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Jenkins Fenstermaker, PLLC

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Huntington, WV 25701-2225

Phone (304) 523-2100

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By Jenkins Fenstermaker, PLLC on 09/22/2020
How Hospitality Businesses Are Surviving the Pandemic

The hospitality industry, from restaurants and hotels to arts and entertainment venues and the many vendors and businesses that supply or work with these companies, has been hit particularly hard by the coronavirus pandemic. Too many businesses have closed for good, unable to remain solvent through the crisis. Some, however, are weathering the storm or even learning how to thrive in this time of crisis. Examining how hospitality businesses are surviving the pandemic can provide insight and inspiration to help your business do the same.

Understanding How Hospitality Businesses Are Surviving the Pandemic

The pandemic crisis response in the hospitality industry has varied widely. Some businesses approached the challenge by hunkering down and minimizing expenses, hoping to wait out COVID-19. Others have been more proactive, evaluating the market and their own circumstances and planning accordingly.

How hospitality businesses have adapted during this ongoing challenge has had a significant impact on which businesses survive and which end up shuttered. With research suggesting activity in parts of the hospitality sector might not return to normal levels until 2023 or later, hospitality businesses that have not been proactively adapting to the pandemic thus far must take steps to do so as soon as possible.

Adapting to the Pandemic: First, Evaluate

The first thing a hospitality business owner or manager needs to do right now is reevaluate. Circumstances have likely changed somewhat drastically since you last completed a thorough evaluation of your business and market. The pandemic has caused huge shifts in consumer preferences, priorities, and behaviors. Businesses that don’t respond in kind are destined to struggle, if not fail.

Gather research for your specific area of the sector; find out what consumers want now from businesses like yours and how hospitality businesses have adapted to provide those things. Then turn your focus inward. A SWOT analysis—considering your business’s strengths, weaknesses, opportunities, and threats—is a good exercise to complete from time to time even when the market isn’t in turmoil. In a situation like a pandemic, it’s practically mandatory to give SWOT issues a thorough review.

In addition to evaluating what your business brings to the table, you also need to consider its legal obligations. Leases, vendor contracts, employment contracts, and required permitting and licensure are all part of the package. If the survival of your business in the long run means cutting back or renegotiating in any of these areas, a hospitality industry attorney is ideally qualified to help you identify the consequences of the changes you may be contemplating. Armed with the knowledge of how hospitality businesses are surviving the pandemic and your business’s specific strengths, weaknesses, opportunities, threats, and obligations, you will be ready to formulate a plan to move forward.

Crisis Response in the Hospitality Industry: Do Well by Doing Good

Recent market research has found that consumers want more from businesses during the pandemic. With a continuing coronavirus threat, an election looming, and divisive social issues top of mind, people are craving positive messages and uplifting stories.

Hospitality companies are uniquely positioned to use their resources and assets for good. The form this takes will depend on your specific situation, but examples include restaurants that have teamed with school districts to provide meals for students, hotels that have donated accommodations to health care workers and first responders, and manufacturers that have pivoted to produce desperately needed personal protective equipment for hospitals.

Giving back in an authentic, sustainable way that makes sense for your business positions you as a partner in your community, builds your brand, and establishes relationships with your customers. Be warned, however, that today’s consumers are conscientious; hollow gestures and commentary that are not supported by meaningful action are likely to be seen as pandering and reproached by consumers.

Keeping It Clean and Your House in Order

An April 2020 study regarding consumer attitudes about leisure travel found that more people would feel comfortable staying in a hotel if they knew the facility was taking multiple proactive steps to prevent the spread of the coronavirus. The possible policies and actions included advanced cleaning protocols, use of protective personal equipment (PPE) by staff, availability of PPE for and enforcement of PPE-use mandates for guests, rapid COVID testing and temperature checks, and measures to allow and encourage social distancing.

While this study focused specifically on hotels, it’s safe to say that it likely reflects consumer attitudes in general as they relate to the hospitality industry. Protecting your employees and patrons and making it known how you are doing so can go a long way to encourage consumer confidence and allow customers to feel comfortable in your care.

A company’s employees are critical to efforts aimed at preventing the spread of the coronavirus and easing the minds of customers. Now, maybe more than ever, hospitality businesses must attract and retain quality staff. Unfortunately, the inherent risks of the hospitality sector’s high level of exposure to the public are turning employees, even long-term service-industry professionals, away from the work.

Losing experienced, long-term employees could create internal problems that run even deeper than the impacts of the pandemic. With consumer expectations high, missteps in basic services are not an option. Employers in the hospitality industry need to protect employees and communicate clearly and effectively to let them know they are a valued, respected part of the business. A hospitality industry attorney is well-suited to advise businesses in crafting or revising policies and procedures that protect employees and the company.

How Hospitality Businesses Have Adapted to Survive and Thrive

A look at adaptability is essential in understanding how hospitality businesses are surviving the pandemic. Restaurants, for example, were sometimes forced or otherwise encouraged to shut down dining rooms and had to find alternative ways to deliver meals to customers. Drive-through, pick-up, delivery, and to-go services became the norm for those customers who were eating out at all. Adapting to the pandemic meant finding a way to offer these services or getting creative about other potential revenue streams your company could tap into.

Technology was and continues to be an essential part of efforts to serve customers in the hospitality industry safely. Businesses that already had the capacity or invested in equipment that allows touchless payments and other technologies that limit or eliminate in-person contact have benefitted from this advantage.

Location has also played a role in the ability of a business to pivot and begin offering more COVID-friendly services. In Huntington and Charleston, WV, for example, city leadership made accommodations to allow restaurants to offer expanded outdoor dining options. This created a safer environment for customers and staff and allowed many businesses that might otherwise have been forced to close to gain some traction.

Adaptations like these are likely to require more than a shift of equipment. Moving dining areas outdoors are likely to require permitting. A bar adding food service might need a restaurant permit. And restaurants that shift any operations to mobile food trucks would need a permit for that as well. Working with a hospitality industry attorney can help expedite the permitting process, from identifying the permits needed and navigating permitting requirements.

How Hospitality Businesses Are Surviving the Pandemic by Restructuring

It was not surprising when news of companies reevaluating their business structures began appearing fairly early in the coronavirus era. For some businesses, no amount of goodwill, ingenuity, or hard work is going to effectively combat the challenges presented by the pandemic. If your business model and structure are simply no longer relevant or workable, it is time to consider a major change. For some businesses, restructuring can improve cash flow or solve other problems brought on by the pandemic.

Mergers and acquisitions are also an option for companies that want or need to remake themselves or join forces to bolster business. Some industry experts expect to see an increase in hotel and other accommodation-related mergers in the wake of the pandemic.

As previously noted, your business’s path to survival may require renegotiation of leases and vendor or other contracts, structural changes to the business, or its merger or sale. All of these require you to consider existing contractual and legal obligations. To protect your business from fallout caused by ill-advised or -considered attempts to save your business, it is imperative to consult with an experienced hospitality attorney for advice before moving on these matters.

Finding a Hospitality Industry Attorney

The pandemic crisis response in the hospitality industry has been and will continue to be complex and multifaceted. All of the matters discussed here are intertwined with potential legal issues that need to be addressed quickly or even in advance to avoid serious fallout. Company owners and operators need a knowledgeable hospitality attorney who understands how hospitality businesses are surviving the pandemic and can help them navigate the challenges of adapting to the pandemic. Contact the firm today by calling (304) 523-2100 or completing the firm’s online contact form.