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Full Project – The effect of corona virus pandemic (covid – 19) on Hotel Patronage

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The Corona virus pandemic is the latest threat to health today. The disease emanated from the Wuhang province of China in December 2019 when it was revealed that those affected showed symptoms of Acute Respiratory Distress Syndrome among other complications (Chen, Zhou, Dong, Qu, Gong, Han, Qju, Wang, Liu, Wei, Xia, Yu, Zhang & Zhang, 2020). Hui, Azhar, Madani, Ntoumi,Koxk, Dar,Ippolito, McHugh, Memish, Drosten, Zumla & Memish (2020) point out that people contracted the disease through the consumption of live animals. At the initial stages, the virus had infected 300 people and caused the deaths of six in Wuhang (Baker, 2020). This number keep on increasing as many more people contracted the disease.

The Corona virus pandemic has drastically affected the economy of the entire world, Nigeria and Lagos state is not spared. This corona virus significantly affects certain economic variables such as Hotel industry, Tourism and Agricultural sector, Tourism and Transportation, Internally Generated Revenue, Financial and Capital Market institutions, Health and educational sectors, and Manufacturing and Small and medium Scale Enterprises.

Corona virus evolved from the family of Corona viridae in the order of Nido virales. Viruses are microscopic organisms and exist virtually everywhere on earth. Virus can infect plants, animals, fungi, and also human. Occasionally, a virus can result into a disease so deadly and fatal. Although other viral infections generate no obvious reaction (Peter, 2020).

On 31 December 2019, WHO was informed of a cluster of cases of pneumonia of unknown cause detected in Wuhan City, Hubei Province of China. The corona virus disease (COVID-2019) was identified as the causative virus by Chinese authorities on 7 January.

Currently, the virus had spread all over the world with 2,259,705 global confirmed cases, 154,422 deaths and recovered cases totalled 578,359 (World Health Organisation 2020). Countries most affected by the pandemic include the United States, Italy, Spain, the United Kingdom, France, Netherlands, Iran, South Korea, Malaysia, Thailand, among others (Davidson, 2020; Vara, 2020).Retrospectively, the world has witnessed health crisis, ranging from malaria, tuberculosis (TB), hepatitis, cholera, lymphatic filariasis, mad cow diseases, Human Immunodeficiency Virus (HIV) which leads to Acquired Immune Deficiency Syndrome (AIDS), Ebola and the swine flu (HINI), among other severe diseases. Of all, the Swine flu (HINI) almost parallel COVID-19 in terms of spread and severity. The Swine virus was first detected in Mexico in June 2009 and was declared a global pandemic by the World Health Organization (WHO). The World Health Organisation (WHO) estimated that over 168 countries were affected by the Swine Flu (HINI) (Charles & Shannon, 2011).

Covid-19 pandemic has a far-reaching economic impact on the world economy generally. Demertzis, Sapir, Tagliapietra& Wolff (2020) point out the volatility of the global economic scene as it is currently has not been witnessed since 2008 during the global financial crisis. Tourist centres such as France, Italy witnessed 30 to 80 percent fall in the number of tourists visiting the countries. In response to the issue, the World Health Organisation (WHO) on the 11th of March 2020 declared the coronavirus public health crisis a pandemic due to number of infected persons and the resultant deaths (World Health Organisation, 2020). Social constraints also accompany the pandemic. Widespread fear welcomed the pandemic along with reduction in social-activities. Lockdowns were imposed in different countries, in order to restrict social activities and movements (Evans, 2020).

African countries are not immune from the COVID-19 pandemic and its varying implications. Countries such as South Africa, Algeria, Senegal, Nigeria, Ghana, Central African Republic, Congo and many more have recorded incidents of the coronavirus pandemic. While this is so, few studies have examined the implications of the pandemic. Evans (2020) investigates the global socio-economic imports of the coronavirus with a view of proffering policy solutions. From another perspective, the United Nations Conference on Trade and Development (2020) considers the impact of the coronavirus pandemic on global trade. While these studies abound, no study investigates the socio-economic implications of the COVID-19 pandemic on Nigeria’s development. In line with this gap, this study sets out to investigate the socio-economic implications of the coronavirus pandemic on Nigeria’s development

Lagos state recorded her index case on the 25th of February 2020. The Lagos state government, the president of the Federal Republic of Nigeria (Muhammadu Buhari – 2020), declared a total lockdown in Lagos, Abuja and Ogun on Sunday 29^th March, 2020 for two weeks. The Africa’s largest economy, Nigeria extended its lockdown by additional two weeks in Lagos, Abuja and Ogun States. The extension came into effect at 11:59 pm on Monday, 13th of April, 2020, as a result, the entire economy of the state partially collapses, this including the hotel industry.

Despite the measure of temporally lockdown by the government, the spread of the virus kept increasing, the number of confirmed cases as at Saturday, June 20^th, 2020 stood at 19,147 patients of carrier of the Virus in Nigeria, meanwhile, Lagos state recorded the highest number of cases (8,177), despite the total lockdown and other measures taken to curb the virus. The bid to contain the spread of the corona virus disease has led to downfall of the Hotel industry as customers were not allowed to visit any Hotel and travel restrictions across the globe affects Tourism businesses, with Nigeria also being affected. The lockdown directives have led to the shutdown of many businesses, especially those that cannot be performed from homes. Only businesses proffering essential services have been exempted from the lockdown directive; hence, the nation’s economy is adversely affected. Hotel businesses, Tourism and Aviation as one of the major sources of revenue generation in Lagos State has been one of the hardest-hit sectors, as the lockdown and travel restrictions have caused a huge slump in demand among travellers. Most of the local and foreign airlines have suspended operations, with all the airports under a shutdown order by the Federal Government. As of March, the International Air Transport Association (IATA) had reported an estimated revenue loss of $252 billion in the sector globally.

Trade is negatively impacted, owing to the shutdown of factories, reduced access to raw materials and commodities due to supply chain challenges. Trillions of naira worth of trade for both imports and exports were lost due to the lockdowns, seaports and border closure. As Lagos state, is crucial to global trade with its current integration in the Nigeria value chain and being one of the suppliers and buyers of intermediate inputs, the disruptions it is dealing with due to the disease affects trade. The disease will impact negatively on the manufacturing sector, as production lines and factories will be shut down due to the lockdown and low consumer purchases. Entrepreneurs are forced to take drastic steps in order to remain in business. The preventive measures taken by the government have left start-ups as one of the most vulnerable.

In the same light, this lockdown has negatively affected the hotel industry being one of the strengths of Lagos state. It is no secret that the hospitality/hotel industry in Lagos State is one of the sectors that have been hit the hardest by the COVID-19 pandemic, with many of the employees either out of work or losing hours due to travel restrictions, the shutdown of businesses, and social distancing. The hotels have been experiencing very low patronage, hence the need for market re-strategizing.

In order to combat this pandemic, hotel industry must embrace efficient marketing strategies. A marketing strategy refers to a business’s overall game plan for reaching prospective consumers and turning them into customers of the products or services the business provides. A marketing strategy contains the company’s value proposition, key brand messaging, data on target customer demographics, and other high-level elements. Marketing strategies should ideally have longer life-spans than individual marketing plans because they contain value propositions and other key elements of a company’s brand, which generally hold consistent over the long haul. In other words, marketing strategies cover big-picture messaging, while marketing plans delineate the logistical details of specific campaigns.

1.2 Statement of the Problem

The continuous decline in the profitability of Hotel industry as a result of Coronavirus (COVID – 19) calls for urgent attention of researcher. As a result of the Coronavirus pandemic, many Hotel business were forced to closed and stop operation, this therefore resulted into severe decline in their profitability, loss of staff strength and compulsory lay-off of employees resulting into high unemployment rate.

There are different marketing strategies employed by hotels, these include: live with a great website; differentiate yourself from the rest; get recommended by real authority; promote yourself with online travel agencies; global distribution systems; appoint a sales rep and reap the rewards; and get savvy with social media. According to Yusuf (2019), the level of awareness of the hotel operator on the internet usage, and its marketing multimedia techniques is low. The hotel operators hereby under-utilize the internet in reaching their guests. However, due to the recent epidemic (Covid – 19), there is need to re-strategizing the marketing strategies of Hotels, hence the need for this study.

1.3 Research Question

What is the effect of Covid-19 on the performance of Hotels in Lagos state?
What are the different marketing strategies that can coup the effect of the pandemic?

1.4 Objective of the Study

The objectives of this study are to:

Determine the effect of Covid-19 on the performance of Hotels in Lagos state.
Ascertain the different marketing strategies that can coup the effect of the pandemic

1.5 Statement of Hypotheses

In order to achieve the objectives of this study, the following hypotheses will be tested:

H₀₁: Covid-19 does not have significant effect on the performance of Hotels in Lagos state.

H₀₂: Market re-strategizing cannot coup the effect of the pandemic

1.6 Significance of the Study

The research is expected to be useful for policy-makers, practitioners, and researchers to understand the possible impact of Corona Virus Pandemic (COVID – 19) on the Profitability of Hotels Establishment.

1.7 Scope of the Study

This study centres on the Effect of Corona Virus Pandemic (COVID – 19) on Hotel patronage. Eko Hotel and Suites and Lagos Airport Hotel are considered as the study area. Though from July to December 2020, there are recorded cases of Coronavirus, but the lockdown has been lifted and Hotels are back to business operation, hence, the period of concern are the period Hotels are lockdown from operation in Nigeria.

1.8 Definition of Operational Terms

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