The Impact of Covid-19 on Hotel Performance

King Talal School of Business Technology

Department of E-Marketing and Social Media
First semester 2021-2022
Marketing Research

Submitted by:
Leen Baker 20180417

Rama Eid 20180116

Zain Al-khateeb 20190457

Liyan Smodi 20190472

Ezzulddin AL-Hadithi 20191022

Instructor:
Prof. Alaeddin Abu Nokta
 1. Introduction:

According to the World Health Organization, it is a contagious illness caused by a newly

discovered virus that affects human bodies, causing mild to moderate, and in some cases

severe illness. It was discovered in early December 2019 in a small town in China and

has since changed and influenced almost every aspect of life (Brown, 2020).

On the morning of March 15, 2020, the Jordanian government implemented a plan to

quarantine newcomers to the country. On March 17th, all airports and borders were

closed totally. Dead Sea Hotels were the first to be declared a closed military zone and

used as lodging for a government-mandated two-week quarantine. These 5-star hotels of

the Dead Sea were the first to be affected by the pandemic in Jordan. After Jordanian

citizens were forced to return due to other country regulations of sending tourists back to

their homes due to hotel quarantine for their citizens, the minister of tourism confirmed

that all necessary measures had been taken in the hotels, such as sanitation and banning

outside visits, after Dead Sea hotels were completely occupied. After applying to

(visitjordan.gov.jo) while it was only for nationals, 3000 citizens were transferred to

Amman hotels as a site for quarantining.

Aqaba’s hotel performance was only affected by lockdown and tourists unable to travel

to the city of Aqaba, however there was no quarantine in Aqaba’s hotels seeing that it

was far from hospital emergencies and not ready to travel from Amman to Aqaba.
 2. Research Problem:

COVID-19 has affected every industry throughout the world, with the hotel industry

being one of the most severely affected in a negative way. This unexpected pandemic

took the hotel industry by a storm; travelling restrictions, countries and cities closure,

social distancing, the rapid number of infected people and deaths around the world and

other factors made the industry struggle like never.

This external and environmental cause have affected every stakeholder in the hotel

industry. Moreover, tourists' interest and ability to travel has declined because of travel

limitations and many other factors. That being the case, they had to cancel their travel

plans and hotel reservations, threatening both the financial stability and jobs of all hotel

employees.

Unfortunately, after almost around 18 months of this struggle, the pandemic is nowhere

near ending and as a result, the hotel industry will have to fight to survive especially for

small hotel business.

As a result, this study has been conducted to answer the following questions:

RQ 1: What is the impact of the pandemic on the hotel’s stakeholders?

RQ 2: What is the impact of the pandemic on the hotel’s occupancy rate?

 3. Importance of Research:

This research will provide an overview of the effects of COVID-19 on hotels, which will

include the occupancy rate percentages, stakeholder’s professional performance rate,

customer behaviors and academic awareness to future references. Moreover, it will

present customer protection and evidence that these hotels biggest concern is their safety.

4. Research Aim and Objectives:

This research aims to:

Investigate the impact of COVID-19 on hotel performance.

Thus, the investigation of the research problem is to

1. Examine the impact of the pandemic on the hotel’s stakeholders.

2. Examine the impact of the pandemic on the hotel’s occupancy rate.

5. Literature Review:

COVID-19

Covid-19 is a contagious infection produced by a newly identified virus that infects

human bodies, producing mild to moderate, and in some cases severe illness. It was

discovered in a little village in China in early March 2019, and it has changed and

influenced practically every element of human life.

Since then, countries have developed various tactics and approaches to fight the disease's

occurrence. The implementation of these strategies differed per country. Some started

long lockdowns in order to guarantee social distance, while others used rules and

regulations to accomplish so.

Occupancy Rate

The hypothesis is that the covid-19 pandemic has a substantial impact on hotel occupancy

rates. This pandemic has had a significant impact on Jordan's tourism revenue, which has

plummeted by roughly 75% from the previous year.

A star-rated hotel is a business that uses a building or part of a building that is built

specifically so that anyone can come and stay and pay for services and other facilities and

has met the standards for a star-rated hotel (Stanislav Ivanov, 2014). A notable

characteristic of a five-star hotel is having a restaurant that is managed by the hotel. The

hotel occupancy rate is deducted from the physical capacity utilization in two main ways:

is the number of bedrooms divided by the total number of bedrooms available for sale

multiplied by 100 (Stanislav Ivanov, 2014).

Occupancy rates for hotel management in general, and the sales department in specific

are quite critical. The presence of occupancy levels below hotel capacity means that sales

opportunities are missed, resulting in a drop in hotel revenue (Saleem & Al Juboori,

2013). As a result, often hotels with low occupancy rates tend to operate regularly

throughout the off-peak time, as far as the present occupancy rate covers variable costs

while still covering fixed expenditures (wages, salaries, depreciation of assets, rents,

electricity, and other costs). At the other side, if the demand for hotel services outweighs
the hotel's capacity, the hotel occupancy rate achieves its highest point as a result of hotel

management. Affordable accommodation prices, internet access, and online booking

access are all indicators of hotel occupancy rates (Saleem & Al Juboori, 2013).

Without a doubt, hotels are one of COVID-19's hardest-hit businesses. Hotel occupancy

rates and average room rates have declined substantially because of the enormous

cancellations of flights, vacations, events, and hotel reservations, as well as a resulting

decline in inbound travel, causing unprecedented profit margin decreases (Ranasing et al.

2020). Despite significant revenue losses, hotels must pay for utilities, labor, and salaries,

as well as other recurring expenses and statutory requirements. In all likelihood, COVID-

19 will result in an unparalleled decline in the hotel business. Experts predict that the

epidemic will last roughly two years (Salanto, 2020). The dread of traveling and the

enforcement of social distance regulations, on the other hand, will not go away quickly

once the epidemic has passed (Salanto, 2020).

H1: There’s a significant positive relationship between Covid-19 and hotel occupancy

rate.

Stakeholders

According to the conclusions of the review, COVID-19 has led in higher cancellations of

hotel and travel bookings, resulting in revenue loss, unemployment, significant loss of

money for the government and a rise in the incidence of poverty, among other things.

Travel limitations and social distancing laws, on the other hand, have had a significant

impact on the industry (Rivera, 2020). Jordanian hotel occupancy rate is down, while

income per available room is down. According to the World Travel and Tourism Council
(WTTC), more than 50 million employments in the travel and tourism sector might be

jeopardized by 2020. The hotel industry is a key cash generator, having the ability to

employ thousands of people each year (Williams et al., 2020). The tourism industry's

hotels have also faced issues as a result of Jordan's covid-19 lockdown policy.

Restaurants, gyms, and wedding halls in hotels were severely impacted by the

government's declaration of a "stay-at-home policy" and "social distancing" mobility

restriction. This resulted in county-wide shutdowns to stop the spread of the covid-19

sickness, which shocked many hotels across the country. Booking cancellations were

estimated to be worth billions of dollars by hotels throughout the world, and the hotel

sector required a $150 billion bailout.

At the local, national, and worldwide levels, the research highlights the interdependencies

between hotel owners and their workers, consumers, governments, suppliers, and

communities affected by COVID-19. Furthermore, the study demonstrates how

cooperating with various stakeholders’ leads to the discovery of new income sources for

the hotel, as well as operational changes and the formation of new commercial

relationships.

H2: There’s a significant positive relationship between Covid-19 and hotel stakeholders.
 6. Research Framework:

Graphical model:

Independent Dependent

OCCUPANCY
RATE
HOTELS
covid-19
PERFORMANCE

STAKEHOLDERS

7. Methodology:

 Research Type

This research is causal research designed to analyze the impacts of the independent

variable covid-19 on the dependent variables hotels’ stakeholders and occupancy rate.

Which include the five stars’ hotels in Amman, Aqaba and the Dead Sea.

 Data Collection
The population of this study consists of Jordanian and non-Jordanian hotels’ employees

and hotels’ stakeholders, during the time period November-December 2021. A purposive

sampling technique was used in this research. Data was collected through a web-based

survey. The survey was distributed for two weeks by sending emails to hotels’ managers

and stakeholders’ then retrieved 24 valid questionnaires responses.

8. Data Analysis:

 Means of Constructs:

Construct N Mean Importance Rank

COVID-19 24 3.85 High 3
Stakeholders 24 4.04 High 2
Occupancy Rate 24 4.33 High 1

 Means of All Items:

Mean Importance Rank

Stakeholders
1) COVID-19 has a

negative impact on 4.27 High 6

restaurants' demand.
2) COVID-19 has a

negative impact on 4.08 High 7

health clubs.
3) COVID-19 has a

negative impact on car

4.29 High 5
rental companies
4) COVID-19 has a

negative impact on 4.33 High 4

public transportation.
5) COVID-19 has a

negative impact on 4.63 High 2

travel agents.
6) COVID-19 has a

negative impact on 4.42 High 3

airlines.
7) COVID-19 has a

negative impact on the 3.67 High 8

government (taxes).
8) COVID-19 has a

negative impact on
4.71 High 1
conferences and

wedding halls.
Occupancy Rate
1) Hotel's performance

needs more than one

4.33 High 3
year to get back to its

normal operations.
2) The occupancy rate

decreased by 50% or
4.42 High 2
more throughout the

pandemic.
3) New health and 4.63 High 1

safety measures should

be applied to gain back

guest's trust.
4) Guest trust in the

cleanliness and

sterilization of the room

3.92 High 4
and the hotel's facilities

is being lacked.

COVID-19
1) Customer

expectations decrease

in hotel industries
3.42 High 5
during the COVID-19

pandemic.

2) COVID-19 impact

negatively on the
4.71 High 1
tourism industry.

3) COVID-19 impact

negatively on the
4.54 High 2
hospitality industry.

4) Customers prefer to 2.83 Medium 6

stay in hotels during the

pandemic.
5) In the pandemic

time, salaries reduction 3.71 High 4

is necessary.
6) Hotels depend on

retirement policies to 3.88 High 3

reduce costs.

 Demographics:

Variable Category Number Percentage

Male 15 62.5%
Gender
Female 9 37.5%
18-25 4 16.7%
26-33 3 12.5%
Age
34-41 9 37.5%
42 and above 8 33.3%
Jordanian 21 87.5%
Iraqi 1 4.2%
Nationality
Lebanese 1 4.2%
Indian 1 4.2%
Diploma 2 8.3%
Bachelors 18 75%
Educational Level
Master 3 12.5%
Doctorate 1 4.2%
Business/Economics 5 21.7%
Accounting 3 13%
Educational
Marketing 7 30.4%
IT 3 13%
Background
Hospitality 3 12.9%
Engineering 2 8.6%
Less than 1 year 3 12.5%
1-5 years 5 20.8%
Experience 6-9 year 1 4.2%
10-13 years 3 12.5%
14 years or more 12 50%
 Branch Manager 3 12.5%
Customer Service 5 24.8%
Tele Sales 2 8.4%
Account Officer 2 8.4%
Job Position Customer Care 3 12.5%
General Manager 2 8.4%
Operations 3 12.5%
Marketing 3 12.5%
Event Management 3 12.5%
Total 24

9. Results

According to the data analysis, the demographics table high percentage gender in the

survey was Male and the high percentage of the age was 34-41 their educational

background is Marketing 1-5 years’ experience.

According to the means of construct table, the respondents were 24 and the three

variables importance was HIGH, COVID-19 mean was 3.85 and ranked 3, Stakeholder’s

mean was 4.04 and ranked 2, Occupancy rate mean was 4.33 and ranked 1.

This demonstrates that the occupancy rate had the highest mean, indicating that the

occupancy rate was the most variable affected by the COVID-19.

10. Discussion:

The literature review provides an overview of previous studies constructed around the

impacts covid-19 had on the hotel industry in Jordan, particularly 5-star hotels. The

results reveal, in quantitative measures, the downfall of occupancy rates and the

diminishing stakeholder returns due to factors that include flight cancellations,

lockdowns, travel restrictions, and countless other defense measures that vary from

one country to another.

 Main Findings

Stakeholders

For stakeholders, statements of main findings under ‘means of construct

(Stakeholders)’ 1 to 8 all proved to be correct. A conceivable explanation for these

findings is quite simple. Intensive lockdowns, accompanied by travel restrictions,

allowed for less demand on items stated in the questionnaires conducted. These items

include airline tickets, car rentals, restaurants, public transportation, wedding halls,

and health clubs.

Occupation Rates

Similarly, occupation rates followed the same path as stakeholder diminishing

returns; all statements in ‘means of construct (occupancy rate)’ 1 through 4 all proved

to be correct. The statement “Hotel Performance needs more than one year to get

back to its normal operations”. A conceivable explanation to this finding may be

attributed to the fact that the hotel industry runs on a large operational cost that

cannot be covered unless occupancy rates break even with costs. Due to the

pandemic, it is evident that one year alone would not be enough to cover lost revenue

induced by declining demand on hotels. As for the second statement: “Occupancy

rate decreased by 50% or more throughout the pandemic” can also be explained by

the same reasons mentioned previously; intensive lockdowns and travel restrictions.
As for results 3 and 4, they can be explained by the general public’s fear and

hesitation of gaining back trust in public areas.

After comparing previous studies with this research’s findings, The findings indicated

in this research prove both hypotheses as correct. Covid-19 was proven to have a

negative effect on both dimensions mentioned previously, as stated in the ‘results’

section. This study is of significant importance for it can be used to assess levels of

overall recession in one specific industry; the hotel industry, rather than providing an

overall perspective of recessionary conditions across industries as a whole.

Furthermore, the findings in this study can also be used as a reference for what

devastating results might yield from uncontrollable environmental events and stresses

on the importance of strategic planning if similar events are to occur.

 Further research

This research focuses solely on the negative effects attributed to the Covid-19

pandemic on the hotel industry in Jordan, It is important to note that further research

may be needed to qualitatively assess other areas that might have affected certain

hotels compared to others. It would also be interesting to explore other factors that led

to these findings that were influenced by covid-19 and not caused directly by it, such

as psychological impressions.

11. Conclusion:
COVID-19 is still affecting all industries around the world; the tourism industry was the

hardest hit by the pandemic, and it is difficult to return to normalcy due to international

health regulations and policies that are mandatory including all guests and customers.

As stated in this research paper, the COVID-19 pandemic had an impact on the tourism

and hospitality industry, especially hotels. The data analysis revealed the impact of

COVID-19 on two variables: occupancy rate and stakeholders, and how the occupancy

rate was the most variable affected by the COVID-19 due to survey respondents.

The study effectively clarified how the COVID-19 had a negative impact on the

independent variables (Occupancy Rate and Stakeholders) in hotels, it gives the decision

makers in the hotels a clear viewpoint how to deal with any crisis or pandemic by

conducting research and collecting data and analyze it clearly.

This research can assist decision makers in developing the best marketing strategy for

dealing with the COVID-19's negative impact on hotels and the tourism and hospitality

industry.

12. References:

 Krishnan, V., Mann, R., Seitzman, N., & Wittkamp, N. (2020, November 5).

Hospitality and COVID-19: How long until ‘no vacancy’ for US hotels?
 McKinsey & Company. Retrieved January 10, 2022, from

https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-

insights/hospitality-and-covid-19-how-long-until-no-vacancy-for-us-hotels#:

%7E:text=COVID%2D19%20has%20affected%20every,take

 H. (2022, January 7). COVID-19: Hotel Industry Impact and Recovery. STR.

Retrieved January 10, 2022, from https://str.com/data-insights-blog/coronavirus-

hotel-industry-data-news

 Impact of the COVID-19 Pandemic on the Tourism Industry. (n.d.-b). Mdpi.

Retrieved January 10, 2022, from https://www.mdpi.com/2071-

1050/13/14/7610/htm

 Coronavirus Pandemic Sets Hotel Industry Back 10 Years. (2021, January 27).

US News. Retrieved January 10, 2022, from

https://www.usnews.com/news/national-news/articles/2021-01-27/coronavirus-

pandemic-sets-hotel-industry-back-10-years-report-finds