COVID crisis ‘trigger’ for innovation in hospitality sector, say researchers

During the crisis, many companies who are normally stuck in the operative process had time to think about what can they can change from a strategic point of view., helping them create new business models. [SHUTTERSTOCK]

The COVID-19 crisis has deeply impacted the hospitality sector, but it has also been a trigger of business model innovation and this must be encouraged to help businesses adapt to the “new normal”, according to new research.

The research, published in January, focused on the role of business model innovation (BMI) in the hospitality industry in Austria during the first wave of the COVID-19 crisis.

One of the most important findings is that the crisis itself was a trigger point for business model innovation for companies, Matthias Breier, lead author of the paper, told EURACTIV.

During the crisis, we saw that a lot of companies who are normally stuck in the operative process had time to think about what can they can change from a strategic point of view. And this strategic thinking helped them to create new business models,” he said.

Andreas Kallmuenzer, co-author of the study, said that “the crisis is an actual trigger of innovation. It’s not that firms decide, ‘hey, let’s innovate and let’s just do something out of it’, but they get pushed into innovation”. He added that the more businesses are under pressure, the more they are likely to engage in innovation.

The research found that BMI did not only help firms to generate revenues during the crisis, but also contribute to a sustainable preparation of the business for the future.

As such, it is crucially important to support businesses in innovating to prepare for the “new normal”.

“In the end, I think that’s something that we can all agree on, it will not go fully back to the old ways, there will be an alternate hospitality sector,” he said.

Support measures: striking the balance

However, the researchers added a warning that when it comes to support measures, it is important to strike the right balance between offering enough financial support for businesses to survive without doing so in a way which inhibits innovation.

One strong inhibiting factor [to innovation] was if liquidity during the crisis is still very high, companies do not start to engage in business model innovation, they just have enough money to wait out the crisis, wait for better times to come,” he said, adding that support measures that are too generous may actually hinder innovation.

Kallmuenzer emphasised that “it’s a question of balance”.

“There’s a great opportunity there to innovate at the moment. And so it’s a question of supporting businesses enough to survive, but also while encouraging them to adapt,” he said, adding that support may need to be better targeted, for example in the development of digital skills.

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Despite the challenges the pandemic has presented to the EU hospitality sector, hopes remain high that it can bounce back and adapt to a new post-pandemic reality, but this requires support “commensurate to the hit it has taken”, according to the EU hospitality association.

Capitalising on consumer trends

One key way that the sector can look to innovate is by capitalising on emerging consumer trends in order to cater to changing consumer needs and demands.

The COVID crisis has seen a number of emerging consumer trends when it comes to food, including an increased interest in consuming local food and more consideration of health products.

It has accelerated some behavioural trends that already existed before the crisis, while new habits and expectations have also arisen, according to Marie Audren, director-general of HOTREC, the European umbrella association of hotels, restaurants and cafés.

Understanding and responding to consumers’ changing behaviours has been outlined as an essential part of the recovery of the hospitality sector to re-engage with customers to build and maintain their trust.

“It was important before, and it will continue now that we have also a new generation of consumer, and this is where we need to keep this ability to invest so as to create as entrepreneurs and really meet those new consumers and meet their demand,” Audren said.

Kallmuenzer also highlighted this as an opportunity for the foodservice industry to capitalise on and seize the opportunities emerging in a changing business environment.

“We’ve seen these trends before, but now these have been pushed by the crisis and we need to make sure that firms can actually capitalise on that change,” he said, adding that this will be highly influenced by the mobility of consumers and the revival of the tourism sector.

“We’ll have to see the mobility that we’ve seen before the crisis, otherwise all these efforts or these attempts to go local and produce regional may not pay off in the end, because the market is just missing,” he warned.

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More plant-based options?

A recent survey from EU consumers organisation BEUC, which focused on consumers’ attitudes on sustainable food, concluded that over half of consumers say that sustainability has some or a lot of influence on their eating habits.

Just over 40% of consumers say they have stopped eating red meat or have cut down due to environmental concerns.

The re-opening of the hospitality sector could be an opportunity to support sustainability concerns of consumers, according to the association.

“The food hospitality and catering sector can greatly contribute to the goal of reducing meat consumption – particularly red meat – by providing consumers with a wider range of meat-free options,” it reads.

While Audren stressed that this is a personal consumer choice, she acknowledged there is a concern here among consumers and this is “part of this ability to be able to innovate, both in your menu and in your offer”.

“There is a trend – you cannot force it, of course, but the entrepreneur knows their customers and is always trying to look for that, to innovate and propose different things,” she said.

[Edited by Zoran Radosavljevic]

The article references the research, 'The role of business model innovation in the hospitality industry during the COVID-19 crisis', by Matthias Breier, Andreas Kallmuenzer, Thomas Clauss, Johanna Gast, Sascha Kraus and Victor Tiberius

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