How would you describe the impact of COVID-19 on your business?

Survey highlights

Sixty-three percent of respondents in this industry were from North America or EMEA, and 58% were from private companies. This industry had a smaller proportion of respondents in the reshape phase (15%), with most respondents (68%) in the recovery phase. Prior to COVID-19, 84% of respondents had not identified pandemic or a major health crisis as a top 10 risk in the company’s risk register. Additionally, 74% of respondents did not have a formal pandemic plan in place. Sixty-seven percent of respondents have seen their business severely impacted and expect it will take significant time to recover — 63% expect the impact to their business to last over a year, and 37% expect it could take longer than 24 months. The industry reported a higher demand-led impact on its supply chain than the overall industry benchmark at 42% (36%), which is consistent with government restrictions during the pandemic. The hospitality industry has been strongly impacted. However, 73% of respondents agreed that their company’s risk management response was sufficient. Nearly a quarter (24%) agreed that although the response was sufficient, more planning would have been beneficial.

Industry insights

The hospitality industry has been one of the hardest hit by the pandemic. A high proportion of respondents also reported that they did not have pandemic plans in place. Large parts of the industry are still fighting to survive. Their main priority has been ensuring the safety of employees and customers, which is key to building confidence in their COVID-19 security. This has been linked with asset investment to ensure customers can be accommodated safely but in a way that limits the impact on customer experience. The potential transmission risk is likely why reputation ranks as a higher priority in this industry compared with the overall benchmark. Brand identity is extremely important, and the global nature of certain brands means that meeting the varied regulatory requirements to ensure safety has been a high priority. In this industry, the failure to predict the pandemic and the degree of impact have meant that cost management is a very high priority. We have already seen organizations restructuring, with large hotel and other hospitality chains reducing employee numbers in so-called nonessential areas in central functions. This may mean that risk management for some organizations will be faced with even further challenges in the near term.

Proportion facing supply chain issues

At the start of the pandemic, there were some signs that the crisis would drive consolidation through opportunistic acquisitions. This is still likely to be important and is linked to capital investment planning as organizations consider how to deploy capital. This may create a focus on specific regions where opportunities exist. The focus in this industry has been managing the immediate impact of the pandemic. But the industry remains concerned about the future macroeconomic shocks that are likely to follow the pandemic. Reduction in spending and travel, which may be associated with macro conditions, creates future volatility for an industry already hit hard financially by the pandemic. Future geopolitical tensions that may deter or restrict travel have the potential to exacerbate this volatility.

Future shocks

  1. Economic disruption
  2. Another health crisis/pandemic
  3. Business model disruption
  4. Geopolitical tension
  5. Technological disruption