The coronavirus pandemic is affecting every corner of the Hospitality business of Nepal, as the ultimate consumers have canceled their travel plans and have started to limit their day-to-day activities. Hospitality Businesses are facing many cancellations making this industry at the forefront of the pandemic’s economic effects. This pandemic situation has collapsed the Hospitality industry of Nepal creating a market crisis. People have become jobless, businesses are going bankrupt and closed, and the national economy has crashed. Hospitality businesses are in a big dilemma regarding their business future as no one has the right answer to the current situation. All these effects of COVID-19 have posed the threat to the survival of humanity and a challenge to face during the pandemic.

Current Pandemic Scenario and Hospitality Business of Nepal

Due to the Covid-19 pandemic, the world’s economy has been badly affected within a short period. This pandemic has affected the Hospitality industry of Nepal too. Many Safety measures taken like community lockdowns, social distancing, stay-at-home orders, travel, and mobility restrictions have resulted in a temporary closure of many hospitality businesses and have decreased the demand for businesses. Almost all hotels and restaurants were asked to limit their operations to only take-outs. Restrictions placed on travel and stay-at-home orders issued by the authorities led to a sharp decline in hotel occupancies, travel reservations, and revenues. This has made a great impact on the national economy within a short period. The reopening process has started and authorities have started to minimize restrictions allowing restaurants to reopen with strict social distancing guidelines, and reducing restrictions on domestic as well as international travel. The complete halt in business for so many months has forced many Hospitality businesses in Nepal to make drastic moves. They need to make informed decisions regarding their business continuity or business closure. No one knows when this COVID-19 situation is going to finish. Till then, Hospitality business operators need to find innovative ways to secure the Hospitality industry.

7 challenges of the Hospitality Industry of Nepal during COVID-19

While the Hospitality industry is recovering, the COVID-19 crisis continues to exert greater impacts on how Hospitality businesses operate. Hospitality businesses need to make changes to their operations in the COVID-19 business environment to ensure employees’ and customers’ health and safety and enhance customers’ travel experience.

Here are 7 major challenges faced by the Hospitality Industry of Nepal during COVID-19:

1. Re-Opening Challenges

Hospitality businesses need to accept the fact that businesses will not be the same as it was before. There will be drastic changes in the business environment compared to what was in the past. Accepting the current situation and re-opening their business is the major challenge the Hospitality industry is currently facing. The challenge for Hospitality owners is to create a strong consumer connection network to position guests, employees, and brand safety over anything. Additionally, businesses also need to be responsible by considering the safety issues of surrounding communities.

There are various areas to cover and various considerations to make while re-opening the business. Thus, as a Hospitality business owner, you have to make calculative decisions on whether the business should be re-opened or shut down. When faced with the challenge of preparing to reopen your business in an uncertain environment, it can be difficult to know where to start and how. You have to follow government guidelines about the reopening process. You need to know where your potential guests travel from and what they want from their stay. You need to know the way to increase demand. So, there are various questions to ask and bold decisions to make while thinking of re-opening the business.

2. Accepting New Consumer Behavior

Consumers today are going to choose experiences that are ‘value for money’, sustainable, healthy, and safe. Compared to the past, their spending habit, consumption pattern, perception, and expectations have changed because of the current pandemic situation.

Reopening the hotel, restaurants, and airlines, and making travel restrictions easy will not bring customers back immediately. Most customers are still hesitant and not willing to travel to a destination, stay at hotels, and dine in restaurants. There is still a huge chunk of customers who will only feel comfortable traveling to a destination and staying at a hotel when the COVID-19 vaccine becomes available and things become the new normal.

As we all know, the breakeven point in the hospitality industry is high because of high operating costs; the survival of many Hospitality businesses depends on increasing the demand for their product & services. Thus, figuring out what will make customers return is essential and this requires intensive research efforts and various modifications in the way businesses are operated. It is, therefore, the Hospitality businesses of Nepal need to act responsibly and create a brand culture that adapts to the changing consumer needs and preferences. Hospitality businesses failing to fulfill new customer necessities will have a difficult time moving ahead, as the situation has changed and customer preferences have changed too.

3. Higher Fixed & Variable Expenses Associated with the Business Operation

As a result of COVID-19, Hospitality business operators had to make tough decisions on whether to open or shut down their businesses. Many businesses had to shut down as they were not able to hold the cost factor associated with it like higher rent, higher salary, loan repayment, etc. On the other side, in a hope of a better situation in the future, many hospitality businesses remained open despite diminished cash flows. This resulted in owners being unable to fulfill debt obligations and having to shut down.

Depending on the type of business and the type of service it provides, the decision to close or remain open varies from place to place. COVID-19 has forced Hospitality business operators to take a hard look at their expenses to see where there might be opportunities to reduce costs in this pandemic environment. They are looking for ways where they could minimize their cost whether by outsourcing staff, making staff layoffs, staff multi-tasking, decreasing utility expenses, etc. It is a huge challenge for hospitality owners who are thinking of reopening their business, as they have to deal with higher fixed, and variable costs, and business liabilities associated with the operation.

4. Adopting Safe and Healthy Practices

Since Covid-19 will stay for at least a few months, you need to execute measures to keep people on your property safe. It’s important to find the right set of tools for efficient implementation. As a Hospitality business operator, it is your responsibility to ensure that you follow major safety and health-related guidelines. Your property should be well prepared and should protect staff and guests during interactions with each other.

Visible sanitizing efforts (such as hand sanitizers at the entry, staff wearing masks and gloves), implementing social distancing, limiting the number of customers served, more rigorous and frequent cleaning of high-touch surfaces in common areas, and employee training of health and safety protocols, healthy and safety guidelines in visible areas are the most important safety precautions customers expect from your Hospitality business. It is important to keep an inventory of masks, sanitizers, gloves, and special cleaning equipment. Also, you’ll have to arrange for frequent air-conditioning service and maintenance tasks to prevent infection spread. If possible, it would be a good idea to conduct temperature checks on guest arrivals. Demonstrating pro-activeness in this regard, will not keep people safe but take your reputation a long way in the travel community. Guests will not feel hesitant to pay a little more if they have made a great effort to tackle the present pandemic situation. What customers want is confidence in what you are providing, and it is your responsibility to fulfill their needs.

Failing to adopt proper health and safety guidelines might result in customers searching for better alternatives compared to yours. There will be fierce competition to grab market share. Hence, safety and health guidelines must be followed by the Hospitality business.

5. Implementing Practical Revenue Management

While ensuring the health and safety of everyone around you is important, you also need to make some rational decisions to maintain the continuity of business. This is the best time to assess your revenue management operations. You’ll need to continually evaluate your rates and most probably lower them. You will need to be flexible as there will be swings in prices because some competitors will panic and you need to be ready for that.

It might be the right time to offer discounts and promotions, but you shouldn’t go too low as this might change your business positioning and damage your brand. You will have to monitor and optimize performance regularly, more frequently than ever. To survive, you need to create the right promotions at the right time and distribute them through appropriate channels to reach targeted customers. It is through innovation and resilience; we can bring back the confidence of loyal customers and attain a new customer base. It might also be the right time to consider alternate sources of revenue. You might be focusing more on catering to the domestic market if you were more into the international market previously, or you could use your assets to generate alternate revenue sources. Therefore, a proper change in pricing strategy, service strategy, or financial strategy is required to survive during this pandemic situation.

6. Adapting to New Technology

It is no doubt that the guests’ expectations for hygiene, cleanliness, and safety have become more important than before.  Additionally, Hospitality businesses are concerned about ensuring the safety of their customers and staff.  This situation has demanded to decrease in the number of direct contacts between customers and staff, and that could be achieved by implementing digital means of communication technology.

Here are some tips on how to use technologies to control COVID-19 effects:

• By introducing mobile check-ins and check-outs with guests not having to come to the Front Desk to get a key.
• By implementing contactless payment via smartphone
• By offering an opportunity to order anything via a mobile app, or introducing a digital menu that can be viewed via QR codes.
• By meeting guest’s needs via direct chat

Technology integration and adoption into Hospitality operations will be very essential shortly. Hotel marketers need to develop marketing strategies with a strong digital presence to ensure large visibility and a great reputation. The main benefit of this measure is the possibility to communicate with guests in real time with no personal contact involved. Implementation of these technologies will have a significant initial cost but will lead to efficiencies and lower costs in the longer run. Sooner or later, technology will dominate the Hospitality industry. Therefore, Hospitality businesses need to adopt new technologies that can benefit them in this hard situation.

7. Adapt the new normal with Business Process Modification

Currently, we are in a time where the Hospitality businesses are facing low bookings and reservations, or no bookings or reservations. We are even aware that the pandemic situation is going to affect our business for quite a time. Hence, we need to accept reality and move ahead by making a few changes in our business process to survive and sustain ourselves. We need to build a completely new business model to enable profitability during the COVID-19 situation. All we need to do is to gain the confidence of our customers by creating a suitable environment for new practices to nurture and flourish in the coming times. Adopting the new normal is the only option we have currently.

Here are a few ways where you can make your operational modification to make a suitable and welcoming environment for your customers:

• Make a new marketing action plan with new strategies and ensure it is implemented.
• Update your website and online presence (social media platform) to communicate necessary information to potential customers.
• Build a communication strategy- creating new posts on websites, new social media campaigns, showing videos of new, safe, arrival and check-in processes, etc.
• Update your cancellation policies.
• Review your OTA (Online Travel Agents) listings to maximize your distribution channel with the inclusion of guest-friendly policies.
• Find new guests by focusing on the domestic community, and focus on your existing customer base for repeat business.
• Expand where you can by investing in a new property or brand that makes financial sense.

Since the crisis is of high, medium, or low intensity in different markets and geographies, a market-wise approach is required to adapt to new normal situations. Hospitality business operators need to develop strong marketing strategies with a strong digital presence to ensure large visibility and a great reputation. 

Besides these, there are many other difficulties and challenges the Hospitality industry is facing.

Staying Afloat and Getting Ahead

For thousands of years, humans have overcome every obstacle. It is no doubt that we will overcome this, sooner or later. While you wait for the recovery, this is the time to be ready with a well-thought-out ‘Digital Marketing Action Plan’. At the same time, you need a solid communications strategy that will help you to be in touch with the market. Engaging with your customers in any way possible will keep your brand at the customer’s top of your mind. You should communicate with your customers keeping 3 things in mind- what you can do for them, what you have available for them, and the measures you’re taking to keep them safe.

You should take this crisis as an opportunity to reinvest yourselves by modifying your business processes to sustain. It is time to focus on domestic travelers as they will be the ones who will be making the first move. If we can create strong domestic tourism, it will help to create a solid foundation for the Tourism & Hospitality industry. All the private and government stakeholders should come together to foster domestic tourism, which will help to revive the Hospitality business. Here, the government has a great role to play and must act as a facilitator to support Hospitality businesses. Communication, collaboration, and collective problem-solving are one of the best ideas to deal with this challenge. Hospitality business operators should grab every opportunity that will help to make their business stable during this pandemic situation.

It is no doubt that only the fittest will survive this battle. This pandemic situation will not be with us for long, hence, as a hospitality business owner, you have to make the right decision to face the current challenges. You should make an effort to reach your customer with the help of modern digital technologies to ease your business process and reach a huge customer base with less effort. Challenges are good, as they always create new opportunities and possibilities. It is time to be optimistic by hoping for the best and preparing for the worst.

Contributed by: Mr. Samit Raj Shakya – Founder/director of Elite Hospitality & Tourism Services and Marketing in Director for Jalan Restaurant Pvt. Ltd.