As with any industry, the hospitality industry is subject to a number of uncontrollable variables that affect those involved in management or ownership of hotels. These include local and global economics, population shifts, oil pricing, legal changes and, of course, health outbreaks and pandemics. I’ll touch on a few of these and other factors in brief:
Health crises and pandemics
No matter the effects of past outbreaks and pandemics (think influenza, Ebola, Sars and H1N1), the global hospitality industry today finds itself plunged into uncharted territory. As a result, thousands of hotels worldwide have had to close.
Whilst no one can determine the final impact of this crisis on the survival of hotels and tourism industries worldwide, it is clear that the uncertainty caused by COVID-19 has forced the industry to become more creative and to innovate.
Resilience is now the watchword during this sharp downturn. Those hotels and brands able to skilfully navigate these waters will have one feature in common: they will have prepared today to build resilience tomorrow.
African oil-producing and -reliant countries have been among the most hard hit by the COVID-19 pandemic and the declining oil price, which has now reached a momentous 18-year low and looks to be unstable for some time as oil price wars take effect. Countries such as Angola and Nigeria, which have been slow to diversify their economic baskets away from crude oil, will unfortunately also see this impact negatively on business travel, as it has in the past. This will also have a hard knock-on effect on Senegal’s promising oil and gas future.
Climate and environmental factors
Communities located in high-risk natural disaster regions encounter greater challenges in developing resilient and sustainable tourism economies. Past examples of tsunamis, earthquakes, volcanic eruptions and even locust plagues have all shown that there are two sides to the issue in terms of the tourism sector. First, the devastating effects of the natural disaster slow down the tourism sector. On the other hand, natural disasters are capable of fostering strong feelings of solidarity, luring global interest to the region for further economic opportunities, including tourism and hotel investment.
Leading up to government elections, hotels typically benefit from increased traffic from international observers, politicians, officials and others who crisscross the country. Typically, however, international corporate and conference travel is seen to decline during an election year, often due to fears of political unrest and protests against long-serving rulers.
The Kenyan tourism sector, as an example, is particularly vulnerable to this trend as the country’s election process can be fraught with violent outbursts. Demand usually declines approximately two months prior to elections, though resurgence in demand usually occurs relatively quickly once a peaceful election process is complete.
Crime and civil unrest
Factors such as civil unrest and international terrorist attacks hamper economic growth and tourism by deterring travel to specific locations. But, whilst the toll of terrorist attacks on hotels and tourism is extensive (take Kenya, for example), post-conflict reforms in countries such as Angola, Rwanda, Nigeria and Ethiopia have seen post-war reconstruction booms. Increasing infrastructure development has rendered these recovering areas ripe for tourism and hotel investment. Figures show travellers eager to return to popular destinations previously affected by geopolitical instability
Government reforms and policy changes
In many countries, changing political trends and wider economic policy challenges typically spill over into the highly fragmented tourism industry. Similarly, government reforms can result in issues such as insufficient tourism resourcing or reduced government spending on business or conference tourism.
In 2016, Tanzania imposed the contentious value added tax (VAT) on tourism services and positively reduced unnecessary government spending that resulted in a significant reduction in hotel demand from government business and conference travel in particular.
South Africa’s 2015 stringent immigration laws for those travelling with children also wrought havoc on its tourism sector. On the other hand, the KAZA ‘Univisa’ initiative by Zambia and Zimbabwe has positively impacted tourism in these countries by granting travellers easy movement between the two (and day trips to Botswana) using just one document.