 Aim and objectives

Research Aim

The current research aims to evaluate the impact of a pandemic on revenue generation for the UK hospitality sector by comparing the pre and post-pandemic era.

Research Objectives

• To understand the overview and trends within the hospitality industry post-COVID.
• To evaluate the pandemic's effects on the hospitality companies' profitability and comparison of pre and post-era.
• To analyse the strategies which the companies have undertaken to improve the profitability post-pandemic.
• To recommend some of the ways through which the profitability post-pandemic can be improved.

Research Questions

1. What are the trends post-pandemic within the hospitality sector?
2. What effects has the pandemic created on the profits and comparing the pre and post-profitability data?
3. What strategies are used by hospitality companies for managing the effects on the profitability of the company post-pandemic?

1.3 Research Significance

In the current competitive environment, companies must operate profitably as when the work will not be accomplished well then the market position will be impacted. Also, the companies operate in an environment which is very dyic and the business must adapt to all the changes effectively. The current environment change included the pandemic and it created huge effects on the profits and operational efficiency of the businesses. Thus, the current study is of significance to the UK hospitality industry as it will evaluate the effects of the pandemic and how the revenue generation was affected (Piga et al, 2022). Also, the study is of significance to the hospitality companies present in other than the UK as they can also apply the findings of the current study. This is due to the reason that similar effects have been faced by hospitality companies in other countries as well. Moreover, the study is of significance to other scholars as well who are trying to conduct the study on a similar research topic.

1.4 Research Rationale

For companies to remain successful they must operate profitably. In case the profitability will not be managed then it will be affecting the overall working. This is the reason that in case the business will not be profitable then it will be affecting the working of the company to a great extent. Thus, the reason for selecting the current research topic is that it will assist in analysing the effects which the pandemic has created and accordingly the improvement will be implemented (Ozdemir et al, 2021). Also, another reason for the selection of the present topic of research is that the comparison will help in analysing the pre and post-situation well and the strategies for improving the profitability are also assessed well. Moreover, the study is also selected because the scholar has an academic and personal interest in the topic of research. Thus, the scholar wants to increase the theoretical insight relating to the effects of a pandemic on the profits of the company.

1.5 Dissertation structure

Chapter One: Introduction

This chapter is the basis of the whole study as it provides an overview of the whole topic and the objectives for which the scholar is working. It also includes the rationale of the topic and the significance of selecting it. Also, it will outline the dissertation structure of the whole study.

Chapter Two: Literature Review

It includes the evaluation of the various secondary information from different sources like books, journals, articles and other published data. It will include evaluating the information relating to the research topic in detail so that in-depth analysis can be done further.

Chapter Three: Research Methods

This chapter emphasises discussion relating to the various methods that are available for the successful working of the study. For the accomplishment of the aim, there are various methods and the scholar is responsible for selecting the most appropriate method.

Chapter Four: Data Analysis and Findings

DA chapter includes an in-depth analysis of the findings gathered from the data collection. It is mandatory for scholars that they must appropriately evaluate the data as this will assist them in attaining the objective of the study appropriately.

Chapter Five: Conclusion and Recommendations

This chapter of the thesis which focuses on concluding the whole study. It is very necessary as it emphasises inferencing key points from every chapter so that it can be summarised in a small way. Also, it will outline some of the recommendations for the future improvement.

CHAPTER TWO: Literature Review Help

2.1 Introduction

The review of the different literature is known as the concept which emphasises the analysis of previous studies relating to the research topic. For the study to be successful effective evaluation of the existing sources must be done well. When the analysis of the secondary source will be done effectively then it will be assistive to the researcher in accomplishing the objectives well. Thus, the current chapter will outline the analysis of the trends which the hospitality sector had to face relating to the pandemic. Also, it will analyse the comparison of the pre and post-profitability and revenue generation of the companies in the hospitality sector. At last, it will analyse the strategies which the organizations dealing in the hospitality sector are undertaking.

2.2 Overview and trends within the hospitality sector post-pandemic

In the views of Rodríguez-Antón and Alonso-Almeida, (2020) global pandemic has affected the working of the company to a great extent. In case the overall working of the business needs to be managed then it will be improving the overall development of the business. Thus, for the companies to be successful it is necessary that the proper trends after the pandemic are implemented. When the companies will not be adapting to the latest methods of working and trends then it will affect the overall efficiency of the business. So it is necessary for the company that they must appropriately work so that the complete working can be improved. In support of this Hemmington and Neill, (2022) state that when proper compliance with the latest working pattern is made then it will improve the working efficiency of the company in better. When these changes are not implemented then it affects the success of the company and competitive advantage is not gained.

Moreover, Wang et al, (2022) stated that when the latest trends are not followed it will impact the work and the consumer will not be satisfied with the services. Particularly within the hospitality industry, the latest trends and changes must be implemented by the organizations so that they are updated and also consumer like their work. Due to the pandemic, the working of the company was affected as there was a lockdown and no person was allowed to travel to any other place. Sanabria-Díaz, Aguiar-Quintana and Araujo-Cabrera, (2021) stated that when people were not allowed to travel then in such a case they people were frustrated and consequently they wanted to travel but there were restrictions to move to any other place. Following the trend, all the hospitality organizations had to stop their operations and ultimately it reduced profitability.

During the pandemic, the most common trend was the lockdown and relating to it the marketing of the hotels and other hospitality organizations was also impacted. Thus, the companies must work accordingly. When the businesses are shut then there is no need for marketing and for this, the working of the company is affected. After the pandemic, the most common trend was of need to refocus on marketing. Jones and Comfort, (2020) outlined that post-pandemic people lost their interest in travelling and as a result, they were not happy with travelling. Thus, the trend of refocusing on marketing and branding increased.

To attract the majority of the consumers, the hospitality organization needed to think creatively so that they could try to attract the consumers. Kumar and Rout, (2020) highlighted that after the pandemic, people were afraid of getting infected with the virus and as a result of this the working of the hospitality organisations was hampered. Moreover, with the analysis of the work of different authors, it was concluded that the major task of the company is to develop awareness relating to coming back to the hotels and other types of hospitality companies. This is very necessary because Talón-Ballestero et al, (2023) stated that if case companies do not take measures to grab the attention of the consumers then it may impact the profitability of the business. Thus, the trend of refocusing on marketing and rebranding is very necessary for the company.

On a contradictory note, Spanaki, Papatheodorou and Pappas, (2021) contemplated that the trend of focusing on effective accommodation is very necessary. This is because of the reason that majorly people travel for some leisure time and this, it is mandatory for them to effectively try to focus on providing better accommodation. In case the accommodation is not good and comfortable then the consumer will not be relaxed. Also after the pandemic people have become more conscious relating to the stay and the quality of the stay. In case the stay is not effective then it will be affecting the overall working of the hotels in a great way. Furthermore, Sucheran, (2021) also argued that when the stay quality and facilities will not be analysed by the company then the consumers will not be attracted towards the working of the business. Hence, as a result of this, it is mandatory that hospitality companies effectively focus on providing better services to the consumers so that they have a better stay and trip.

2.3 Effect of a pandemic on the profitability of hospitality companies pre and post-pandemic

Global pandemic of Covid-19 is termed as a black mark on the history of the world which leads to struck multiple lives and affects the livelihood in adverse manner. Gursoy and Chi, (2020) mentioned that Covid-19 had severe effects on the hospitality companies. During the pre-pandemic era, there are diverse range of inbound, international and outbound travellers, engages highly with the travel and leisure activities. At that time, travellers were focused on the gaining innovative experience through explore the world, to reduces the burden and stress of daily work life. Davahli et al, (2020) further stated that tourists were engaged with the hospitality sector, facilitate them to gain a refreshing perspective, and lead to foster positivity and motivation. During the pre-pandemic era, the profitability of the hospitality companies were recorded at £59.3 billion, which was measured at estimated 3% of the total economic output of the UK (Hutton, 2022).

However, Jones and Comfort, (2020) critically argued that the post pandemic era results to put adverse impact on the profitability of the hospitality companies. The governmental authorities of the nation imposed travel restriction by way of Lockdown, results in full time closure of the hospitality companies, such as restaurants, accommodation, bars and pubs, resorts, cafes and many more. Furthermore, there are several restrictions imposed on the international travel activities, this leads to severe drop in the number of tourists. Jiang and Wen, (2020) analysed that this results in adverse impact on the profitability of the hospitality industry in unprecedented manner. It faces the biggest economic downturn during the post pandemic, results in decreased profitability of the sector by 90% in April 2020, as compare to the pre-pandemic era (Hutton, 2022). Overall the economic output of the hospitality companies was negatively affected by 43% lowers than 2019. Organisations struggled to sustain their business with low profitability, results in closure of multiple organisations within the hospitability industry.

Before pre-pandemic era of Covid-19, with an increased demand for tourist for hospitality, the employment rate of the UK’s hospitality economic also measured at high rates. In addition, as per the opinion of Aigbedo, (2021) hospitality industry has a vital contribution in the development and growth of the nation’s economy. With the increased number of customers, organisations within hospitality are taken the advantage of increased efficiency, high revenue turnover, results in increased chances of market expansion and growth. It was resulted that there were estimated 2.53 million jobs in the hospitality companies, leads to represent 7.1% of total employment within the UK (Hutton, 2022). There are wide range of customers, required the effective and best services of hospitality, resulted in increased employment rate. Hospitality companies comprises higher proportions of skilled and talented workers belongs from international and domestic region, part time workers and ethnic or minority background workers as compare to the other business and services sector. Apart from that, Fenitra et al, (2022) claimed that global pandemic resulted in loss of jobs of individuals, resulted in massive decline in spending of the customers towards the leisure and travel activities, resulted in reduction of profitability of the sector.

On the contrary, in the post-pandemic era, there are multiple restrictions imposed by the nation’s government on the travel and trading, results in adverse impact on the hospitality companies with a significant decrease in arrival of tourists. Khan et al, (2021) critically contended that imposition of lockdown and changes in the travel policies leads to restrict travellers from utilizing the leisure and travel activities. The hospitality sector faced severe decline in the unemployment rate due to short come of tourist arrival. It was revealed that the industry faces the severe decline in unemployment rate or jobs with a significant fall in the worker’s number by 90,000 or 3.6% from January to march 2020 to October to December 2021 (Chissom, 2024). In the year 2021, the economic condition of the nation is begun to regain its strength with the adoption of initiatives to strength its profitability turnover. At this time, companies faces the issue related to shortage of staff, results in high number of vacant vacancies which are concerned with providing the effective services to the customers.

Huang et al, (2020) analysed that during the pre-pandemic era, the hospitality companies are operated its business in traditional manner without the integration of advanced technologies in the management of operations. The current trends of the hospitality sector involves with facilitation of maximum satisfaction with effective and personalised services to the travellers. This aims to maximise the retention and engagement of the customers towards the hospitality company, provides the advantage of high profitability and increased competitiveness. Furthermore, Chanyasak et al, (2022) evaluated that the non-requirement of technological advancements results in saving high cost of investment and recruitment of the skilled and technical employees, results in increased profitability and efficiency of the hospitability companies.

On contrary, during the post pandemic era, there is an evolution of requirement based on the integration of advanced technology within organisation as a current hospitality trend. John and Thakur, (2021) critically contended that for the effective maintenance of business operations such as self-check-in and check-out facility, online bookings and online payments, it becomes essential for the companies to implement the advanced technologies of Artificial intelligence, Automation, Augmented Reality and virtual reality (Fenitra et al, 2022). This required huge cost of investment to install the technical software within the organisation, results in reduction of profitability of the sector. In addition, the implementation of advanced technology needs the high technical and skilled staff to operate in effective manner. As per the view of Bagheri et al, (2023) to maintain the effective operations of technology, a hospitality companies needs to recruit the technical staff, results in emerging recruitment cost and payment of salary or wages to the workers. This minimizes the overall profitability of the business and further affects the development and growth of the hospitability companies in adverse manner.

2.4 Strategies undertaken by the company to improve the profitability of the company post-pandemic

In the post pandemic era of global pandemic, the hospitality company’s faces multiple challenges, among which decline in profitability is the foremost challenges, requires overcoming. According to the view of Nguyen et al, (2023) the unprecedented challenges related to the travel restrictions, hygiene and safety concerns and imposition of lockdown leads to emerge halt within the hospitality operations. However, the world is gradually overcoming the negative shadow of Covid-19 with an implementation of different strategies, aimed to improve the profitability of the organisation. The strategy of digital marketing was adopted by the hospitability companies to enhance its market and customer reach with an increased online presence. Gursoy and Chi, (2020) analysed that in the competitive market, the organisations are adopted the strategy of digital marketing with the adoption of social media platforms to robust its online presence, essential for the attraction of diverse range of travellers across global nations. The increased number of travellers leads to improve the profitability of the hospitality sector.

However, Davahli et al, (2020) critically argued that the adoption of digital marketing strategy increased the chances of cyber threat and risks related to the hacking, phishing and steal of vulnerability and sensitive information of customers and companies. Apart from that, the strategy of digital marketing provides the benefit of increased visibility facilitates direct booking through social media platforms and websites, leads to improve the profitability of the sector (Fenitra et al, 2022). In addition, the hospitality sector adopted the strategies related to flexible pricing, emerges as a potential key to navigate the challenges and uncertainties in the era of post-pandemic. As per the view of Jones and Comfort, (2020) the implementation of models based on dyic pricing enables the companies to adjust their service rates as per the seasonal trends, fluctuation in demands and as per the competitive analysis. This facilitates the basis of comparison to the customers on the basis of pricing, results in improved sales of hospitality services and profitability.

As per the analysis of Jiang and Wen, (2020) offering attractive packages rewards of loyalty and promotions incentivize the increased booking within the hospitality companies, drives profitability growth. In the competitive landscape of hospitability industry, the strategy of embrace partnerships and collaboration is termed as the success key to improve the profitability and competitiveness of hospitality companies. Aigbedo, (2021) suggested that partnership with the local organisations, tourism boards and other hospitality companies creates variety of growth opportunities with a significant increase in profitability. Apart from that, collaboration with the complementary businesses includes transportation services, tour operators and cultural institution offers the comprehensive experience by attracting the large segments of tourist as its target customers. Khan et al, (2021) evaluated that the strategy of partnership results in new market access with the foster of creativity and innovation within hospitality, leads to enhances overall experiences of guests, which improves profitability.

Huang et al, (2020) contended that partnership evolves with high financial risks and emerges as a threat for the hospitality companies, leads to reduce the number of customers by influencing them towards their organisation. This increases the chances of decline in profitability and affects the performance of the hospitability companies in adverse manner. Apart from that, Chanyasak et al, (2022) mentioned that strategy of innovation is adopted by the hospitality organisation as a current trend of advanced digital world in the post-pandemic era. Organisations are engaged in leverage of innovated digital technology of AI, automation, augment reality and virtual reality to streamline the hospitality operations and maximise the experience of guests. John and Thakur, (2021) stated that Innovation with the hospitality companies with the AI chatbots, Automation and VR, AR facilitates the effective streamline of hospitality operations, results in improved profitability and increased innovation and growth within the business.

For example: Travelodge in the UK has adopted the innovation strategy with the implementation of advanced technology of AI and automation, leads to improved performance, resulted in high experience of customers and increased customer retention. This has a positive impact on the profitability of the organisation, measured at £1,035.2m with a significant growth rate of 13.7% in 2023 (Travelodge, 2023). However, Bagheri et al, (2023) critically acclaimed that there are potential drawback of the strategy of innovation such as high maintenance cost, increase in operational cost and huge expenses of investment, negatively impacts the profitability. The stakeholder theory assist the hospitality organisations to make increased profit by fulfilling the needs of its stakeholders, comprises of employees, workers, partners and customers. Nguyen et al, (2023) contended that the stakeholder theory influences the stakeholders to serve the guests in effective manner to improve their engagement and retention, aims to increased profitability of the organisation.

2.5 Conclusion

From the above chapter, it has been concluded that the global pandemic of Covid-19 resulted in changing trends and preferences of the customers within the hospitality industry. Customers were highly preferred the technical organisations with the adoption of online payment methods, mobile bookings and hustle free check-in without physical interaction with personalized services of hospitality with proper hygiene and sanitation. Apart from that, there was an adverse impact on the profitability of the hospitality organisations due to reduction in the number of tourist arrival, decline in customer’s spending and increased rate of unemployment. In addition, the growth strategy of digital marketing, adoption of innovation and flexible pricing strategy and collaboration and partnership strategy to improve the profitability of the sector was concluded.

2.6 Literature gap

This research gap highlights the impact of Global pandemic of Covid-19 in special reference to the hospitability companies within the UK. The existing study comprises of detailed study on the hospitality sector and potential effect of Covid-19 on it. However, the current study bridges the gap with the implementation of theoretical framework and multiple strategies based on the improvement of profitability of the UK hospitality market. The theoretical framework of stakeholder’s theory is implemented in the current study with a view to promote profitability of the hospitality companies with increased maximisation of satisfaction and contribution to the stakeholders (Gursoy and Chi, 2020). Furthermore, the current study critically evaluates the current trends of the hospitality sector to minimize the adverse impact of global pandemic on hospitality industry. Detailed comparison between the post and pre pandemic era within the hospitality industry in context of profitability is examined in this study, which was missed in the previous one.

References

Books and Journals

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