Competitive survival in a devastated industry: Evidence from hotels during COVID-19

Area of Science:

• Business and Economics
• Pandemic Response
• Hospitality Management

Background:

• COVID-19 emergency funding overlooked firm heterogeneity.
• The lodging industry faced significant pandemic-related challenges.

Purpose of the Study:

• To analyze how firms' adaptability to safety needs influenced their pandemic survival.
• To investigate the role of social distancing capabilities in hotel business resilience.

Main Methods:

• Comparative analysis of hotel performance pre- and during the COVID-19 pandemic.
• Examining the relationship between hotel characteristics (e.g., service offerings, space) and business outcomes.
• Controlling for location and time to isolate the impact of adaptability.

Main Results:

• Hotels less suited for social distancing (e.g., destination hotels) offered discounts or closed.
• Simpler hotels with fewer services were more likely to stay open, some increasing prices.
• Area infection rates had minimal impact on hotel business outcomes.

Conclusions:

• A firm's inherent ability to adapt to safety requirements, particularly social distancing, was crucial for pandemic survival.
• Business model and service structure, rather than external factors like infection rates, determined resilience in the lodging sector.
• Pandemic-related business support should consider firm-specific adaptability to safety needs.