Between Make Or Break: The Hospitality Industry In Spring 2022

The Current Environment of the Hospitality Industry

Since?the beginning of the pandemic in February 2020, the hospitality industry has experienced a rollercoaster ride: From being completely locked down to flourishing holiday seasons, a steady state has still not been reached. Furthermore, it is worth noting that the business travel segment shows very little signs of recovery. In addition, the Ukraine crisis has added even more complexity and insecurity to traveling during the last weeks. With oil prices reaching never expected heights and further inflation pressure, impact on pricing is inevitable. New global flight routes to avoid certain airspaces result in more time and cost consuming logistics. Last but not least, growing security concerns are more and more influencing travel decisions. In the current situation, where traveling has become more restricted, more complicated and more expensive, the hospitality industry is facing a very challenging and insecure outlook.

The Root Causes of the Downturn

It would be far too easy to solely blame the pandemic and the Ukraine crisis for this downturn. Research shows that social change and changing consumption behavior of travelers were often not taken very seriously during the last two decades. Or, as the global trend experts say: “The pandemic has been an accelerator of major social trends.” Current pressuring problems like low occupancy rates, dependencies on OTAs, rising operating costs and a lack of talents are only a few to mention. All of them are the result of fairly outdated business models across the hospitality industry, not being flexible enough to respond to current market dynamics.

Call to Action

In current times with insufficient fixed cost coverage across the hospitality industry, decreasing governmental support and rising operational costs, the traditional players cannot wait any longer to adapt to the new normal. The mantra of the hour is to adapt business models, as we are all navigating into a highly insecure and extremely dynamic future. More than ever, business models are needed which are more customer centric, more flexible and agile.

Detlef Schmidt - March 18, 2022

About the Author

Detlef Schmidt is the managing director of viabledesign. Detlef is based in Stuttgart/Germany and holds a master diploma in business management from the University of Stuttgart (Dipl.-Kfm. techn.). He is passionate about the hospitality industry and the art market, where he shares his expertise in numerous projects around the world.

About viabledesign

viabledesign?supports its clients to draw the right conclusions from current marketplace dynamics and helps them to better cope with future complexity by estalishing state-of-the-art business models. One of the main industries served is hospitality. By using the?proven viabledesign methodology, the pandemic trauma can be overcome in a very efficient way to get back on the growth track under new premises.