The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, and aims to provide much-needed financial aid during the current slump triggered by the coronavirus pandemic. Under the $2 trillion relief fund, many hospitality businesses such as those in the hotel and restaurant space may be eligible for a slice of the $350 billion forgivable loans pie.
Despite this move from the US government receiving praise from many sectors, some leaders in the industry have said that it is not enough. For example, American Hotel & Lodging Association (AHLA) President and CEO Chip Rogers said that the CARES Act is “unworkable for hoteliers.” The CARES Act currently limits SBA loans to 250% of average monthly payroll, and Rogers believes that this isn't enough to allow an operator to meet both payroll and debt obligations beyond the estimated four to eight weeks of business closure.
If the relief funds provided aren’t enough to help businesses, what else can they do to stay afloat during this period?
How They Can Help Employees
Workers are undoubtedly the first to feel the impact of the economic downturn, for both salaried and hourly employees. North Carolina’s hotel industry has already reported a loss of 370,000 jobs, while airline companies around the world have grounded most, if not all, of their entire fleet, leaving members of the cabin and ground crew jobless. Forbes has compiled a list of companies that have laid off workers, covering industries such as art and entertainment, real estate, manufacturing, education, and many more.
One way to ensure that some workers are still employed is to redeploy them to areas where they can help combat the virus. A great example of this is CVS Health Corp.’s call to recruit 50,000 employees to help them handle the greatly increased demand - and they’ve partnered with other companies to hire their laid-off workers. Their partners include big names in the hospitality and travel industries, including Delta Airlines Inc. and Hilton Worldwide Holdings Inc. Over 900,000 applicants have already put in their bid for gainful employment. Jeff Lackey, head recruiter at CVS, shares that he is grateful for the spirit of partnerships, and that “we only have one enemy right now, and it’s the coronavirus.”
In this sense, employee redeployment serves a dual purpose: to give back to people the means to support themselves, and also allow in-demand businesses to bolster their staff.
How They Can Create Alternative Revenue Streams
Because of the heavy reliance hospitality businesses have on the physical presence of its customers, social distancing measures have inevitably affected sales. In the US restaurant industry alone, over $25 billion in sales have been lost due to the pandemic.
1. Restaurant Industry
Many have already started to focus their efforts on food delivery. Traditionally, fast food and fast-casual restaurants are the ones that have always relied on delivery as an alternative revenue stream. Fine dining restaurants, on the other hand, seem to be reluctant to venture into that space for fear of compromising on the dining experience. However, given today’s climate, even fine dining restaurants have to follow suit. To further make your offerings more attractive, you can also come up with more family packages since more families are forced to stay home.
While most restaurants have continued to serve food, others have gotten a little more creative and ventured into the grocery space. As supermarkets and grocery stores are scrambling to keep essential items in stock to cushion the effects of panic buying, some restaurants are selling their supplies as everyday grocery items. Meanwhile, Farmers Restaurant Group has started selling their supplies as meal kits with cooking instructions to promote home cooking. The meal kits come with packaged chicken salad, toilet paper, paper towels, wine, beer, and other essentials.
2. Travel Industry
Just because air travel is heavily restricted now doesn’t mean that you can no longer share cultural experiences with people around the world. Several sites have popped up which allow people from all over the world to view iconic travel destinations. For example, the Virtual Angkor Project website allows visitors to get a 360-degree view of the ancient temple of Angkor Wat in Cambodia. Travel companies can partner with such websites to promote travel packages in anticipation of post-coronavirus travels. Meanwhile, Airbnb has shifted its experience platform online. This platform includes cultural activities from 30 countries such as meditation with Japanese monks and making homemade pasta with Italians.
3. Hotel Industry
Hotels have pivoted to make the necessary adjustments in this pandemic-impacted business climate, by providing venues for temporary lodging and quarantine. In New York City, for example, hotels have started accommodating healthcare workers. Those with coronavirus symptoms are quarantined separately from asymptomatic healthcare workers who wish to self-quarantine to prevent passing the virus to their families. Meanwhile, the city of Chicago will rent more than 1,000 empty hotel rooms as housing for those affected by the coronavirus, with the cost fully covered by the government.
In summary, the hospitality industry’s heavy reliance on the physical presence of its customers has caused it to be one of the most severely affected industries. Nonetheless, the service-centric nature of the industry means that workers from this sector can still use their skills and knowledge during these times, albeit for a different purpose and target demographic.
For more resources on how businesses can deal with the impact of the coronavirus pandemic, visit the Workstream blog.
Nigel is not just a marketer at Workstream, he is also a graduate of Psychology and Marketing of Singapore Management University. He has multiple experiences in various areas of marketing - advertising, email marketing, and content writing. Fun fact, prior to joining Workstream, he took a semester off school to intern at SAP in Brazil.