THE EFFECT OF COVID 19 PANDEMIC ON HOTEL PATRONAGE
- Project Research
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BACKGROUND OF THE STUDY
In 2020, Nigeria joined most countries of the world to witness a health pandemic. Economic pandemic are normal Nigeria situation but health pandemic was definitely not part of her experience. Some of the economic pandemic Nigeria has witnessed include the 2016 recession, the monetary authority in Nigeria defended the local currency from forced devaluation against the dollar and adopted a managed float foreign exchange system, which worked well from 2016 to 2019. In the aftermath of the 2016 recession in Nigeria, it was almost widely believed that unexpected and sustained decline in oil price was the most important cause of recessions in Nigeria. Nigeria witnessed two economic crises within a decade. The economic crisis of 2009 was as a result of the global financial crisis while the economic crisis in 2016 was as a result of the sudden fall in oil price in the world market. The 2009 recession was caused by a combination of the after-effect of the 2007-8 global financial crisis, poor loan underwriting process in banks, bad risk management practices and poor corporate governance of banks (Sanusi, 2010). Banks were a major cause of the 2009 economic crisis. The 2016 economic crisis was caused by unexpected decline in oil price which led to a sharp drop in oil revenue which severely affected Nigeria’s foreign reserve (Adeniran and Sidiq, 2018). This led to massive balance of payment deficits combined with an already high debt burden which plunged Nigeria into its second recession in a decade.
What made the 2020 economic crisis different from other economic crises or recessions in Nigeria was that most economic agents, who should have helped to revive the economy, were unable to engage in economic activities due to fear of contracting the Covid-19 disease, while other economic agents did not engage in economic activities when the government imposed and enforced its social distancing policy and movement lockdown in Abuja, Lagos and Ogun states on the 30th March of 2020.
Ferguson et al.(2020) restated that pandemics are not new and have occurred at different stages in human history (Ferguson et al., 2020). While there have been many outbreaks and human catastrophes, there has been a notable rise in the frequency of pandemics from the year 2000 and thereafter. This is particularly due to increased emergence of viral disease amongst animals (Madhav et al., 2017). Given the rise in the frequency of pandemics, many researchers including Garrett (2007), Keogh-Brown et al. (2008) and most recently Madhav et al. (2017) and Fan et al. (2018) argue that a largescale global pandemic was inevitable. Ferguson et al. (2020) from the Imperial College London COVID-19 Response Team claim that COVID-19 is the most serious episode since the 1918 Spanish Influenza pandemic. Despite the comparisons, Barro (2020) concludes that the nonpharmaceutical interventions implemented during 1918 Spanish Influenza pandemic were not successful in reducing overall deaths. This was because the interventions were not maintained for a sufficiently long period of enough time. He estimates that the mean duration of school closings and prohibitions of public gatherings including hotels was only 36 days, whereas the mean duration of quarantine/isolation was 18 days (0.05 years). Barro et al. (2020) estimate that, holding everything else constant, the 2.1 percent death rate during the Spanish Influenza pandemic in 1918-1920 would translate to roughly 150 million deaths worldwide (compared to the World’s population of 7.5 billion in 2020) during COVID-19 pandemic. Barro et al. (2020) also find that, on average, the 2.1 percent death rate corresponds to 6 percent decline in GDP and 8 percent fall in private consumption. According to Jonas(2013), the impact ranges from: i) avoidance reaction due to social distancing measures (e.g., individuals might forgo consumption and purchases and use of certain goods and services including hotel patronage), ii) small direct costs (e.g., hospitalization and medical costs), iii) larger indirect costs (loss of labor, production), and iv) offsetting and cascading effects (disruption of services, travel and others).Hence, this study seeks to examine the effect of the covid-19 pandemic on the patronage level of hotels in Estako West of Edo state.
1.2 Statement of the research problem
The outbreak of the Covid-19 pandemic can be best described as unexpected and unprepared. The suddenly epidemic blew like a hurricane across the globe, halting economic activities across countries. The pandemic brought fear and anxiety to people and communities across the world. The Pandemic which is stated to originate from Wuhan, China had most communities and nations on lock-down. Movements were restricted except for essential items. Corporate organizations including banks, ministries, multi-nationals were on total lock-down as the transmission of the virus was seen on the increase. One of such business and industry that was worst hit by the pandemic is the hotel industry. The hotel accommodation is regularly accessed by private individuals and organizations for business meetings and recreational activities. However, with the presence of covid-19 pandemic, hotels across the country witnessed a sharp downward curve in patronage. This is because private individuals and organizations hid in the comfort of their homes during the lockdown and would rather use internet and video conferencing method for communication purposes. This situation saw the poor patronage for the hotel industry. This study therefore is undertaken to examine in specificity the effects of the covid-19 pandemic on hotels and how this sad situation affected their patronage. The hotels in Estako west, Edo state will be specially studied for this purpose.
1.3 Objective of the study
The primary aim of this study is to examine the effect of covid-19 on the patronage level of hotels in Estako West of Edo state. Specifically, the study seeks to:
- Ascertain the frequency of hotel users to hotels.
- Ascertain the revenue level of hotel operators in Estako West Local government.
- Evaluate the loss incurred by hotel operators as a result of covid-19 pandemic
1.4 Research questions
- What was the rate of frequency of hotel users during the covid-19 pandemic?
- What is the relationship between the frequency of hotel users and the revenue of hotels in Estako West?
- What were the several losses incurred by hotel operators during the covid-19 pandemic?
1.5 Research hypotheses
Ho: There is no negative relationship between patronage and revenue in hotels in Estako West LGA.
Ha: There is a negative relationship between patronage and revenue in hotels in Estako West LGA.
1.6 Significance and justification of the study
This study was motivated in order to explore the dynamics of the changing economic. It highlights the uncontrollable risks that confronts business operators often. This knowledge is relevant for intending business owners. The study is relevant to individuals and organizations in the hospitality industry. This is because it presents them with facts and figures arising from the quandary beclouding the industry. This knowledge will aid them in making provision for future unpredictability embedded in the industry.
This study however, is a contribution to the body of knowledge as it documents relevant ideas useful to covid-19 pandemic.
1.7 Scope of the study
This study focuses on the events of the covid-9 pandemic and draws its findings from the borders of hotels in Estako West Local government of Edo state, Nigeria.
1.8 Limitation of the study
The findings of this study may not be inferred on all hotel situations in Nigeria. This is because the study is limited to Estako West local government area. This research gap can be closed by carrying out broader studies, capturing other local governments and states.
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