CHAPTER ONE

Statement of the Problem and Its Approach

1.1 Background of the Study

COVID-19 pandemic is having an unprecedented impact on the Ethiopian hotel industry. The
intensity of the impact is unknown, as comprehensive and detailed study of the impact has not
conducted yet by the government as well as the respective industry stakeholders. However, travel
restrictions and social distancing policies have had a dramatic effect on the industry.

Hotel occupancy in the Ethiopia has dropped to 43% and revenue per available room has
declined by 30.5% for the week ending March 14, according to Smith Travel Research (STR).
The World Travel and Tourism Council (WTTC) in 2020 estimates that more than 50 million
jobs in the travel and tourism sector could be at risk globally. The hotels and hospitality sector is
a major revenue earner, with potential of creating thousands of jobs annually. The hotels and
hospital subsector of the tourism industry have also had their own share of the challenges from
the covid-19lockdown policy of the government of Ethiopia. With government announcement of
“stay-at-home policy” and “social distancing “movement restriction, most restaurant businesses
were greatly affected. This led to rapid shutdowns in cities and states to control the spread of the
covid-19 disease, which threw many restaurants and hotels across the country into sudden shock.

Many hotels have recorded decline in bookings due to the health scare, while restaurants in
major towns in the country are now restricted to offering only delivery services. Since most
restaurants operate with fresh food products, which are difficult to keep in stock as demand
fluctuates, they are bound to incur losses. Hotels across the globe perceived booking
cancellations worth billions of dollars, and the hotel industry required a $150bn bailout .Resorts
and hotels that were booked by excited vacationers and corporate conference-goers before the
present covid-19 pandemic are receiving calls to postpone plans or cancel entirely their earlier
proposed events. This has made most of the hotels and restaurants to embark on temporary
suspension of normal operations which puts the estimated loss of jobs to 24.3 million globally,
and 3.9 million in the US alone due to the decline in hotel occupancy during the pandemic
period.

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While the hospitality industry is slowly recovering, the COVID-19 crisis continues to exert
profound impacts on how hospitality businesses operate. Hospitality businesses are expected to
make substantial changes to their operations in the COVID-19 business environment in order to
ensure employees’ and customers’ health and safety, and enhance customers’ willingness to
patronize their business (Gossling et al., 2020).

Preliminary findings of a longitudinal study conducted by the editorial team of the Journal of
Hospitality Marketing & Management suggest that reopening the sit-down restaurants and easing
travel restrictions will not bring customers back immediately (Gursoy et al., 2020). A large
portion of individuals (over 50%) are not willing to dine in at a restaurant immediately. The
same is true for staying at hotels. Most customers (over 50%) are not willing to travel to a
destination and stay at a hotel any time soon. Only around a quarter of the customers have
already dined in a restaurant and only around one-third are willing to travel to a destination and
stay at a hotel in the next few months (Gursoy et al., 2020).

These findings suggest that customers in general still do not feel comfortable to dine in at a sit
down restaurant, travel to a destination and stay at a hotel. Since the breakeven point in the
hospitality industry is relatively high due to high operating costs, the survival of many hospitality
businesses heavily depends on increasing the demand for their services and products. Thus,
figuring out what will make customers return is essential and this requires intensive research
efforts. The industry and the academia are in urgent need of behavioral and operational
hospitality marketing and management research to guide the hospitality operations in the time of
COVID-19 pandemic.

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1.2 Statement of the Problem

The COVID-19 pandemic, which is wreaking havoc in the hospitality service in Addis Ababa,
Ethiopia, will result in an immense slide in one of the main hospitality service category which is
the hotel service. Taking precisely the scenario of star rated hotels( in our focus study, four star
hotels) found in Addis Ababa, the COVID 19 pandemic will have a profound impact on different
sections of services of these four star hotels found in Addis Ababa.

1.2.1 Basic Research Questions

This study will try to assess the Impact of the COVID-19 pandemic has on the service of Four
Star Hotels in Addis Ababa by raising the following research questions:

1. To what extent COVID-19 has impact on changes in the demand pattern for
accommodation section of four star hotels in A.A?
2. To what extent COVID-19 has impact on changes in demand pattern for catering section
of four star hotels in A.A?
3. To what extent COVID-19 has impact on changes in demand pattern for conference
holding section of four star hotels in A.A?

1.3 Objective of the Study

1.3.1 General Objective

The general objective of the study is to examine the extent of the impact that COVID-19 has on
the service of Four Star Hotels in Addis Ababa and to come up with some possible solution and
recommendation after the study.

1.3.2 Specific Objectives

The specific objectives of the study are:

 To examine the extent of the impact that COVID-19 has on changes in the demand
pattern for accommodation section of four star hotels.

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  To examine the extent of the impact that COVID-19 has on changes in demand pattern
for catering section of four star hotels.
 To examine the extent of the impact that COVID-19 has on changes in the demand
pattern for conference holding section of four star hotels.

1.4 Significance of the Study

The rationality behind our study is to have a stand by and tangible solutions to mitigate the
possible impacts that COVID 19 has on the service of specifically four star hotels in Addis
Ababa by having an all rounded view of the intensity of the impact and creation of new
assortments that reflect possible changes to be made on the system that the hotel service industry
will work.

1.5 Delimitation of the study

The scope of our focus study will examine the extent of impact that the COVID-19 pandemic has
on the service of specifically Four Star Hotels of their three sections of the services
(accommodation, catering and conference holding) and the study will targets the hotels found
only in Addis Ababa.

1.6 Definition of Used Terms

COVID-19: a mild to severe respiratory illness that is caused by a corona virus (Severe acute
respiratory syndrome corona virus 2 of the genus Beta corona virus), is transmitted chiefly by
contact with infectious material (such as respiratory droplets) or with objects or surfaces
contaminated by the causative virus, and is characterized especially by fever, cough, and
shortness of breath and may progress to pneumonia and respiratory failure.(Cited in Merriam
Webster)

Social-distancing: also called “physical distancing,” means keeping a safe space between
yourself and other people who are not from your household to reduce contagious diseases.
(Cited in Center for Disease Control)

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Hospitality: the group of businesses such as hotels, bars and restaurants to provide food, drink,
or a place to sleep. (Cited in Cambridge Dictionary)

Service: an act or performance that one party can offer to another that is essentially intangible
and does not result in the ownership of anything. Its production may or may not be tied to a
physical product. (Philip Kotler, 1997)

Accommodation: a place in which to live, work, stay, etc (Cited in Cambridge Dictionary)

Catering: is the activity of providing food and drink for a large number of people,
for example at weddings and parties. (Cited in Collins)

Conference: is a meeting, often lasting a few days, which is organized on a particular subject or

to bring together people who have a common interest. (Cited in Collins)

1.7 Research Methodology

1.7.1 Research Design

Descriptive research methodology studies are those which concerned with described the
characteristics of a particular individual, or a group, specific predictions, with narration of facts
and characteristics concerning individual, group or situation (Kothari, 2004). Therefore, the
nature and purpose of the research is involves descriptive type of research.

1.7.2 Data Source and Data Collection Technique

Our study will be undertaken by using Descriptive Survey. In our research we will use both
primary and secondary source of data. The data types of the study will be majority of

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quantitative in nature and minority of qualitative. Then the source and the data collection
technique are put it as follow:

The primary data of the study will be collected through the following data collecting techniques.
Structured and unstructured interview will be our main data collection tool for this research. The
structured interview will be prepared for the hotel owners, hotel managers and department
managers.

Personal observation is one of the important methods of primary data gathering instruments.
Therefore, personal observations on the current atmosphere of hotels will also be used as a
primary source of gathering qualitative data.

The secondary data will be collected from the hotels financial report, Ministry of Culture and
Tourism (MoCT), Central Statistics Agency and Global Statistical Reports of the Industry.

1.7.3 Sample Size and Sampling Technique

The population of our study will be Four Star Hotels in Addis Ababa. According to Trip
Advisory, there are thirty-five Four Star Hotels in Addis Ababa. In this research it will be more
relevant to use simple random sampling techniques (lottery method will be used for "n" number
of samples) for the hotels and purposive sampling techniques for interviewing hotel executives
because it is very difficult to get the desired and relevant information from employees, who are
working in the operational position of the hotel.

The total population of Four Star Hotels in Addis Ababa are 35 out of this according to (Glenn,
2009) the following formula

n= N
1+ N (e2) will be used to take a sample size

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 Where N= population size n= sample size e = level of error

Therefore using 0.005 error which means

n= 35 ≈32
1+35 (0.052)

By rounding to the nearest, 32 four star hotels will be included to conduct the study.

1.7.4 Methods of Data Analysis

The data collected will be analyzed using statistical tools like; Sample Means, Sample Proportion
Measures of Association (Covariance, Correlation, Coefficient of Variation and Coefficient of
Determination ) In addition to this, the qualitative data will be interpreted using quotations and
discussions,

1.7.5 Limitations

The study will be challenged by the following constraints; lack of time, lack of having available
data access, lack of accurate data regarding hotels ratings and lack of cooperation from hotels,
hotel owners and hotel executives.

1.8 Organization of the Study

The study will organize under four chapter, chapter one contains the introductory part,
background, statement of the problem, objectives of the study, significance of the study,
delimitation of the study, methodology and organization of the paper. The second chapter deals
with review of related literature. The third chapter will present the empirical findings from the
examination of the extent of impact that the COVID-19 has on the service of Four Star Hotels in
Addis Ababa. In the last chapter, conclusion and recommendation will be provided.

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Definition of Hospitality Service

Hospitality service refers to the supply of all assets, facilities, services, accommodations or
others to be enjoyed or bought by travelers or visitors and occasioned by the journey of visitors
or travelers. (Ellsworth Milton Statler, 1893)

It consists of an amalgamation or mix of attractions that shapes the demand for tourism in a
country.(Thomas Cook,1832)

2.2 Market demand in hospitality

Market demand in hospitality can be broadly described under four key headings:

 Business travel demand includes all those journeys business people make to meet
customers and suppliers, and attend conferences, exhibitions and seminars. Business
travel does not include the daily journeys people make when commuting to work.
 Leisure travel demand includes journeys where people travel away from home for
amusement, entertainment or relaxation for example, holidays, weekend breaks, or same-
day visits.
 Domestic travel demand includes all the travel generated within a country by people
living in that country so, for example, the domestic demand for business travel in
Australia’s all business journeys taken in Australia by people living in Australia.
 International travel demand includes all the journeys generated to a country from people
living in other countries. France is one of the most popular tourist destinations, and
attracts international visitors from all over the world.

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2.3 Marketing in Hospitality

In any business, a solid marketing strategy is critical to building a brand, attracting new
customers and maintaining loyalty. The hospitality industry is no different. Because customer
loyalty is key, Marketing managers and executives devote a lot of time and resources to building
brand awareness and creating ongoing, interconnected campaigns. These marketing efforts
usually include both print and digital collateral that target former guests while also attracting new
clientele. However, this particular industry has a unique set of challenges that must be overcome.
Understanding the importance of marketing in the hospitality industry can help you get ahead
and standout in the competitive job market.

The Basics
Hospitality sales are different from consumer goods sales because marketers must sell tangible as
well as intangible products. In many cases this means that they are marketing services rather than
goods, and success hinges on creating the right feeling in the consumer. For example, a resort
will want to cultivate a relaxing, fun atmosphere that is recognizable to customers and inspires
those same feelings in the consumer.

Because the hospitality industry is mostly made up of tourism and other experiential services a
consistent brand identity is also very important. Marketers want to ensure that brand recognition
exists so that customers will use their services again and again. Repeat customers bring in a
sizeable portion of revenue, so marketing strategy must be split between maintaining
relationships with past customers while seeking out new ones.

2.4 Factors for the strategic success of hospitality service

Companies in the hospitality industry use various methods to develop and maintain an effective
marketing plan. The following are some of the general strategies that marketers use for brand
success.

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Research

Customers choose hotels and other hospitality services for a variety of reasons. From location to
facilities and perks, companies have to be sure that they are providing what buyers are looking
for. The role of marketers is to identify what factors make customers choose a particular
hospitality service, and this requires extensive research. By speaking to current and former
guests, monitoring customer reviews on websites, reviewing industry data and more, marketing
professionals learn what makes a hospitality service standout, as well as how it can be improved.

Awareness
If potential customers don’t know about a service, they can’t purchase it. That is where brand
awareness comes in. Marketers make sure information on hotels, resorts and restaurants is easy
to find and up-to-date. They can do this by buying ad space on relevant travel sites, creating an
engaging website and collaborating with other, non-competing hospitality services in the same
market.

Promotion
Another smart strategy for attracting customers is to run promotions during certain times of the
year, usually when business is slower. Introducing incentives and offering incentives are just
some of the ways that marketing professionals achieve this. Have you purchased a Group on for
a spa weekend? Hats promotion at work.

Relationships
To ensure high levels of repeat business, good customer relationships are vital. Not only do
repeat customers usually promote a service through word-of-mouth and social media, but they
also create a stable revenue base. One way to build relationships is through customer loyalty
programs, which reward customers who regularly use a particular hospitality service.

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 2.5 The hospitality marketing mix

The term marketing mix is used to describe the tools that the marketer uses to influence demand.
The marketing mix is a core concept in marketing.

Product/service offer

Hospitality products and services are primarily designed to satisfy the needs and wants of
business and leisure travelers. Examples include:

 Accommodation: a bed, bedroom, cabinet suite, in hotel, chalet, apartment, time-

share, cruise ship, hospital.
 Food and beverage: a drink, sandwich, fast food, family meal, gourmet dinner, in a
café, cafeteria, restaurant, airplane, at an attraction or leisure center.
 Business services: a meeting, conference, communication bureau, in a hotel or
conference center.
 Leisure: a short break, domestic holiday or international holiday, In a hotel, resort,
self-catering accommodation, camping and caravan site, or a cruise.

Marketing, working with operations, should play a role in developing the product and service
offers to ensure that the needs of customers are the focus of planning and product development.

Location

Location decisions are incorporated with distribution under the heading Place in the generic
marketing mix. Because the choice of location is the first and crucial marketing decision for
hospitality companies, this text includes locations one of the main elements of the marketing
mix. Location decisions focus on where the hospitality business should build, buy, franchise or
rent the site(s) from which it operates.

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Price

The pricing decisions a hospitality organization makes include:

- Setting the tariff, or rack rates

- Agreeing the level of discounts for key accounts
- Pricing all- inclusive packages(conferences, functions and leisure breaks)
- Developing special priced promotions to increase sales during low season periods.

Pricing decisions influence demand, are crucial in driving profitability, and play an important
role in presenting the image the hospitality firms wants to project to customers and stake holders.

Distribution

In most textbooks, distribution decisions are generally discussed with location under the heading
Place. Distribution in hospitality is concerned with how a company can make it timely and
convenient for a potential customer to book hospitality products directly from the hospitality
company or through intermediaries. The impact of ICT and the Internet has transformed the
distribution channel, and is changing relationships between hospitality providers and travel
agents, tour operators, conference placement houses and incentive houses.

Marketing communications

Originally called promotion and now popularly described as Marcom, marketing communication
covers all the tools that hospitality firms can use to communicate with customers, employees and
other stakeholders. This is the function of most marketing and sales departments. The key
elements of marketing communications in hospitality are:

-Brand/ corporate identity

-Personal selling (the sales team)
-Print and publicity material (e.g. brochures)
-Advertising
-Direct mail (often part of a broader data base marketing or direct marketing effort)

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 -Sales promotion
-Public relations
-Merchandising
-Sponsorship
-Website design.

Physical environment

The physical environment (physical evidence) consists of the tangible features of the hospitality
offer the external appearance of the premises (the landscaping, lighting and signage)and the
internal layout(appropriate decor, furniture and furnishings).Intangible factors are intimately
linked to physical evidence the ambience or atmosphere and clearly the success of a hospitality
product is dependent upon the appeal of the physical environment to the customers.

Process

Because of the simultaneous production and consumption prevalent in hospitality services, the
processes through which customers buy and consume hospitality products are crucial to
marketers. Important processes include booking, checking in and checking out, queuing systems
and service operations. Marketers need to ensure that the organizations service delivery
processes are efficient, customer friendly and competitive.

People

In the services marketing mix, people include both customers and employees. We have already
discussed how hospitality customers interact with each other whilst on the premises indeed, in
certain hotel and holiday environments a good rapport between customers is an essential
ingredient of the successful product. Managing the customer mix and ensuring that target
markets are compatible plays a key role in delivering customer satisfaction. Hospitality is a
service where the interaction between customers and employees is also a critical element of the
customer experience. Marketing therefore needs to have an input in to human resources aspects
of the operation, and this is called internal marketing.

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References

1. Archer, B.H. (1982). The Value of Multipliers and Their Policy Implications. Tourism
Management, 3(4), 236-241.

2. Bramwell, B. &Lane, B. (2010). Sustainable Tourism: an evolving global approach.

(4th ed.). New Delhi: Prentice-Hall of India Limited.

3. Kotler, Bowen, J.T., & Makens, J.C. (2014). Marketing for hospitality and tourism, sixth

edition. Boston: Pearson.

4. Gossling, S., Scott, D., & Hall, C. M. (2020). Pandemics, tourism and global change:
A rapid assessment of COVID-19. Journal of Sustainable Tourism, 1–20.

5. Williams, A. 2006. Tourism and hospitality marketing: fantasy feeling and fun. Journal of

Contemporary Hospitality Management, 18: 482-495.

6. Williams, P., & Soutar, G.N. November 2000. Dimensions of customer value and tourism

experience: An exploratory study, November, 1415-1421. Queensland, Australia:

Paper presented at the ANZMAC 2000 Visionary Marketing for the 21st Century:
Facing the Challenge.

7. Alberts, N.F. 2004: Strategic Tourism Management , University of Pretoria, Unpublished

class notes

8. Addis Ababa Hotel owners trade sectoral association survey on April 2020.

9. UNWTO, (2020). UNWTO World Tourism Barometer (Vol. 18, Issue 2, May 2020).

10. http://www.tripadvisor.com/Hotels (accessed on April 02/2021)

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 Appendix

UNITY UNIVERSITY

COLLEGE OF BUSINESS, ECONOMICS AND SOCIAL SCIENCE

DEPARTMENT OF MANAGEMENT AND MARKETING

Interview for Hotel Owners and Managers

1. What do you think is the impact that COVID-19 pandemic has on the hotel sector as a
whole? And upon its sections?

2. How do you evaluate the extent of the impact that COVID-19 has on the hotel sector as a
whole as well as upon its sections?

3. While evaluating the extent, what is your frame of reference for the measurement of its
extent of the impact that COVID-19 has on the hotel sector as a whole as well as on its
sections?

4. How do you see the significant changes in the demand pattern of consumers as a result of
the COVID-19 pandemic?

5. What is your plan to alter to these under-siege conditions that is challenging the hotel
sector as a whole as well as upon its sections?

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