Coronavirus Alert: How to Manage in ‘Hot Zone’ Industries

Companies in hard-hit industries like hospitality cite worrisome trends stemming from the virus

By Brian O'Connell March 17, 2020
Coronavirus Alert: How to Manage in ‘Hot Zone’ Industries

​As of early March, U.S.-based hospitality trade groups were positive about the industry and its ability to protect its employees and customers, but that may not be sustainable given the widespread concerns that have surfaced since then over the coronavirus.

"I want to reiterate how critically important the health and safety of our guests and employees is to us as an association and to each and every one of our members," said Chip Rogers, president and CEO of the American Hotel & Lodging Association (AHLA), at a March 4 travel industry summit in Washington, D.C., hosted by the U.S. Chamber of Commerce.

According to Rogers, hotels have protocols to deal with everything from the common cold to the flu. "Hotels are cleaned each and every day," he said. "Currently, our members are working with industry experts to make adjustments to those protocols as needed, such as increasing the frequency of cleaning common spaces and supplying additional sanitizer stations with a minimum alcohol content of 60 percent.

"Hotels have long been prepared to deal with public health instances like this, whether it's norovirus or H1N1," Rogers added. "Thankfully, we have protocols and procedures in place that align with the latest guidance we continue to receive from the U.S. Centers for Disease Control."

Nevertheless, the hotel and travel industries have already taken a financial hit, and even harder punches may be coming.

According to the Global Business Travel Association (GBTA), the coronavirus is causing many member companies to change their travel policies. "Fully 43 percent of respondents report their company has instituted new trip approval procedures, and 51 percent say they have modified their travel safety and security features for their travelers," the group noted Feb. 27.

The GBTA estimates the virus could potentially cost the industry $46.6 billion per month. "That translates into $559.7 billion annually, or 37 percent of the industry's total 2020 forecasted global spend," the group stated.

Different Industries, Same Troubles

Other hard-hit industries may differ in products and services offered, but the goal is the same—stay healthy and figure out creative ways to generate revenue.

"We're putting hand sanitizer on all of the counters for customers to use," said Matt McCormick, founder and owner of Jet City Device Repair, which has stores in Seattle (where coronavirus was first detected in the U.S.) and Chicago and which repairs over 22,000 laptops, smartphones and other electronic devices annually. "If hand sanitizer can't be found—which is a real problem in Seattle-area stores—we will be prepared to use small spray bottles filled with alcohol."

The company is taking steps it has never taken before:

  • Keeping lots of sanitizer behind the desk for technicians to use.
  • Putting the credit card reader on the front desk so customers can swipe their cards themselves and then regularly cleaning the machine after use.
  • Wiping down devices with alcohol when they're taken from customers and wiping them down again before giving them back. 
  • Paying employees who stay home if they feel sick, to ensure that they actually do stay home.

McCormick said the current coronavirus is reminiscent of other business headwinds, except it's much worse.

"Every year, we have to deal with the Chinese New Year. It means about two weeks where we can't order any parts from China," he said. "We've gotten pretty good at planning for this and, for the past several years, it's caused very few problems. However, the timing of this year's coronavirus meant that normal two-week shutdown has turned into five weeks and there is still a lot of uncertainty."

As a result, Jet City Device Repair has started ordering what it can from domestic suppliers, but that scenario is presenting problems, too.

"These parts tend to be expensive [even] during normal ordering cycles, but right now, with the industrywide shortage, they're even more expensive," McCormick said. "Plus, the quality of domestic parts is usually not as reliable. So not only is the company paying higher prices, but it's frequently getting a worse product."

Now, the normal domestic vendors are running out of stock, so Jet City is having to rely on unknown vendors. "Worse still, you wind up relying on random people on eBay, which is notoriously bad."

McCormick said some employees are sitting around with nothing to do because the necessary parts can't be found. Others are dealing with the frustration of having to do the same repair multiple times because of poor-quality parts. "Lately, our company's purchasing manager is spending a lot more time trying to source parts and having to deal with a lot more returns," McCormick added.

Right now, the company can't fill all customer orders, is seeing much lower margins on the repairs it is able to do and is paying much higher labor costs per repair, McCormick noted.

graphic: financial impact of COVID-19 on the business travel industry

Ramping Up Sanitation

Managers at companies where direct contact with the public is the norm say they've always had rules and policies covering sanitation, but now they're pushing those rules aggressively.

Take Kirby and Kristina Lavallee, who run a bakery called Cake Girl in Tampa, Fla.

"Obviously, the coronavirus is a hot issue right now in our state and in the food-service industry," said Kirby Lavallee. "We're going above and beyond when it comes to cleaning and safe food-handling practices."

Upon hiring, all of Cake Girl's employees go through a ServSafe program that teaches them safe food-handling practices. "We take it a step further through our safety-training program to bring our employees up to speed daily on hand-washing policies and techniques, proper cleaning and sanitation of food surfaces and pots and pans, and constantly wiping down any surfaces that come into contact with the public," Lavallee said.

Routine cleaning procedures performed by bakery staffers—such as wiping down the glass display case, door handles and point of sale systems are being done much more frequently.

As for business, Lavallee said store traffic is down and so is revenue for the last two weeks.

"The first week, we didn't notice lower business as much, but this last week was down from the previous one," he said. "Foot traffic is also lower in the shopping plaza at other retailers. I believe a lot of people are staying in during this time due to avoiding contact with others who might be sick."

"We have been running aggressive promotions to bring in more traffic as well," he added. "We are noticing that even with those offers, people are not acting on them as much as they were in the past."

Global Impact

Around the world, companies in virus-vulnerable industries are dealing with the pandemic, with one eye on worker and customer protection and another on the bottom line.

So far, the results have been mixed, at best.

"As a tour operator that provides one-day and package trips throughout Israel, Jordan and Egypt, we have definitely felt the immediate effects of the coronavirus," said Shira Pik-Nathan, marketing manager at Tourist Israel.

Travel restrictions continue to climb, and an increasing number of foreign visitors are barred from entering Israel. As a result, there's been less demand for tours and more cancellations, Pik-Nathan said.

"In light of the situation, we are allowing tourists who aren't comfortable traveling at this time and tourists who are unable to enter the country due to rigid travel restrictions set forth by the Israeli government to change their tour to a later date," she noted.

Tourist Israel is following the strict orders of the Israeli Ministry of Health, which are updated frequently.

"All Tourist Israel employees who have recently returned from abroad must follow the official orders of the government, which for many countries translates as a mandated two-week quarantine at home," Pik-Nathan added. "The same rule applies for all of our tour guides and bus drivers. We are encouraging both our employees and travelers to wash their hands often and refrain from coming to work and joining tours if they feel ill."

For now, the company is looking inward to keep the revenue flowing during the coronavirus crisis.

"Right now, we are working to promote tourism within Israel among local residents and foreigners who are living in Israel for an extended period of time," she said. "Many have had their plans to travel abroad hampered by travel restrictions and are forced to keep their travels domestic.

"Although the current situation is grave, we are remaining hopeful that it will improve and our operations can continue to run as usual."

Brian O'Connell is a freelance writer based in Bucks County, Pa. A former Wall Street trader, he is the author of CNBC Creating Wealth (John Wiley, 2001) and The Career Survival Guide (McGraw Hill, 2002).

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