The Coronavirus’ Effect on the Global Restaurant, Hotel & Hospitality Industry

The Coronavirus pandemic had a devastating effect on restaurants, hotels, hospitality businesses and related logistics and support firms on a global basis. A massive slowdown in consumer spending on restaurants, hotels, cruise lines and other hospitality businesses ensued. A rash of bankruptcies has been one result. For example, U.S. restaurant firms Logan’s Roadhouse, CraftWorks Holdings (which owns the Old Chicago chain), Krystal, CEO Entertainment (which owns the Chuck E. Cheese chain) and the U.S. arm of Le Pain Quotidien sought bankruptcy protection in 2020. On the positive side, all of these firms found buyers relatively quickly, indicating that investors see good value in well-known brands are betting that restaurants will recover in the wake of the pandemic.

Large numbers of restaurants shut their doors permanently worldwide. (Many restaurants simply turned over the keys to their landlords, abandoning fully equipped restaurants.) In the U.S., perhaps 110,000 of the nation’s 1 million restaurants closed for at least an extended period of time, despite the injection of federal financial support in the form of PPP loans. This led to a large amount of finished, well-equipped restaurant space going vacant. To a significant extent, such space has been seen as an opportunity by some entrepreneurs and chefs who negotiated advantageous leases and opened new restaurants with modest investments.

Meanwhile, after learning of the convenience of enjoying food from their favorite restaurants at home during the Coronavirus, consumers developed an interest in delivery and pickup services at restaurants of all levels, from casual to fine dining. Business at restaurant meal delivery companies like GrubHub and Uber Eats initially soared. By 2022, many consumers were more comfortable being around strangers, even in crowded restaurants, while business rebounded for many restaurants and bars.

Operators of hotels, cruise lines and restaurants were forced to show to their guests that they are operating very high levels of sanitation, worker health and guest protection. Many hotels closed temporarily, notably the 1,900 room Hilton in New York City. Others operated with reduced staff and low occupancy. By 2022, hotel occupancy had increased to a much more desirable level. Leisure travel bookings for the summer of 2023 were very high, and many properties were able to raise their room rates substantially—particularly in popular resorts. For example, business in the gambling mecca Las Vegas was booming, and many major new hotels recently opened there. While business travel has resumed to some extent, it still remained below pre-Coronavirus levels. Many in-person conferences and trade shows have resumed, such as Austin Texas’s South by Southwest, but often report attendance levels down by 50% or so. Cruise lines essentially shut down until the Coronavirus vaccines became widespread, but cruises rapidly rebounded in 2022-2023.

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