Impacts and Implications of COVID-19 on the Global Hotel Industry and Airbnb

Abstract

While the tourism industry was on a steady growth path up to 2019, it remains sensitive and vulnerable to natural and political shocks. Such shocks have been on the increase in the recent past. Of concern has been the increase in diseases and pandemics which have become more prevalent since 2000 to 2020. As a result of the interlinkages in the tourism industry, disease outbreaks are often disruptive to global tourism economies. This chapter assesses the impact of COVID-19 on the hotel industry and shared accommodation in the form of Airbnb. Using critical document analysis and tracking hotel bookings from machine learning data for five top global online travel agencies and the American Hotel and Lodging Association, among other authoritative sources, the study found that COVID-19 has had a devastating impact on the sector. COVID-19 has led to massive booking cancellations and record low bookings with adverse effects on annual accommodation bookings for 2020 globally. This has, in turn, resulted in hotel closures and empty rooms for Airbnb properties. The slump in business has further led to record high hotel employee layoffs and/or furloughs, while Airbnb property owners battle to pay fixed expenses and mortgages on their properties. In addition, most global hotel chains have cancelled dividend payments and postponed capital expenditure to avoid bankruptcy and industry collapse. There are real fears that the impact of the pandemic, far exceeding previous disasters such as SARS, will reverse the gains and the contribution made towards the achievement of the Sustainable Development Goals. This study recommends the scaling up of several government and private sector relief funds and other measures aimed at assisting both the industry and its employees hardest hit by COVID-19. Particular attention should be given to small- to medium-size enterprises and establishments in developing countries.