between make or break: the hospitality industry in spring 2022

March 18, 2022
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The Current Environment of the Hospitality Industry

Since the beginning of the pandemic in February 2020, the hospitality industry has experienced a rollercoaster ride: From being completely locked down to flourishing holiday seasons, a steady state has still not been reached. Furthermore, it is worth noting that the business travel segment shows very little signs of recovery. In addition, the Ukraine crisis has added even more complexity and insecurity to traveling during the last weeks. With energy prices reaching never expected heights and further inflation pressure, impact on pricing is inevitable. Adapted global flight routes to avoid conflict areas result in more time and cost consuming logistics. Last but not least, growing security concerns are more and more influencing travel decisions. In the current times, where traveling has become more restricted, more complicated and more expensive, the hospitality industry is facing a challenging and insecure outlook.

The Root Causes of the Downturn

It would be far too easy to solely blame the pandemic and the Ukraine crisis for this downturn. Research shows that social change and changing consumption behavior of travelers were often not taken very seriously during the last two decades. Or, as global trend experts summarize: “The pandemic has been an accelerator of major social trends.” Current pressuring problems like low occupancy rates, rising operating costs, a lack of talent and dependencies on OTAs are only a few to mention. All of them are the result of aging business models across the hospitality industry, not being flexible and innovative enough to respond to current market dynamics.

Call to Action

In current times with insufficient fixed cost coverage across the traditional hospitality industry, decreasing governmental support and rising operational costs, it is time to adapt to the new normal. The mantra of the hour is to adapt business models as we are all navigating into a highly insecure and extremely dynamic future. More than ever, business models are needed which are customer centric, flexible and agile.