National Crisis Impact

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Part
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National Crisis Impact: Restaurants (Historical)

The US restaurant industry has been severely impacted by historical national crises. Crises such as Hurricane Harvey and the 2008 recession, show that restaurant franchises and family-owned restaurants are equally intensely impacted. Restaurants with preexisting disaster relief plans are better equipped at returning to profitability after a crisis.

Historical Crisis' Impact on Restaurant Industry

  • National disasters, including recessions, cause 40% of small businesses such as restaurants, to fail.
  • In 2017, Hurricane Harvey impacted Houston, Texas' economy severely. Singling out restaurants, especially small family-owned restaurants. FEMA argues that at least 40% of small businesses, including restaurants, will never be able to recover from a disaster.
  • During a national disaster including hurricanes, flooding is a major impact on business. During Hurricane Harvey, flooding caused a power shortage, causing restaurants to throw away the food that had gone bad in their fridges and refrigerators. The loss of product, making rent, and payroll plays a major factor in the financial aspect of the impact of a national crisis in the restaurant industry.
  • During a national crisis, public systems are often impacted severely. A public structure that is often impacted by natural disasters, and consequentially decreases foot-traffic in restaurants is the public transit system.
  • Economic declines and recessions impact the restaurant industry severely. In 2008, Dow Jones US Restaurant and Bar's index fell 13%. This index includes food industry conglomerates including Starbucks and McDonalds. Indicating that franchise and family-owned restaurants are both impacted greatly during a national crisis.
  • During the 2008 recession, Ruby Tuesday Inc's shares dropped 85% while The Cheesecake Factory's shares fell 65%. This shows the drastic effects of a negative economic event has on the restaurant industry.

Adapting to a National Crisis

  • When adapting to a national crisis, restaurants have to consider both their incoming and outgoing cash. The financial strain on the restaurant servers is something that the host restaurant needs to adapt to. In Texas, the median wage for a tipped server is $2.13/hour. Restaurant owners adapt by either paying their workers are subsidized pay or laying off their workers in order to make rent.
  • Peli Peli, a Houston based restaurant, adapted to the hurricane by opening up their kitchens and workforce to feed first-responders. Indicating, that restaurants not only have to adapt to the stain in their incoming cash, but also have the opportunity to help their local community adapt to the crisis itself.
  • During the 2008 crisis, fast-food chains that lowered the prices of items on their menu performed better than restaurants who refused to change their prices. Understanding the economic strain on customers during a national crisis can help restaurants positively adapt to consumers.

Back to Normal

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Part
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National Crisis Impact: Restaurants (COVID-19)

Restaurants across the country have been forced to make significant changes to their business models due to the COVID-19 crisis. Food establishments have responded to the pandemic by providing meals in different ways and enhancing safety protocols for customers who choose to dine-in. Despite these adjustments, restaurants are facing an inevitable economic downfall that will lead to closures and lay-offs.

National Restaurant Association Statement

Restaurant Response

  • Many restaurants have shifted to carry-out and delivery of food, with special options such "curb-side pickup." Delivery platforms (such as DoorDash or Uber Eats) are not usually viable financial options, as most platforms claim a large percentage of the purchase. In mid-March 2020, delivery service Grubhub announced it would "temporarily suspend collection" of commission payments from some restaurants.
  • Some restaurants are providing "no-contact drop-offs" for food orders.
  • Chefs are still focusing on purchasing locally sourced fruits and vegetables when it is possible. Farmers' Markets are still viewed as essential services in many states and are a prime location for restaurants to purchase the items they need.
  • Digital gift cards have gained in popularity, as customers seek to support their favorite food establishments. These cards are a win-win for restaurant owners and customers, who can use them to buy meals for their families now or later when restaurants reopen.
  • Due to a surplus in food, many restaurants are donating food to pantries, homeless shelters, and programs such as Meals on Wheels.
  • Restaurateurs have noticed a domino effect of COVID-19, as artists and musicians who provide entertainment and cookbook authors holding launch events are also negatively impacted. Businesses hosting catered events are also suffering economic setbacks.

Sanitization Efforts

  • Rigorous food safety procedures have always existed for restaurants, but with the spread of COVID-19, establishments must take additional measures to protect staff and customers.
  • ServSafe, a food and beverage safety training and certificate program operated by the National Restauant Association, has issued guidelines for restaurants in light of COVID-19.
  • Restaurant owners must require staff to sanitize the environment constantly and thoroughly, engage in rigid hand-washing protocol, wipe equipment and appliances frequently, and ensure staff are not working while ill.
  • Some restaurants are using disposable condiments, utensils, and dishware. Others are marking each table as sanitized after a guest has left.
  • Experts state that restaurants engaging in delivery services must be even more diligent with sanitization efforts.

Menu Shifts

  • To respond to those who are sheltering in place, meals have become family-friendly and shareable, featuring items such as homemade bread, sandwich kits, pizzas, and casseroles.
  • Meal packages have become popular takeout options. Chicago's Weber Grill is marketing family grill packs with choices such as meatloaf, beer-can chicken, grilled strip steak, planked grilled salmon, all with sides and pretzel rolls.
  • Many restaurants have adjusted their menus to reflect items that travel well. A ramen restaurant in Brooklyn, for example, is providing new soup and appetizer options that reheat well.
  • Fine-dining restaurants, such as Masseria, a Michelin-starred restaurant in Washington, D.C., will include a bottle of wine with takeout meals. Others are changing the sauces and the cuts of meat so their elegant dishes will be considered luxurious and delicious even at home.

Restaurant Closures

  • Lawmakers in many states have ordered bars and restaurants to close dine-in services for extended periods of time as a means of implementing social distancing. As of March 16, 2020, governors have ceased dine-in services in: California, Colorado, Connecticut, New York, New Jersey, Illinois, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, South Carolina, Vermont, Washington, West Virginia and Wisconsin.
  • One restaurant owner decided to close before her state required such action. She believed that despite her best efforts to keep her restaurant sanitized, she felt she was playing "Russian Roulette" with the lives of her customers.
  • Danny Mayer, Bobby Flay, and David Chang had already closed their restaurants before state governments issued decrees.
  • For those states without strict regulations, the CDC and President Trump have urged that large gatherings of 50 people or more be canceled or postponed. This has caused restaurants to turn away customers on a daily basis.
  • Shifting to take-out and delivery may not enable restaurants to avoid closure. Consumers are still concerned about the safety of consuming meals produced at restaurants, and guidance from industry experts is conflicting. Harvard Medical School scientists advise against eating takeout food during the COVID-19 outbreak, while the CDC (Centers for Disease Control and Prevention) and the U.S. Food & Drug Administration have indicated that there is no evidence to suggest it is an unsafe practice as long as social distancing is practiced.

Research Strategy

In order to complete this research, we analyzed numerous government publications pertaining to the restaurant industry, as well as economic journals, news articles, and actual restaurant websites. It should be noted that the findings listed are current, but the impact of COVID-19 is constantly evolving. Researching updates to these findings would be advisable.
Part
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Part
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National Crisis Impact: Consumer Behavior, Restaurants (Historical)

Previous national crises such as the 9/11 terrorist attacks and the economic recession of 2008-2009 indicate that consumers are less likely to eat at restaurants during times of crisis, but that restaurants that adapt quickly to new trends are likely to succeed long-term.

September 11, 2001

  • As a result of the terrorist attacks on September 11, 2001, consumers avoided restaurants, especially those in large cities. Americans were more likely to stay home or host their own dinners than take the risk of eating out.
  • Catering companies, gourmet food retailers, and cookware sellers reaped the benefit of the loss of restaurant popularity. A gourmet grocery saw a 25% increase in sales one year after 9/11.
  • Post-9/11, consumers showed preference towards casual chain restaurants over fine dining.
  • Consumers chose not to eat out at restaurants as often after 9/11 due to an uncertain economy, fears of terrorism, travel aversion, and high gas and utility costs. As consumers shifted away from restaurants, they instead focused on spending time, money, and energy at home around family and friends.
  • Take-out dining slightly declined post-9/11. In 1985, American consumers ate take-out for 85 meals per person per year. The number of take-out meals Americans consumed leading up to 9/11, was 121 which declined to 118 for the year April 2001-April 2002.

Housing Market Crash 2008

  • Some restaurants offered delivery service in order to retain customers as the 2008 recession continued.
  • By 2010, consumers were returning to restaurants. In March 2010, restaurant sales increased 1%, the first month of positive sales since May 2009.
  • When consumers feel good, they go out to eat as a treat. Therefore, the slight increase in restaurant sales indicates an increase in consumer confidence and financial security.
  • A USDA report from 2014 makes the claim that consumers spent 13% less on food consumed away from home during the 2008 recession. Some factors playing into the consumers' decision to eat at home include loss of jobs, lower wages, and more time to cook at home.
  • An article in QSR Magazine claims that after the 2008 housing crisis, consumers were slow to recover their financial security. While the economy recovered in 2009-2010, consumers couldn’t yet afford expensive vacations or other activities. Therefore, dining out became consumers' leisure activity of choice.

Research Strategy

We scoured news articles related to the restaurant industry that were published during each crisis, as well as articles from a few months after, a year after, and 5-8 years after each crisis. We also thoroughly searched for articles during those timelines and crises specifically related to delivery and take-out and have included the limited findings above.
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National Crisis Impact: Consumer Behavior, Restaurants (COVID-19)

COVID-19 is impacting the US consumers' behavior by making them visit restaurants less often, prefer dining at premium restaurant brands, cooking more at home, cooking foods more thoroughly, cocooning at home with friends and family, and others. We have compiled the report by referencing the most recent reports published by Datassential, BCG, PYMNTS, and Technomic.

COVID-19 Impact: Consumer Behavior for Restaurants

  • Datassential’s COVID-19 report "Fear & Response" was released on March 17. The report was compiled from a survey on 1,000 US consumers on March 13 and 14. It is found that about 41% of consumers are nervous to dine-out, and 27% are avoiding eating out altogether. Further, about 31% of consumers living with families and kids will avoid going to a restaurant, while only 16% of Gen-Z will do the same.
  • It is noted that 47% of consumers have already stocked up their pantries for COVID-19. Further, about 68% of high-income earners ($100k+), and 56% of married and millennials, have stocked up food supplies for COVID-19.
  • Datassential’s COVID-19 report "Coronavirus & the Impact on Eating" was released on March 12. The report was compiled from a survey on 1,000 US consumers on March 10. It is found that about 60% of consumers were concerned dining-out, and 20% planned to avoid eating out altogether. Also, about 89% of consumers felt that food cooked at home or from grocery stores are safer to eat during a pandemic.
  • Further, it is noted that about 54% of consumers will decrease going to sit-down restaurants, followed by 16% of consumers reducing their delivery orders. Alternatively, about 69% of consumers said they would increase cooking at home.
  • It is noted that about 3 in 10 consumers planned to reduce their frequency of food away from home and restaurants due to Coronavirus. Further, these consumers plan to reduce their dine-out frequency for a more extended period, i.e., about 31% plan reduce their visits for 1-3 months, and 41% plan to reduce their visits for more than 3-6 months. (figure below)

Consumers Concerns

Top Concerns at a Restuarant

  • Touching things that have been touched before: 38%
  • Being close to other people in a restaurant: 28%
  • Handling of food by staff: 15%
  • Being served from large containers: 9%
  • Interaction with staff: 7%

Likelihood of Contracting Virus at a Restaurant

  • Touching door handles: 78%
  • Self-served food: 77%
  • Public restrooms: 74%
  • Crowded seating: 69%
  • Sharing food and condiments: 63%-64%
  • Eating food with hands: 56%
  • Restaurant dishes and glasses: 48%

Most Risky Food Transactions

  • Meal kit: 19%
  • Takeout: 17%
  • Drive-thru: 17%
  • Meat & seafood at the grocery: 19%
  • Restaurant delivery: 20%
  • Grocery bakery: 19%
  • Deli grocery counter: 20%
  • Cafeteria: 36%
  • Self-serve food at the grocery: 41%
  • Self-serve at a restaurant: 43%

Consumers Demands

  • Visibly wiping tables and things people touch: 57%
  • Employees wearing food safety apparel: 46%
  • Restaurants providing disinfectant wipes: 43%
  • Food covers, sneeze guards, and other measures: 42%
  • No open-containers: 40%
  • Individually wrapped servings: 37%
  • More space between tables: 36%
  • No food items from coronavirus-affected areas: 35%
  • No-touch door handles: 32%
  • Displayed food safety inspection results: 28%
  • Order by phone app: 18%

Supplemental Findings

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Part
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National Crisis Impact: Hospitality (Historical)

Impacts

  • Economic recessions take a toll on the hotel industry; however, the amount of impact varies significantly depending on chain scale. In the 2002 recession, for example, economy to upper-midscale hotels only saw minor losses; on the other hand, upper-upscale and luxury properties saw significant declines. In 2009, the difference was not quite so stark, with most hotels from economy to upper-upscale seeing big losses. Still, luxury hotels fared significantly worse than all other categories.
  • Hotel location also makes a difference in the toll taken by economic recession. In 2002, interstate and small town properties actually saw little to no impact. Airport and resort properties saw the greatest negative impact. In 2009, however, even small town and interstate properties saw big losses; but, airport and resort hotels still saw roughly double the impact experienced by small town and interstate hotels.
  • Geographic location also makes a difference in the impacts felt across the industry. "The top 25 U.S. markets were certainly affected much more than the industry overall, declining 19.1% in 2009 and 16.5% in 2002. New York, Chicago, Dallas and Miami were four markets severely hit during both recessions. San Francisco posted the biggest 12-month decline at 32.5% in 2002."
  • In 2008 and 2009, 144,000 workers lost their jobs in hotels, motels, and casinos.
  • Hotel, resort and cruise stocks fell by 74% after the 2008 recession.
  • In 2007, revenue-per-available-room (RevPar) was an average of $66. "In the depths of the recession, U.S. hotel financial performance plummeted, generating an industry-wide $54 of sales for each available room, down 18 percent."
  • In September 2001, "America's national RevPAR national experienced a monthly drop by 20 to 25% compared to the previous year, with an even more marked drop in the indicator in New York and Washington (-30 to -40%), which were hit directly."
  • Business travel volume declined by 21% from 2001 to 2010. International travel to the US grew by only 2% during this same period, despite the fact that international travel overall grew by 40%.

Recovery

  • As of 2018, "the hospitality sector has been steadily recovering and now, net of losses during the recession, employs 153,000 more people than it did before the recession in 2008." RevPAR has grown at a CAGR of 5.7% since 2009 and hit $84 in 2018.
  • A report by Deloitte identifies some of the strategies that were successful in recovery after the last recession: "In broad terms, top performers in both industries took proactive measures while employing typical cost transformation levers during the downturn to drive long-term performance. If their experience teaches a lesson for use in the present day, it’s that companies should look for opportunities to make smart capital decisions now, on what may be the cusp of a new downturn, if they hope to enjoy similar returns after it hits." In particular, Deloitte recommends investing in new technologies such as cloud and automation; "At a time when productivity gains have slowed because of changes in customers, operations, and talent, and when debt may no longer be an avenue to extra cash, new tools may help build new value from the inside out."
  • Harvard Business Review extensively studied the hospitality industry and its recovery after the 2008 recession and came to a similar conclusion as Deloitte: "companies that carefully balance cost-cutting measures while also investing in growth have the highest probability of recovery." The companies that recovered most quickly were those that cut costs by improving operational efficiency, rather than by slashing employees. This can be coupled with investment in new technologies to improve efficiency. "Take energy efficiency. Artificial intelligence can respond automatically to guestroom occupancy patterns and can identify how long it will take to heat or cool a room. When you multiply the benefits of the savings per room across an entire property across multiple properties across even just a year what might seem like small savings on a micro-level (i.e., per minute or per hour) becomes a hefty addition to the bottom line."
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Part
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National Crisis Impact: Hospitality (COVID-19)

In the wake of COVID-19 pandemic, the hospitality industry is projected to be among the most adversely affected sectors in the entire US economy. So far, the economic impact of the pandemic towards the hospitality industry is estimated to be more severe than 9/11 and the 2008 global financial crisis combined. The hospitality industry contributes a total of $660 billion to the US GDP and consists of both major hotel brands and 33,000 other small businesses, which make up 61% of hotel properties in the country.

Plummeting Demand

  • The hospitality industry is currently facing plummeting demand in bookings, rooms, reservations and travels. Between the 8th and 14th of March this year, "hotel occupancy was down 24.4% to 53% year-over-year." The reduction in demand for hotel rooms and other bookings was caused by the global efforts to mitigate the spread of the pandemic. The US government has equally provided strict guidelines restricting the size of gatherings while encouraging social distancing.
  • In Austin, the cancellation of the SXSW Conference and Festivals is forcing the hospitality industry in the region to come to terms with huge losses from hotel cancellations. In a press statement delivered on March 20, Walt Disney announced the decision to shut down all their Disney-owned hotels.
  • Travel bans and restrictions have direct adverse implications for the hospitality industry. On March 11, the US President banned any travelers from 26 EU nations, further decimating tourist numbers from these key markets.
  • The hospitality industry currently relies on local tourists since domestic travels have been less impacted compared to international travels. However, industry experts concur that even domestic travels will soon begin to diminish considering that individuals make travel decisions based on several factors, the most important one being their safety.
  • When the WHO upgraded its risk assessment on the COVID-19 threat to "very high," hotel searches in the US dropped by 10% year-over-year. By March 13, after the virus was declared a global pandemic, hotel searches had dropped by 50% year-over-year.

Low Occupancy Rates and Job Losses

  • As travel bans and restrictions go into effect across the world, hotels in the United States are either shutting down or experiencing record-low occupancy rates. According to an Oxford study, a 30% drop in revenue may lead to a loss of 4 million jobs in the hospitality industry. Additionally, a further drop by 50% could decimate close to 6.5 million American jobs.
  • According to the president of Unite Here, a trade union with at least 300,000 members from both the US and Canada, almost 90% of their members will be out of work if the crisis persists. As of now, Unite Here estimates that 4000 to 4500 of its 5,500 members from Seattle have already been laid off.
  • Hospitality jobs are expected to be one of the hardest hit in the country especially considering they constitute 1 out of every 25 American jobs. This adds up to 8.3 million jobs that pay workers $97 billion in salaries.
  • Due to the plunging demand for rooms and bookings, the InterContinental and Holiday Inn hotels recently announced cost-cutting measures totaling $150 million that involved substantial reduction is wages, salaries and other benefits received by both executives and other hotel employees.
  • As COVID-19 cases continue to escalate in the country, companies in the hospitality industry are currently being forced to adjust their revenue expectations and strategies. The hospitality industry in particular experiences unique high labor costs coupled with huge mortgages that make hotels vulnerable to long periods of low-occupancy.
  • Rob Katz, the CEO of Vail Resorts announced that the revenue projections may fall below the initial targets by approximately $180 million to $200 million for both March and April.
  • Choice Hotels International Inc. recently announced a decision to withdraw its 1st quarter projections for 2020 which did not account for the COVID-19 pandemic. Hyatt had to also withdraw its 2020 fiscal guidance that had projected net income of between $113 million and $144 million based on the expectation that at least 80 new hotels would be launched in 2020.

Coping Strategies

  • Industry experts are constantly issuing coping strategies as stakeholders in hospitality meet with President Trump to discuss how best to mitigate extreme economic implications. One of the most widely applied coping strategies revolves around cost-cutting. David Eisen, an industry expert, advises hoteliers to consider cutting costs in marketing and advertising as this would not lead to an increase in demand.
  • At the same time, Eisen cautions hotels from slashing prices as this will not spur any demand but rather lead to further losses.
  • According to the president of Hotel Trades Council, a union that represents more than 40,000 hotel workers announced that more than half of the members have already been laid off.
  • Hilton is considering restructuring its staffing based on the current needs as well as to mitigate unsustainable labor costs. Such measures include introducing flexible hours, job rotations, furloughs, shorter weeks as well as offering paid time off.
  • Experts are further advising the hospitality industry to focus more on local tourists by offering incentives and favorable prices. In financial terms, most hotels are advised to take advantage of any fiscal relief plans provided by the government such as subsidies, relief loans and tax cuts.
  • Financial experts are also advising companies in the hospitality industry to consider renegotiating loan repayment terms with lenders.
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Part
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National Crisis Impact: Consumer Behavior, Hospitality (Historical)

Previous national crises such as the 2008-2009 economic recession and the September 11, 2001-terrorist attack have impacted consumer behavior when it comes to their patronage of hospitality properties in the US. The 2008-2009 recession caused consumers to put more value in entertaining experiences while the September 11 terrorist attack caused consumers to be more concerned about their safety and security.

The 2008-2009 Economic Recession

  • A study conducted by Jonathan Barsky on Luxury Hotels and Recession revealed that in 2008, 51% of Americans have changed or canceled a leisure trip to reduce costs while less than 40% have canceled their business trips. This, in turn, caused a similar percentage of cancellations in hotel bookings.
  • The luxury hotel guests who still decided to book a hotel preferred to book online. There was an 8.2% increase in online bookings in 2008 as compared to that in 2006. The popularity of online booking was fueled by the ability to get lower rates when guests reserve on a date that's closer to the accommodation date. People were prepared to wait for the late deals before they make their hotel reservations.
  • Before the recession, "the guest experience that was most sought after among luxury hotel guests was to feel pampered. This changed in 2008 as feeling pampered no longer became a priority for luxury guests. Instead, "feeling entertained, excited, and inspired" became the most sought after experiences at luxury hotels.
  • The cancellations were seen not just in luxury hotels. According to Smith Travel Research, in September 2008, "domestic hotel occupancy was down 5 percent from the previous September." Also, "cancellations of existing reservations are running about 50 percent above normal at full-service hotels."
  • After the recession, American spending changed in a way that Americans started to value experiences more. They spent more on experiences after the recession. This resulted in increased bookings in luxury hotels after the crisis passed, especially true for wealthier travelers. However, the mid scale full-service hotel brands had difficulty recovering, along with the middle class, even after the recession.

The September 11, 2001-Terrorist Attack

  • The terrorist attack that happened on September 11, 2001, caused hotel guests to feel fear and panic at that time. Some were traumatized, especially those who were lodged at hotels that were destroyed during the attack or at hotels that were a few blocks away from the World Trade Center.
  • This caused a decline in the hotel bookings after the attack as people started to be more concerned about their safety and security. Four months after the attack, consumer behavior started to return to what they were as people started to feel secure again about staying in a hotel.
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Part
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National Crisis Impact: Consumer Behavior, Hospitality (COVID-19)

Due to the fear of community spread of COVID-19 through travel and group scenarios, one of the industries feeling the most immediate impact is hospitality. The U.S. has shown a 10% decline in bookings in the week of March 1st, and a further decline of 25% the week after. This is due to changes in consumer behavior.

Consumer Behavior Trends

  • Concern Level: Men and women are equally concerned about contracting the virus. The millennials were the most concerned of all demographic groups. Thirty percent more so than their parents and grandparents.
  • Flying & Travel: Consumers just said no to fly, especially if those trips were to hotspots or anywhere international. The same held true for booking vacation rentals and hotels.
  • Hotels: For those who traveled, more consumers (14.3 percent) felt more comfortable staying in someone’s home (home-sharing properties) than in places with other people, specifically large name-brand hotels (9.7 percent) and B&Bs (11.4 percent).
  • Unconcerned Travelers: Some travelers are seizing this opportunity to take advantage of cheap travel deals on hotels, airlines, cruises; The prices are lower than ever.

Results of Consumer Behavior

  • According to the American Hotel and Lodging Association, there were 12,995 total jobs supported by the hotel industry in South Dakota. Of those 4,340 jobs were cut from hotel businesses.
  • Chicago's downtown hotel occupancy rate plunged to 35.6 percent the week of March 8-14, down from 84.2 percent a year earlier. Plus, the Park Hyatt Chicago and Peninsula hotels of Chicago have both temporarily closed. They are the first two downtown Chicago hotels to close because of the COVID-19, according to the Illinois Hotel & Lodging Association.
  • The Marriott has not laid off any corporate employees, the possibility is “under discussion,” the spokesperson added, and once the outbreak is contained they expect to bring back "as many of the employees as possible." In the U.S., about 130,000 employees work in the 5,300 properties.
  • On March 17, the American Hotel and Lodging Association (AH&LA) said one million hotel jobs had either been eliminated or will be eliminated in the next few weeks. Given the occupancy drop, it said 3.9 million jobs could be lost over the full year.

Research Strategy

We consulted leading news articles for data points about the hospitality industry as it pertained to consumer behavior and the outbreak of COVID-19. Information trended toward hotels response to COVID-19 and their goal of providing safe customer interactions. It also discussed the lack of bookings and their reaction to this, which is featured above as the results of consumer behavior. It did not however, discuss the reasons why consumers made their decisions. This instigated a search for consumer behavior information as it relates to COVID-19, which brought us to an informational survey that is featured in the why consumers are avoiding, delaying, & canceling section. It also produced a little information about consumer behaviors that were opposite to the current trends.
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Part
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National Crisis Impact: Attractions / Live Events (Historical)

Social disasters had only short term effects on the attractions/live events industry. While many events and performances had to be canceled, major players in the industry were able to adjust as quickly as within one week. Live performances suffered the greatest setback but were able to recover by restructuring their offering. The economic downturn had no impact on people's entertainment habits.

Social and Natural disasters: Impacts

Immediate decrease in sales

  • After the 9/11 attacks, music sales dropped 5% in New York City and 16.2% in the metro area.
  • Many tours were postponed, including those headlined by U2, Madonna, Aerosmith, Britney Spears, and Janet Jackson.

Delays and cancellations

  • The 9/11 attacks had a big impact on the movie industry. Spiderman and Lilo and Stich had to be significantly edited. Many movies that were in production at the time had the iconic Twin Towers in their shots, and the towers were eventually removed or obscured.
  • Any references to terrorism were also removed, restructuring plot lines. Edits caused movie release delays. The plot lines of Jacky Chan's Nosebleed and Forest Gump 2 could not be restructured, and thus, the two movies had to be canceled in pre-production.
  • Broadway shows were hit the hardest after the 9/11 attacks. With most of their viewers coming from outside the city, the slow in tourism caused show cancellations, which lasted months. Actors took pay cuts, and not all shows came back on the stage.
  • After the 9/11 attacks, Major League Baseball canceled all 15 games. The Professional Golf Association tour was canceled, and the NFL postponed all the games. Meanwhile, NASCAR canceled its weekend races.

Economic disaster

No financial impact

  • The 2008 economic downturn did not impact Broadway ticket sales, as they kept steadily rising throughout the years.
  • The 2008 recession had no impact on Disneyland and Disney World visits, as they stayed relatively flat between 2006 and 2013. Since then, there has been a slight increase in visits.
  • The number of movie tickets sold declined in 2008 and has since continued to decrease. However, this is largely due to rising movie ticket prices and the availability of low-cost online streaming services like Netflix with an increasingly wide movie selection.

Recovery

Tuned into compassion

  • In the months following 9/11, artists released songs to help people grieve and find hope. Alan Jackson’s "Where Were You" was recorded that November, and Bruce Springsteen’s “The Rising” was released the following July. An all-star version of Marvin Gaye’s classic "What's Going On," featuring Bono, Christina Aguilera, Jennifer Lopez, and Gwen Stefani, was created within months of the disaster.
  • Top performers banded together to create a benefit concert, raising $150 million for United Way to help families impacted by 9/11.

Restructured

  • The movie industry itself has taken a turn following 9/11, favoring fantasy and family-friendly movies over adventure or action. In 2005, terrorists were back on the screen, portrayed as the bad guys in numerous movies. Urban attacks started appearing on the screen.
  • Broadway was able to recover the losses after 9/11 by running promotions, discounts, and affiliating itself with other businesses to bring the people back into the theater. Smaller theaters did not have such resources and never fully recovered.
  • Major sports have made the fewest changes. They either pushed back their seasons one week or canceled the weekend games and proceeded according to the calendar.
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Part
10

National Crisis Impact: Attractions / Live Events (COVID-19)

COVID-19 is drastically impacting the arts world, and is causing ripple effects in the attractions and live events industry in the United States. Travel restrictions and job losses amid COVID-19 affected the sales and supply chains of theme parks, plays, concerts, and sporting events. Below is information on how COVID-19 is impacting American amusement parks and live conferences, sporting events, and concerts, as well as how each industry is adapting to the situation.

Conferences

  • The global economic loss from 10 major tech conference cancellations because of COVID-19 is beyond $1 billion.
  • SXSW, which is "an Austin tech, music, and movie conference," said its cancellation means a loss of $350 million.
  • Conferences like Facebook F8 and Adobe Summit will adapt to the situation by hosting its events online.

Theme Parks

Live Sporting Events

  • Many sports, including the NBA, MLS, and NHL, all suspended their season because of COVID-19.
  • They will suffer repercussions because multiple sports like the MLS and NWSL rely "heavily on ticket sales for revenue." The NBA makes about $9 billion from media fees, while NCAA makes over $1 billion from major events and television rights fees. These are amounts both associations may miss out on because of COVID-19.
  • Sports networks are adapting by broadcasting "documentaries and taped games" on their channels. NBC and Marquee Sports Network will also air specials, along with hours of past postseason games. ESPN will air live studio and news programming, as well as "entertain fans through fun, compelling archival content and/or themed and stunt event programming."

Music Concerts

  • COVID-19 will cause the concert industry to lose billions because of cancellations.
  • The concert industry was predicted to make $29 billion in 2020.
  • The music industry may lose about $5 billion because of COVID-19.
  • Coachella, the second-largest festival in the United States, made about $1.4 billion in 2019. More than half of that amount supports the Coachella Valley. Coachella is postponing its concert until October.
  • Some musicians are adapting to the situation by playing music live on social media, as well as streaming music and holding virtual concerts online.
Part
11
of twelve
Part
11

National Crisis Impact: Consumer Behavior, Attractions / Live Events (Historical)

Some previous national crises, such as 911 attacks and recession, have impacted consumer behavior when it comes to their patronage of attractions and live events within the United States. A few well-publicized museums experienced a "spike in their attendance," while several history museums experienced declining attendance due to the recession that followed the terrorist attacks of September 11, 2001. Church and synagogue attendance soared by 20% within the same period. Live concert attendance often fluctuates during periods of recession.

Fluctuating Museum Attendance

  • Museums across the United States often experience a fluctuation in attendance following the impacts of national crisis. Following the terrorist attacks that happened on September 11, 2001, a limited number of well-publicized museums experienced a "spike in their attendance."
  • Several history museums experienced further declines in their attendance "due to the relatively brief," startling recession that followed the terrorist attacks that occurred on September 11, 2001.
  • Delaware Art Museum is one of the museums that has experienced a fluctuation in attendance during periods of past national crises. The museum's attendance declined steadily by about 15% between 2008 and 2011, dropping to 385,000 visitors by 2011.
  • Fewer families visited museums after the 2008 recession, and several museums experienced a "slight uptick" amid signs of "a sluggish economic recovery" by 2011.

A Surge in Religious Activities

  • One of the behaviors of Americans that changes during periods of national crisis is their attendance or participation in religious activities.
  • Americans reportedly increased their attendance at church activities and synagogues by 20% following the 9/11 attacks. There are no insights available on how long this surge in turnout for religious activities lasted.

Fluctuations in Concert Attendance

  • Americans often alter their concert attendance behavior during periods of national crisis like a recession. In 2010, Pollstar reported a 12% reduction in the number of tickets purchased by Americans to attend concerts due to recession. Consequently, several groups known for live events canceled shows and shortened tours including the Jonas Brothers, Lilith Fair as well as American Idols Live.
  • Some promoters, as well as artists, blamed the sluggish economy (recession) for significant drops in attendance of some live events during an economic downturn that spanned into 2010. A live performing tour group known as the Lilith Fair tour canceled 12 dates due to slow ticket sales and the effects of a recession in 2010.
  • The Eagles, known to be one among the most dependable live tour groups for two decades leading to 2010, were "forced to cancel dates" in the summer of 2010 due to anticipated poor turnouts. The willingness of Americans to buy expensive tickets to attend live events such as concerts often falls during recessions forcing promoters to "scramble to fill empty seats."
  • Despite the above drops in attendance of some live events, several live events ticket sales such as box-office, often go up during recessions. In 2008 during a recession, box-office ticket sales went up 18% while average attendance went up by 6.3% across North America. Box-office sells tickets for live events or performance.
  • Top-grossing tours for 2008 included those of Bon Jovi, Madonna, as well as Bruce Springsteen and E Street B. Live Nation also played a significant part in the growth of box-office ticket sales as its attendance went up by 12.2% to reach 52 million attendees in 2008. Bon Jovi is "an American rock band" that was formed in Sayreville, New Jersey in 1983, while Bruce Springsteen, E Street B, and Live Nation refer to US-based individuals or groups.
  • The great recession spanned between 2008 and 2010, and total box-office movie attendance in the United States was 1.34 billion in 2008, 1.41 billion in 2009, and 1.34 billion in 2010. This attendance often continues to fluctuate after recessions and fluctuated to 1.28 billion in 2011 and 1.36 billion in 2012, respectively.

Research Strategy

The study reviews how previous national crises impacted consumer behavior when it comes to their patronage of attractions or live events in the United States. Resources covered by the research include publications of mission-driven associations like the Summerlee Foundation, news publications, scholarly as well as academic resources, among other publications. The Summerlee Foundation is a United States publication with headquarters in Dallas, Texas. A recent Summerlee Foundation article provides insights into how previous national crises in the United States have impacted consumer behavior when it comes to their patronage of attractions such as museums. The study considers museums as the "most popular heritage" attractions among young people. Due to the limited number of national crises within the past two years (excluding COVID-19), the study includes a few resources older than the usual 24-months credibility range.
Part
12
of twelve
Part
12

National Crisis Impact: Consumer Behavior, Attractions / Live Events (COVID-19)

Up until this past weekend, many people were still going out trying to partake in anything outdoors. However, now more people are choosing to avoid anything dealing with large crowds, including going to sports outings and theme parks. Many people are choosing to be cautious while others aren't.

COVID-19 Impacts On Consumer Patronage Of Live Events & Attractions

  • Only 40% of Americans canceled plans that involved large crowds.
  • Before they closed on March 15th, consumers were gathering in Orlando to visit the Universal Orlando theme park during their last week of operation.
  • Some consumers are canceling their trips to amusement parks and other live events since most of them have been shut down.
  • Unhappy consumers are flocking to social media to express how they're avoiding concerts and theme parks until its safe.
  • A user on Facebook is hoping that COVID-19 won't interfere with her plans.
  • One user on Twitter is shocked that the NFL is still going on with their season even though there is full contact between players.
  • Others are showing optimism that patronage will shift back to pre-pandemic ways.



Sources
Sources

From Part 01
Quotes
  • "FEMA estimates that about 40 percent of small businesses will never reopen after a disaster."
  • "In most cases, it takes a business about 14 days to recover from a natural disaster, according to Scott Teel, senior director of communications for Agility Recovery Solutions"
Quotes
  • "Texan servers, the majority of whom are paid the federal tipped minimum wage of $2.13 per hour, can’t earn tips when a restaurant’s doors are closed — or when people can’t afford to dine out."
Quotes
  • "A few years ago, National Public Radio broadcast a story about Waffle House, the ubiquitous restaurant chain off major U.S. highways, which has one of the best disaster preparedness and recovery plans in its industry."
From Part 06
From Part 10