How Hotel Giants Recover from the Pandemic

Posted by Andrew Turton on

The hospitality and tourism industry plays an important role in the global economy, contributing 11 per cent of the world’s total GDP pre-COVID. Its recovery, therefore, is highly anticipated and closely watched as the world emerges from the pandemic.

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Saying the pandemic has set the sector back many years would still be an understatement. 2020 is widely considered the worst year of both the tourism and hotel industries. In a survey by the American Hotel & Lodging Association (AHLA) in November 20201, nearly half said that they would be forced to close their properties.

Even the biggest players in the hotel industry are not immune to the enormous impacts of the pandemic. But these giant hotel chains usually have enough resources to weather the post-pandemic turbulence. More importantly, each of them has come up with clever strategies to recover.

Read more: Measuring the impacts of COVID-19 on the Hospitality industry

How are giant hotel chains recovering from the pandemic?

Accor is among the most well-known hotel chains globally, with over 100 brands and thousands of properties. Nevertheless, its revenue dropped 60% in 2020, to less than $2 billion, due to the pandemic2.

The bright spot in Accor’s recovery strategy is that they have managed to lower their reliance on tourists. In particular, Accor is now focusing on lifestyle hotels or those that make at least half of their revenue from food and beverage outlets or other amenities beyond guest rooms.

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Unlike conventional hotels which are geared towards tourists or business travellers, lifestyle hotels are destinations for people who come to dine, spend several hours, have a coffee, or meet someone.

This target is to reduce costs and increase revenue contemporarily. As a result, Accor’s profit was around 95 million dollars for all of 2021- an amazing recovery after a massive loss just one year ago.

Read more: Ready to Rebound: Accor Poised for Recovery with Infor SunSystems SaaS

Unlike Accor, InterContinental Hotels Group (IHG) has made an essential decision to trim off underperforming hotels from its global network, including Holiday Inn and Crowne Plaza hotels.

Instead, IHG has boosted new brands like Voco and Avid to become new drivers in the future. In addition, IHG also targets different segments with luxury, high-end, and affordable brands, respectively. IHG leaders do not hesitate to trim off low-income hotels while continuing to invest in great potential models.

The essential services have proved to be vital more than ever to IHG when it has focused on business travellers like those working in construction, while its competitors, such as Hyatt, have relied on large companies that work remotely during the pandemic.

Read more: Are These Common In-Room Amenities Still Relevant In the COVID Era?

Another clever strategy came from Orascom Development, a company that operates in both hospitality and real estate development. This organisation welcomed new CEO Omar El Hamamsy at the peak of the Covid-19 crisis. He immediately had a 100-day plan to stop revenue loss and find new growth avenues by changing focus to the areas of our business that are independent of tourism and international travel.

This is an advantage of a business with multiple sectors like Orascom when it puts great effort into its real-estate and town-management parts while maintaining hotel services for national and local markets.

The pandemic was definitely an unexpected challenge for all businesses, but it has also opened the doors to countless undiscovered opportunities and accelerated digital transformation projects. How does hospitality transform technologically post-COVID? Unmask its new face with our whitepaper below, available to download today!

Download whitepaper Hospitality Unmasking: From Contactless to New Revenue Models




Topics: Hospitality solutions

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Rick Yvanovich

 Rick Yvanovich
 /Founder & CEO/

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