COVID-19 pandemic created an impact on businesses located all around the world. Out of them, businesses that exist within the hospitality industry had to deal with the most damage. That’s because people were forced to stop traveling for leisure and business purposes due to the lockdowns and social distancing requirements.

According to the analysis of experts in economy, it would take time until 2023 for the industry to return back to the normal operating conditions. Until that, we will have to see the industry suffering. If you are an economics student, you should be mindful about this as well. That’s because you will have to answer questions in analyzing the economic impact created by COVID-19 in the hospitality industry. This is where you can refer to the IB Economics Paper 1 Sample Answers and get yourself ready.

While keeping that in mind, let’s take a look at some of the most prominent negative impacts that the COVID-19 pandemic has created in the hospitality industry.

• Lots of people who worked for the hospitality industry have now lost their jobs

Along with COVID-19 pandemic, we saw how lots of people lost their jobs. Out of them, people in the hospitality industry are much higher when compared to other industries. The virus could create a negative impact on our livelihoods as well as our lives. The crisis is moving at a pretty fast rate and we are not too sure on when those people will be able to get back their jobs.

Businesses that exist within the hospitality industry are struggling to make profits as they don’t have any customers. In fact, they can’t even cover up their expenses, such as to pay salaries of employees. This has contributed a lot towards the job cuts that we could see in the past few months. This is applicable to businesses that belong to hospitality industry across the entire world.

• Economy class hotels and airlines may survive

Most of the hotels around the world are now closed. If you take a look at those hotels, you will figure out that a higher percentage of closed hotels are luxury hotels. People are curious about spending their money during the uncertain economic times. Hence, they refer to stay away from luxury as much as possible. This is the main reason on why luxury hotels are closed. On the other hand, the total number of people who fly with business class have dropped significantly. Even under the lockdowns still prevailing in numerous countries, we can still see how some of the airlines are operating. Passengers who travel in these airlines prefer to use economy class.

Since customers have refrained from going after luxury, we will be able to see the biggest impact on COVID-19 on the luxury hotels. The economy hotels will still be able to survive with their reduced occupancy rates.

• Investors remain pessimistic

No investments are taking place in the hospitality industry as of now. However, we can see how the investors remain pessimistic about the changes that would happen in the industry within future. Share prices of the businesses that exist within hospitality industry are dropping. This will be favorable for the investors. Hence, the investors expect to go ahead with their investment opportunities and contribute towards the betterment of hospitality industry again in the future. However, we are not too sure on when that would happen. That’s because the COVID-19 is not yet over and we cannot still see the light at the end of the tunnel.

The road to recovery

Other industries impacted with COVID-19 pandemic will be able to get back faster when compared to businesses that exist within the hospitality industry. Even if the restrictions are lifted, people will not be willing to spend all their money and start traveling the world. It will take around four years for things to get back to normal.

As an economic student, you can discover numerous real world examples for businesses that survive the hard economic times prevailing out there. You can learn more about their strategies by analyzing their financial accounts. You will have to provide answers to similar questions on the exams that you will have to face in the future. Hence, you should go through Econs Tuition and enhance your knowledge, so that you can keep yourself equipped with knowledge at all times. This knowledge can benefit you at the time of providing answers to the questions that you get.