Effects of Covid-19 on Hospitality Sector

Effects of Covid-19 on Hospitality Sector

The COVID-19 epidemic caused the global economic crisis and sent shockwaves through the worldwide healthcare sector. In response, many governments introduced a so-called “intelligent lockdown” and emphasized on maintaining physical distance from each other. Unfortunately, hospitality is one of the industries that has been hit by lockdowns and regulatory restrictions. As the coronavirus lockdown began, unemployment rate increased - many hotels, bars, cafes, and restaurants had to close their doors for an extended period of time as well as limit the number of workers. 

Unemployment as a consequence of lockdowns

In Austria, the number of persons who registered as unemployed rose to record levels in March and April 2020. In September, unemployment was about 22% higher compared to the same month in the previous year. The unemployment rate at the end of November 2021 rose to 9.5 per cent. The sector in which joblessness increased the most year-on-year was hospitality, with a 43% jump.

In the United Kingdom, the number of employees on furlough peaked at over 1.6 million in April 2020. UK restaurants and casual dining firms recorded almost 30,000 job losses in 2020 as the Covid-19 pandemic drove a 163% jump in redundancies. Data compiled by the Centre for Retail Research  revealed that 29,684 jobs were lost across fine dining.

In Germany, after the first lockdown waves most restrictions were lifted in time for the Easter vacations. The hospitality sector was once again setting up chairs and tables, while hotels were preparing their rooms to welcome guests. But this expected surge of tourists has highlighted the problem causing concern in the industry – the lack of personnel. Because there was little or no demand during the pandemic, the industry experienced a drop in employment. In addition to more than 217,000 part-time, more than 130,000 full-time positions in Germany have been lost in the last two years. 

The Netherlands also suffers from a labor shortage. The Dutch unemployment rate fell to its lowest level in over 20 years, while the number of job vacancies continues to rise. Unemployment has been falling and the number of vacancies has been steadily rising since mid-2020, with each quarter going on to break the previous quarter's record. And unfortunately, this trend has continued into 2022.

Staff shortage continues

As the travel and tourism sector recovers, many businesses are reaching  pre-pandemic client demand. Yet, many hotels have been unable to attract skilled personnel. Because of a lack of service employees, luxury hotels in London and Paris are leaving rooms unsold. While it is certainly difficult to keep a €700 room unoccupied, hotels understand that selling rooms at outrageous prices and offering hostel-level service might harm their long-term image.

There are many factors to staff shortage. In the recent poll by McKinsey & The Company, it was found that 47% of hospitality and leisure workers are likely to leave their job in the timespan of 3-6 months. During the interview with CNN, AccorHotels CEO Sébastien Bazin shared that the company's most complex problem is getting employees to return to work. According to Bazin, Accor is operating its hotels with 15% fewer personnel than before the epidemic, making it harder to maintain expected levels of service. 

“Foreign” Help

The German Federal Employment Agency has revealed that around 35% of hospitality employees are foreign nationals — in no other industry is the proportion higher. Because the hospitality sector is attractive and easy to get into, the industry is having high hopes for foreign workers. One of the examples are the refugees who had to flee from Ukraine to Europe and landed with a job in the industry. 

Did you and your company feel the economic downsize caused by Covid-19? Or have you encountered staff shortages? Our mission is to connect Ukrainian talents with job opportunities as well as to help European companies to avoid the staff shortages during the upcoming coronavirus waves.

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(Sources: Covid19.iza.org, Deutsche Welle, iamexpat.nl, Reuters, The Guardian)