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Peer-reviewed

Research Article

COVID-19, government measures and hospitality industry performance

Roles Conceptualization, Data curation, Formal analysis, Investigation, Methodology, Project administration, Software, Supervision, Writing – original draft, Writing – review & editing

* E-mail: [email protected]

Affiliation Department of Business Administration, Ono Academic College, Kiryat Ono, Israel

Roles Data curation, Investigation, Validation, Visualization, Writing – original draft, Writing – review & editing

Roles Investigation, Validation, Visualization, Writing – original draft, Writing – review & editing

Affiliation Department of Management, Guilford Glazer Faculty of Business and Management, Ben-Gurion University of the Negev, Beer Sheva, Israel

Roles Conceptualization, Investigation, Validation, Visualization, Writing – original draft, Writing – review & editing

Affiliation Department of Economics and Accounting, Ruppin Academic Center, Emek Hefer, Israel

Roles Investigation, Methodology, Resources, Software, Writing – review & editing

Affiliation Department of Business Administration, Faculty of Management, University of Haifa, Haifa, Israel

• David Yechiam Aharon, 
• Arie Jacobi, 
• Eli Cohen, 
• Joseph Tzur, 
• Mahmoud Qadan

• Published: August 6, 2021
• https://doi.org/10.1371/journal.pone.0255819
• Peer Review
• Reader Comments

This study explores the interplay between public measures adopted by the U.S. government to combat COVID-19 and the performance of the American hospitality industry. The recent global pandemic is a natural experiment for exploring the role of government interventions and their direct impact on hospitality stock returns in the U.S. financial market. Overall, our findings show that most of the government interventions were associated with a negative response in the returns of the hospitality industry, a response that became more negative as the COVID-19 pandemic evolved. Similar patterns were also detected for other industries such as entertainment and transportation that are closely related to hospitality. The findings we document are fundamental to understanding the trends and fluctuations in hospitality stocks in the current crisis and any similar crisis in the future.

Citation: Aharon DY, Jacobi A, Cohen E, Tzur J, Qadan M (2021) COVID-19, government measures and hospitality industry performance. PLoS ONE 16(8): e0255819. https://doi.org/10.1371/journal.pone.0255819

Editor: Stefan Cristian Gherghina, The Bucharest University of Economic Studies, ROMANIA

Received: March 5, 2021; Accepted: July 23, 2021; Published: August 6, 2021

Copyright: © 2021 Aharon et al. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: All relevant data are within the manuscript and its Supporting Information files.

Funding: The author(s) received no specific funding for this work.

Competing interests: The authors have declared that no competing interests exist.

Introduction

The recent COVID-19 crisis may be one of the most influential and unprecedented events for firms, investors, policy makers and many other market participants. Along with the worldwide outbreak of the disease, it has also spilled over economically to major capital markets and sectors, thereby also adversely affecting the performance and stability of the hospitality industry.

The negative impact of the COVID-19 crisis is mainly affecting service-oriented sectors such as the hospitality industry. The latter functions as a powerful vehicle for economic growth and job creation all over the world. It is directly and indirectly responsible for regional development, numerous types of jobs, industries and sub-industries, and underpin many economic activities. According to the U.S. travel association ( https://www.ustravel.org/research/travel-facts-and-figures ), in 2019, travel alone generated $2.6 trillion in total economic output, supported 15.8 million American jobs, and accounted for 2.9% of the U.S. gross domestic product (GDP). These statistics highlight the economic importance of travel and tourism to the U.S. economy as well as to the global economy as a whole.

According to the World Health Organization (WHO), the COVID-19 pandemic was first reported in Wuhan, China on December 31, 2019. The pandemic spread quickly all over Asia, leaving behind it health and economic crises. On March 2, 2020, COVID-19 was first reported in the US and 10 days later Europe became the epicenter of the pandemic, both leading to even worse health and economic catastrophes. On June 1, 2020, there were over 6 million confirmed cases, and more than 370,000 confirmed deaths worldwide. Remarkably, as of May 20, 2021, the WHO reported that there had been 166,346,635 confirmed cases of COVID-19, including 3,449,117 deaths.

During the COVID-19 crisis, governments have taken different measures in the health, public and economic fields. These interventions were aimed at containing the spread of the virus in an attempt to minimize the adverse effects of the COVID-19 outbreak on both the health and economic realms. A brief review of such interventions reveals that governments imposed different actions such as canceling public gatherings, closing workplaces and schools, requiring social distancing, and also providing economic support, creating contact tracing and offering COVID-19 testing policies.

Using a unique dataset by Hale et al. [ 1 ] tracking the U.S. government’s interventions to the COVID-19 spread, we explore the response of U.S. hospitality stocks to different types of government interventions. In addition, we extend our examinations to additional firms operating in sectors closely related to the hospitality industry, given the possibility of a spillover effect from the hospitality industry to its close sub-industries.

We contribute to the literature in three areas. First, we add to the growing body of research dealing with the impact of epidemics and crises on asset pricing (e.g., [ 2 – 15 ]) by examining the immediate and short-term effect of the COVID-19 outbreak on the price evolution of stocks in the hospitality sector using the event study method. Second, we contribute to the literature dealing with the impact of government interventions and their reflection in asset prices during times of crisis (e.g., [ 11 , 16 – 22 ]) by sorting the intervention into economic (e.g., income support, debt contract relief) and non-economic (e.g., travel restrictions, school closings) measures and exploring their consequences. Overall, the results show that both economic and non-economic interventions imposed on the public can affect the prices of hospitality stocks. The magnitude of the short-term negative effect increases with the timeline of the evolution of the epidemic and the increased level of uncertainty.

Finally, we contribute to the literature dealing with changes in government policy and uncertainty in the stock market (e.g., [ 23 ]), by exploring the Granger-causality relationship between uncertainty due to infectious disease and variations in the hospitality stock returns. In addition, we examine how uncertainty reacts to government intervention. The results highlight that the hospitality business is very sensitive to economic uncertainty. When faced with adverse economic conditions, consumers typically tend to postpone using disposable income for travel and tourism in favor of more basic needs [ 24 ].

Our main empirical findings documented here show that the major challenge during the spread of COVID-19 was uncertainty. This uncertainty originated in two different, yet related, sources. The first source stemmed from the pandemic itself and the intensified ambiguity about the real consequences for the economy in terms of the time required for economic recovery, the rapidity of the spread of the infection and its lethality. This contention is confirmed using textual analysis of unique data from approximately 3,000 U.S. newspapers.

The second source was related to the uncertainty originating in the government interventions themselves. There was a great deal of ambiguity about the economic and non-economic consequences of government interventions. In addition, the public was uncertain about whether the government planned future interventions.

In this spirit, empirical studies have shown that increased ambiguity about government policy and spending has direct implications for the steady state of many macroeconomic variables such as debt, the GDP and consumption (e.g., [ 25 ]).

To summarize, during a crisis like a pandemic, the leading challenge a government faces is reducing both types of uncertainty. Doing so is vital for industries that are sensitive to such uncertainty such as the hospitality sector. Policy makers might be well-advised to impose measures with detailed transparency about their long-term plans to promote certainty. Ambiguity about current and future government spending (and stimulus packages) creates uncertainty in the stock market [ 23 ] and disrupts many macroeconomic variables such as debt, GDP and consumption (e.g., [ 25 ]). Our findings can also help policy makers fine-tune their aid policy and help tourism planners prepare better for possible future government interventions during subsequent epidemics such as COVID-19.

The remainder of this study is organized as follows. Section 2 presents the scientific background. Section 3 describes the data sources, our research methodology, and the measurement of the variables. Section 4 details the empirical findings, Section 5 discusses policy implications and future recommendations, while the last section provides a summary of the findings.

Literature review

The effects of government interventions during covid-19.

Zaremba et al. [ 22 ] examined the impact of government interventions on stock market liquidity in 49 countries during January-April 2020, and demonstrated that the effect of government interventions is limited in scale and scope. Specifically, they reported that the closures of workplaces and schools reduced liquidity levels in emerging markets, while COVID-19 information campaigns promoted trading activity. In a subsequent study, Zaremba et al. [ 26 ] explored the relationship between government policy responses to the COVID-19 pandemic and stock market volatility. They gathered data about seven non-pharmaceutical interventions from 67 countries and concluded that information campaigns and the cancellation of public events were the major accelerators of market volatility.

Kizys et al. [ 18 ] used 72 stock market indices from both developed and emerging economies and tested whether government policy responses to the COVID-19 pandemic could mitigate investors’ herding behavior. Overall, their results point to the herding phenomenon in international capital markets, but policy responses reduced such behavior. Ozili and Arun [ 27 ] tested the impact of government measures during the COVID-19 epidemic on the performance of leading market indices on four continents: UK, US, Japan and South Africa. They revealed that the increasing number of lockdown days, monetary policy decisions and international travel restrictions severely affected the level of general economic activity and the closing, opening, lowest and highest stock prices of major stock market indices. In contrast, the restrictions imposed on internal movement and increased fiscal policy spending had a positive impact on the level of economic activity.

More recently, Huang et al. [ 28 ] tested the effects of COVID-19 government policies on the hospitality labor market in the U.S. They found that closure policies were associated with a 20% - 30% reduction in non-salaried workers in the hospitality industry. Furthermore, the number of daily confirmed cases adversely affected the hospitality sector’s labor market.

Previous studies such as the work of Adda [ 16 ] explored the unintended consequences of economic activity on the spread of infections and assessed the efficiency of measures that limit interpersonal contacts in France. They found that policies reducing interpersonal contacts such as closing schools and public transportation significantly reduced the spread of disease, although they were not cost-effective. Pennathur et al. [ 20 ] explored the impact of the U.S. government interventions in response to the subprime financial crisis on the stockholder returns of banks, savings and loans firms, insurance companies, and REITs. They found that interventions reduced the wealth and increased the risks of financial institutions. Ding et al. [ 11 ] used an event study approach to examine the Chinese stock market’s response to the lockdown restrictions imposed on Hubei province in light of COVID-19. In general, this response was negative. Furthermore, firms that had a great deal of exposure to Hubei earned significantly lower returns following Hubei’s lockdown measures.

Chen et al. [ 17 ] examined the effect of the SARS epidemic on the stock prices of seven Taiwanese hotel stocks using an event-study approach. They reported that these firms suffered from steep declines in their earnings and stock prices during the SARS outbreak. Ru et al. [ 14 ] explored the cumulative abnormal returns during the COVID-19 epidemic for two groups of stock markets: countries that had experience with SARS, and countries that did not. They documented a stronger negative response in the markets in the experienced countries.

Using daily data about confirmed cases and deaths from the coronavirus and stock market returns from 64 countries, Ashraf [ 10 ] found that stock markets responded negatively to the growth in confirmed COVID-19 cases. Furthermore, there was a weak relationship with the number of deaths. Al-Awadhi et al. [ 9 ] explored companies included in the Hang Seng Index and Shanghai Stock Exchange Composite Index during the COVID-19 pandemic, and established a significant negative relationship between both the daily growth in total confirmed cases and the daily growth in total deaths caused by COVID-19. Recently, Goodell et al. [ 13 ] investigated the abnormal returns of 49 U.S. industry portfolios around COVID-19 news announcements. They documented that on February 26, 2020, when the first domestic case was confirmed in California, 15 industries reacted negatively to this news. The industries most sensitive to the news around February 26, 2020 were utilities, services and restaurants, hotels, and motels. Gerding et al. [ 12 ] examined stock market reactions to the COVID-19 outbreak around the world. They found that the market response was more aggressive in countries with a higher debt to GDP ratio. Finally, Ding et al. [ 29 ] evaluated the degree to which pre-crisis corporate conditions affected stock price behavior with respect to the COVID-19 epidemic. They reported that stock fluctuations were more moderate in firms that engaged in more CSR activities, and had more cash, less debt, and larger profits. They also indicated that stock prices were less exposed to the negative of COVID-19 if they had global supply chains and customer locations, and less entrenched executives. To summarize, we will add to the standing literature by investigating the impact of various U.S. government intervention measures on the tourism industry.

COVID-19’s impact on the hospitality industry

The COVID-19 pandemic had an unprecedented negative impact on the hospitality industry. According to a report published by the American Hotel and Lodging Association ( https://www.ahla.com/sites/default/files/recessiondepression_0.pdf ), the expected US hotels losses are nearly $83.7 ($51.2) billion in room revenue in 2020 (2021), compared with 2019, while job losses in 2020 (2021) are projected to be nearly 630,000 (546,000). In addition, about half of hotel markets, representing 72% of hotel rooms in the US, are still in a recession or depression. These numbers indicate that most of the hotel industry has a long road to recovery, especially when considering that an occupancy rate of 35% or lower makes it impossible for many hotels to stay open. In Fact, individual hotels and major operators are projecting occupancies below 20% ( https://hoteltechreport.com/news/tourism-industry-statistics#hotels ).

Similarly, the general state of the travel and tourism industry is also under a great threat. According to the Economic Impact Report by the World Travel and Tourism Council [ 30 ], prior to the pandemic, the travel and tourism sectors, both directly and indirectly, accounted for 1 in 4 of all new jobs created around the world, 10.6% of all jobs (334 million), and 10.4% of global GDP (US$9.2 trillion). In 2020, 62 million jobs were lost, representing a drop of 18.5% (62/334). The threat of job losses is continuing as many jobs are currently supported by government retention schemes and reduced hours, which without a full recovery in this sector, could be lost.

A careful mapping of the literature shows that several papers have reported supporting evidence for COVID-19’s adverse effect on the performance of the hospitality sector. Hao et al. [ 31 ] reviewed the overall impact of the pandemic on China’s hospitality industry—the country where the health crisis began. The industry witnessed a sharp decline in hotel occupancy rates and a loss of over US$9 billion in revenue. About 74% of the hotels in China were closed in January and February 2020 for an average period of 27 days. Furthermore, from January 14 to 28, the occupancy of the hotels dropped from around 70% to 8% and remained under 10% in the following 28 days. As a result, the hotel and tourism industry reduced their number of employees, leading to a significant drop in cash flow and revenue. Zheng et al. [ 32 ] studied the phenomenon of “travel fear” in China. They reported that perceptions about the severity of the threat and the susceptibility to it can cause “travel fear,” which leads to protective behaviors with regard to travel decisions. Furthermore, “travel fear” can evoke different strategies that increase people’s psychological resilience and adoption of cautious travel behaviors. Villace-Molinero et al. [ 33 ] explored perceptions about travel risks during the pandemic and proposed measures to improve traveler confidence based on the issue-attention cycle. Based on a survey conducted in 46 countries and a qualitative study in which 28 international hospitality experts were interviewed, the authors concluded that in a pandemic scenario, confidence in communications from the local government about personal safety and security are the main factors people consider when making travel decisions.

Lee et al. [ 34 ] tested the impact of COVID-19 on hospitality stock returns in China. They argue that the increasing uncertainty about the COVID-19 outbreak has made the Chinese stock market more turbulent and less predictable. Using a structural vector auto regression (SVAR) framework, they examined the link between the COVID-19 outbreak, macroeconomic fluctuations and hospitality stock returns in China. Their results hint that macroeconomic fluctuations and hospitality stock returns are significantly affected by shocks from the COVID-19 outbreak. Crespí-Cladera et al. [ 35 ] used a stress methodology to estimate the potential performance vulnerability for Spanish hospitality firms. They demonstrated that almost 25% of their sample firms are exposed to financial distress when operational income decreases 60%. They also found that the majority of such firms are generally small ones, which would also suffer from solvency problems. When hospitality firms’ revenues drop 80%, the predictions show that 32% of firms would be in financial distress. Rodríguez-Antón and Alonso-Almeida [ 36 ] reported that the performance of the hospitality industry in Spain has been severely damaged as a result of COVID-19. More specifically, they noted that in the first seven months in 2020, the total hotel overnight stays in Spain declined from 184.7 million in 2019 to nearly 46.4 million. In addition, the pandemic reduced the number of new hotel openings (−22.02%) and the number of employees hired (−30.94%) in March 2020. Finally, a recent study of Clark et al. [ 37 ] documented the negative impact of COVID-19 on the stock performance of hospitality firms. They estimated negative mean cumulative abnormal returns of −17.54% for 54 publicly traded hospitality firms from 23 different countries. Restricting their sample to the US or Japan yielded negative cumulative abnormal returns of −29.67% and −10.68%, respectively.

Other studies have examined the impact of previous pandemics, such as the severe acute respiratory syndrome (SARS), on the performance of the hospitality industry. Chien and Law [ 38 ] showed that the outbreak of SARS in March 2003 had a strong negative impact on the hotel business in Hong Kong. The occupancy rates of many hotels in Hong Kong fell to 10% or less in March and April 2003, which normally is the peak season. Similarly, Hendersom and Ng [ 39 ] reported statistics from the Singapore Tourism Board confirming the severity of the impact of SARS on the hospitality sector there. According to the report, the average hotel occupancy rate for the second quarter of 2003 was 21%, compared with 74.5% for the previous year, and average room rates dropped by 18.8%. In addition to this report, they also surveyed hotels in Singapore to estimate the economic loss resulting from SARS. They noted that in their own surveyed hotels the average occupancy rates were also relatively low, in the range of 27.7% to 42.3%.

Kim et al. [ 40 ] tested the effect of SARS on the Korean hotel industry. They examined six Korean hotels and reported that the occupancy rate dropped nearly 14% from February to July 2003. They argued that the reason seemed to be that inbound tourists saw Korea as an unsafe tourism destination within the territory of the SARS-affected Asian Pacific zone. Revenue per available room (RevPAR) during the three months from April to June was 215,849 won (US$180) in 2002, whereas it was 115,676 won (US$96) in 2003, a 100,173 won (US$83) difference. Finally, there was a 16% drop in profit margins from April through June in 2003 compared to the same period in 2002. The average rate per room also declined by 19% as hotels attempted to cope with the sharp decline in demand. Tew et al. [ 41 ] used a questionnaire designed to investigate, among other points, the impact of SARS on hotel performance in Canada. Respondents were asked to assess the impact that the SARS crisis had on their hotel’s performance. Over 82% of respondents reported that SARS had an extremely negative or very negative impact on their hotel’s performance. In addition, Tew et al. (2008) [ 41 ] also reported that the Niagara Falls region experienced a loss of over 122,000 room nights in the second quarter of 2003. This loss translated into a loss of $19 million in room revenue. Finally, Chen et al. [ 17 ] examined the effect of the SARS epidemic on Taiwanese hotel stock price movements using an event-study approach. They showed that for seven publicly traded hotel companies there were steep declines in earnings and stock prices during the SARS outbreak period. More specifically, they reported that in April 2003 hotel companies experienced drops in earnings in the range of −49.81% to −11.14%. They also showed that these drops worsened significantly when extending the period examined for two months (April–June, 2003), with reductions varying from −76.89% to −20.00%. Finally, they calculated the cumulative abnormal returns of stocks in this sector during 10 and 20-day windows from the day of the SARS outbreak. The negative returns they found were also robust using different types of models to estimate the abnormal returns.

Importantly, COVID-19 has not only directly affected the hospitality industry performance, but also created collateral damage that might indirectly harm it. The literature suggests several possible additional factors behind the poor performance of the hospitality industry that might delay its future recovery. These effects are evident in the labor force (Jung et al. [ 42 ]), its mental health (Yan et al. [ 43 ]), and the willingness to travel and the spreading of fake news (Alvarez-Risco et al. [ 44 ]).

To summarize, these studies show that in addition to the negative effect that government interventions usually have on financial markets, COVID-19 also had various detrimental effects on the hospitality industry. Therefore, combining these two pieces of evidence, we might expect that the impact of government interventions on the hospitality industry would also be negative.

Data and methodology

Sample construction and data sources.

Our sample consists of the daily log returns of stock portfolios consisting of firms operating in the hospitality industry in the following COMPUSTAT SIC codes: Retail‒eating places (5800‒5819), Restaurants, hotels, motels (5820‒5829), Eating and drinking places (5890‒5899), Hotels, other lodging places (7000‒7000), Hotels and motels (7010‒7019), Membership hotels and lodging (7040‒7049) and Services–linen (7213‒7213). We refer to these related industries collectively as the hospitality industry.

We use market prices as a proxy for the overall state of the hospitality industry as well as for the other related sectors. This approach might have limitations, albeit temporary ones, which stem from behavioral biases. Nevertheless, using market prices is still a prevalent method that reflects the present value and state of securities. Additionally, we retrieved data for the log returns of stocks in nine other related industries (Food Products, Candy & Soda, Beer & Liquor, Entertainment, Consumer Goods, Apparel, Personal Services, Transportation and Retail). All firms in each portfolio are traded on the NYSE, AMEX, and NASDAQ exchanges. The data are publicly available on Kenneth French’s website and cover the period of December 31, 2018 to April 30, 2020. They include 336 daily returns for each industry portfolio and a total sample of 3,360 daily observations ( http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html ). We also retrieved data from Kenneth R. French’s data library about the performance of a market portfolio (MARKET). According to French’s definition, the market portfolio consists of the value-weighted returns of all CRSP firms incorporated in the US and listed on the NYSE, AMEX, or NASDAQ (See also [ 45 ] for a complete description).

Table 1 as well as Fig 1 present information about the cumulative returns of the hospitality and other related industries for January 2020 to April 2020, compared to the general market’s performance. As can be seen, the overall negative performance is not limited to the hospitality industry. In fact, several other industries are associated with excess negative returns compared with the hospitality industry. Note too that the worst month for all of these industries was March 2020, when most of the interventions occurred. During this month negative returns abounded. Indeed, the hospitality industry lost about 45% of its cumulative market value. The recovery in the market value of the various sectors, including the hospitality industry, took place in April 2020. However, nearly all industries ended the period with a substantial decrease in their market value.

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A . The figure depicts the cumulative returns of the S&P 500, the hospitality industry and the indices of numerous related industries since the outbreak of COVID-19 in January 2020. “c,” “e” and “h” denote closures, economic and health measures, respectively.

https://doi.org/10.1371/journal.pone.0255819.g001

https://doi.org/10.1371/journal.pone.0255819.t001

Our empirical discussion also utilizes Baker et al.’s measure of uncertainty due to infectious diseases [ 46 ]. The data come from their Economic Policy Uncertainty website and are available since 1985 ( http://policyuncertainty.com/infectious_EMV.html ). In designing this index, Baker and colleagues created an index based on the frequency with which various terms appeared daily in approximately 3,000 US newspapers. They classified these articles into three categories: E: economic, economy, financial; M: stock market, equity, equities, Standard and Poors; and V: volatility, volatile, uncertain, uncertainty, risk, and risky. Finally, these articles must also mention one or more terms related to epidemic, pandemic, virus, flu, disease, coronavirus, MERS, SARS, Ebola, H5N1, or H1N1. The resulting counts were scaled by the count of all articles on the same day. Fig 2A and 2B plot the evolution of epidemic-based uncertainty. As can be seen, uncertainty skyrocketed upwards multiple times above the average. The maximum value reached was 112.93, recorded on March 15, 2020.

(A) The dotted line is a one-week moving average of the index. The figure indicates that starting from the last week of February 2020, pandemic-driven uncertainty skyrocketed to record values. The figure includes 7-day-a-week observations. (B) The solid bold red line is Baker et al.’s daily index of uncertainty due to infectious diseases [ 46 ]. This uncertainty measure considers the frequency of U.S. newspaper articles that include terms related to economy, risk, financial market, uncertainty and epidemic. The uncertainty index observations correspond with the trading days on the stock exchange. The correlation between this form of uncertainty and variations in returns is 0.46 (t-stat = 4.66). Overall, the message of the figure is that high levels of uncertainty do not bode well for a quick recovery in the hospitality sector.

https://doi.org/10.1371/journal.pone.0255819.g002

Fig 2A provides a combined snapshot of the uncertainty due to infectious diseases and the performance of the hospitality portfolio, NASDAQ and S&P500. The overall picture illustrates a clear inverse relationship. A high level of uncertainty is accompanied by a decrease in the hospitality returns (as well those of the market portfolios), and vice versa.

Event study

Event study methodology explores the response to a specific event by assessing whether it creates abnormal stock returns that can be attributed to new information released. Therefore, in using this method, our first step was determining the event of interest and defining the length of the event’s window. To do so, we collected the dates of the government responses to COVID-19 from Hale et al.’s database [ 1 ] (See the Oxford COVID-19 Government Response Tracker on https://covidtracker.bsg.ox.ac.uk/ ). This database is constructed from publicly available sources such as news articles and government press releases and briefings. We also identified March 19, 2020 as another significant date because it marked the day when President Trump signed a $100 billion economic aid package.

Table 2 presents the list of U.S. government interventions with a definition for each intervention variable. The responses appear chronologically to illustrate how the government’s actions evolved over the full period of COVID-19’s spread.

https://doi.org/10.1371/journal.pone.0255819.t002

Next, we defined the length of the event window in which we examined the behavior of the equity prices of stocks in the hospitality sector and those in related industries. In fact, there is no golden number for the length of the event window. On one hand, a longer window relying on a large number of daily returns may reveal more information. On the other hand, other events occurring during a long-time window might contaminate the results. Given the proximity of events, we focused on a relatively narrow timeframe to minimize the possibility of confounding events. We adopted this approach to isolate the impact of each intervention, and because the COVID-19 period was followed by many events apart from the interventions. In addition, using a long timeframe might increase the chances of contemporaneous and inter-temporal residual correlations that could result in underestimates of the standard errors [ 47 ]. Brown and Warner [ 48 , 49 ], as well as McWilliams and Siegel [ 50 ] argued that a long event window also reduces the power of the test statistics and leads to false interpretations. Therefore, we chose an event study that spans three days, that is, from t -1 to t +1 days, which should cover the impact of government interventions on equity indices.

The center of each event study (t 0 ) is the announcement day (henceforth, day zero). Using Hale et al.’s [ 1 ] database, we defined day zero as the first day on which the intervention was announced to the public. If the announcement was made on a day when the exchange was closed, we defined day zero to be the first day when the exchange was open again. For instance, if the intervention was publicly announced on Saturday or Sunday, day zero would be the following Monday.

The subsections provide a detailed explanation of how we measured the returns, expected returns and abnormal returns as well as additional information concerning government interventions.

Abnormal returns (AR)

The term in parentheses on the right-hand side of Eq ( 1 ) is the expected normal return. The error term is the industry-specific component or the unexpected return, which can be attributed to the new information released such as the intervention. We explored each point in time separately from the market performance.

We estimated the coefficients’ parameters in Eq ( 1 ) using a pre-event estimation period (December 31, 2018-December 30, 2019) consisting of 252 trading days before the outbreak of COVID-19, as on December 31, 2019, the WHO was informed of cases of pneumonia of an unknown cause in Wuhan City, China. Finally, we aggregated the abnormal returns (CAR) and computed the t-statistics, following Brown and Warner [ 49 ].

Causality tests

OLS and regression analysis

Lastly, after testing the potential relationship between hospitality stock returns and uncertainty, we explore the uncertainty levels around the interventions themselves. To do so, we employ OLS estimations, which link government interventions with uncertainty. Such examination will allow us to reveal whether government interventions induce uncertainty, fear and anxiety, which will be then translated to hospitality stock returns performance. To obtain heteroscedasticity and autocorrelation consistent covariance matrix estimates, we employed Newey and West’s [ 55 , 56 ] estimation method.

Empirical findings

Table 3 presents a summary of the effect of each measure on the hospitality industry and related industries sorted by the type of intervention. We present and discuss the findings chronologically to understand how the government’s actions evolved throughout the spread of COVID-19.

https://doi.org/10.1371/journal.pone.0255819.t003

In parallel, Fig 1 plots a comparison of the cumulative returns of the market portfolio (S&P 500), the hospitality equity portfolio, and other related industries relative to various event dates associated with COVID-19’s outbreak. The figure illustrates the high degree of co-movement between the hospitality and other related industries, and the shocks to these industries relative to the market portfolio.

As the table indicates, most of the events are associated with a significantly negative response to U.S. government interventions. The only exception is the aid package (e3), announced on March 19, 2020, which mostly had a significant positive effect.

As illustrated in Fig 1 , between January 2, 2020 and February 20, 2020, the cumulative returns of the hospitality industry portfolio (depicted in red) rose moderately, implying that the government’s earlier actions had no influence on the performance of hospitality companies. More specifically, the interventions of contact tracing (h3) and restricting international travel (c8) did not have any statistically significant effect on the hospitality industry’s performance and most of the related industries. One explanation for this result might be the common belief in the early stages of the COVID-19 pandemic that it would not spread to the U.S. Naturally, people were still optimistic that COVID-19 was just another form of the flu that would have a minor effect on the economy. Apart from the explanation for this relatively passive market response coming from the fact that this date was part of the early stage of the outbreak, many may have believed the claim of China’s Foreign Ministry on the very same day that the U.S. government was reacting inappropriately to the outbreak and spreading fear by enforcing travel restrictions.

From this point in time, which we can call the realization period, the U.S. engaged in more frequent and extensive interventions, underscoring the severity of COVID-19. In fact, the period from February 21 to March 18 is characterized by a sharp decline in the hospitality industry’s performance as well as on other related industries. It was during this period that a series of interventions were imposed that also had an increasingly negative impact on the hospitality industry and the economy as a whole. During this period of time, even the economic intervention of debt/contract relief (e2), which postponed debt payments, had a negative effect (CAR = ‒5.36%) on the hospitality industry and also for the food (‒3.396%) and entertainment (‒2.149%) industries. These findings raise the possibility that the market was overwhelmed by negative sentiment. However, it may also reflect that the expectations about economic aid and substantial government support were much more meaningful. As evident in its cumulative negative returns, the hospitality industry regarded the announcements about debt/contract relief (e2) as insufficient, especially, due to the opinion that the hospitality sector would be the first to be hurt and the last to recover. In addition, according to the Oxford database, the debt/contract relief intervention in the U.S. provided only limited relief because it just postponed debt payments with no clear indication about real economic recovery, or any guidance about plans for the long term. When we delved deeper, we also reveal that February 26, 2020 was a significant milestone. It was the date on which the first U.S. coronavirus case of unknown origin was documented, which possibly induced negative response.

The next intervention of the U.S. government occurred in the health field and involved the announcement about a COVID-19 testing policy. The policy sets the criteria for who is to be tested for COVID-19. Intuitively, such a measure should be interpreted as good news. However, the overall response of the hospitality industry to the U.S. government’s testing policy intervention (h2) was negative (CAR = ‒4.195%). As for the related industries, the findings show mainly insignificant negative responses on the event date. The only exceptions are entertainment (‒3.810%) and transportation (‒3.092%). One explanation for this counterintuitive outcome might be that testing was offered only to those who had apparent symptoms and met specific conditions. Therefore, the industry regarded this as a minor and insufficient step in stopping the pandemic.

Several days afterwards, on Monday, March 1, 2020, the canceling of public events (c3) was imposed. The results indicate a clear negative effect on the hospitality industry’s performance; the cumulative abnormal returns (‒3.394%) were negative and statistically significant. Actually, in most of the industries, there were statistically significant and consistently negative abnormal returns. These findings highlight the powerful effect of cancelling public events on this industry, which may be a main source of the hospitality companies’ income.

This major negative response may also be a result of two additional events that occurred on the same weekend when the stock market was closed. The first event was the official record of the first coronavirus death in the U.S., and the second was an extension of the travel restrictions to include Italy and South Korea. These events probably intensified the negative market response. Apparently, now, the market starts to comprehend that the coronavirus is here to stay, and is far from being a trivial episode. In addition, canceling public events is a real business obstacle, and with the overall comprehension of the new challenging and unclear business activity, it might explain the overall negative response.

A quick glance at Fig 2A and 2B supports this notion. The figures show that the measure of COVID-induced economic uncertainty in Baker et al.’s index [ 46 ] started to deviate from the mean values observed prior this period implying that the media and newspapers devoted extensive attention to the pandemic and to its economic consequence. In this spirit, prior works have documented that media-driven pessimism–fueled by the outbreak of a pandemic–has a remarkable impact on stocks exposed to intense media coverage (e.g., [ 57 ]).

From this point forward, the U.S. engaged in more frequent and severe interventions. The findings show the clear negative response of both the hospitality sector and most of its closely related industries to these announcements. On March 5 and March 11, 2020, the closure interventions were extended and included new restrictions such as school closings (c1) and restrictions on gatherings (c4). The results in Table 3 demonstrate an evident adverse impact that was much more aggressive in terms of its magnitude. Specifically, for the hospitality industry, the abnormal returns in the wake of school closings were ‒3.786%, while restrictions on gatherings had a total negative effect of ‒5.550%. Note that on the evening of March 11, 2020, President Trump expanded the travel restrictions on foreign travelers, banning entry for the next 30 days from 26 countries in Europe except for Ireland and the United Kingdom. This announcement probably intensified the negative market reaction on March 12, 2020. The negative market reaction was also reflected in the significant cumulative abnormal returns for the hospitality industry (‒10.490%), and for the entertainment and personal services industries (‒14.561% and ‒8.879%, respectively).

The next intervention (mixed (1)) was an even more significant one, given that it involved several measures of different types. The mixed (1) intervention involved three events: domestic-travel restrictions (c7) on local movement between cities and regions, stay at home requirements (c6) and public information campaigns (h1) to raise awareness of the coronavirus. These steps were publicly announced between Saturday, March 14, 2020 and Monday, March 16, 2020. As the reported results in Table 3 illustrate, the combined effect of these interventions had a particularly strong impact on the hospitality industry’s performance (CAR = ‒21.98%), indicating the severe effects of the stay at home and public transportation restrictions which also spilled over to the entertainment (CAR = ‒16.29%) and apparel (CAR = ‒11.94%) industries.

On March 17, 2020, the closing of public transportation (c5) was the most significant event affecting the stock prices of the hospitality industry. The market value of the hospitality industry plunged almost 29% in three days (CAR = ‒28.72%), while the entertainment industry lost almost one-third of its market value in just three days (CAR = ‒30.59%). The record level of uncertainty due to the pandemic observed on this day appears in Fig 2A and reflects the tense atmosphere in the economy.

There are two possible explanations for this clearly significant tendency for negative returns following the government’s interventions, rooted in two different, but somewhat related, reasons. The first is the ambiguity about the government’s future fiscal steps that increased the uncertainty in the stock market [ 23 ]. The public finance literature has established that frequent changes in government policy may have direct implications for the stability of macroeconomic variables such as GDP, consumption and debt (e.g., [ 25 ]). The second reason is related to the uncertainty surrounding the pandemic itself and the unclear picture in its initial stages. This uncertainty includes the ambiguity about the real consequences for the economy, the time required for economic recovery, the rapidity of the spread of the infection and its lethality. All of these factors offset the impact of the interventions, or at least postponed their immediate effect until a bit later.

Another set of several interventions imposed together are described in the mixed (2) interventions in Table 3 . The mixed (2) intervention involved two events. On March 19, the government announced a new restriction that required all but essential workplaces to close and people to work from home if they could (c2). In addition, on Wednesday evening, March 18, 2020 when the exchange was closed, President Trump signed a $100 billion coronavirus emergency aid package, which included provisions for emergency paid leave for workers as well as free testing (e3). Table 3 shows that the good news about the assistance package announced on March 18 during the evening overcame the negative news of workplace closures. This result is both interesting and important given that according to the American Hotel and Lodging Association, job losses in the industry are expected to be extensive. In 2020, job loss was projected to be nearly 630,000, while in 2021 job loss were still expected to be around 546,000. Given that about half of hotel markets, representing 72% of hotel rooms in the US, are still in a recession or depression, it seems that providing economic aid might help calm the adverse effect of the expected job losses and the negative impact of imposed closures. Finally, the economic assistance had a major positive impact not only on the hospitality industry but also on several other industries such as entertainment, apparel and retail (CAR = +9.292%, +5.147% and 5.432%, respectively).

Indeed, the announcement about closing workplaces probably was expected, given all of the former restrictions, especially after the stay at home requirement made only three days before. Note that the aid package (e3) was a turning point in the behavior of the hospitality industry performance. It ended the one-month period of decline and started a positive upward trend that continued, though with fluctuations, through April 30, 2020, when the cumulative returns of the hospitality industry portfolio matched the cumulative returns of the S&P 500 index (see Fig 1 ).

Lastly, and in line with the Keynesian theory that countercyclical fiscal policy actions such as lower taxes or more fiscal spending under adverse economic conditions may help the economy recover (e.g., [ 58 ]), on Friday, March 27, the U.S. government announced a new intervention of income support. The aim of this stimulus was to cover the salaries or provide direct cash payments to people who had lost their jobs or could not work (e1). It also included payments to firms if explicitly linked to payroll or salaries. It was the most substantial stimulus package in U.S. history, and included payments of up to $1,200 for individuals or $2,400 for married couples. Parents also received $500 for each qualifying child. In spite of these generous fiscal steps, the results in Table 3 show a decline in the hospitality performance on the event date. This negative response is probably because this package of income support included payments to firms if explicitly linked to payroll or salaries but did not compensate the hospitality industry for its massive loss of revenues. In addition to the results reported above, additional findings for different time windows are available in the S1 Appendix . The results remained similar.

In the next subsection, we examine the impact of pandemic-driven uncertainty developed by Baker et al. on the price variations in the hospitality sector [ 46 ].

Causality test results

Table 4 reports the Granger-causality test results about the causal relationship between uncertainty due to infectious disease and variations in the hospitality stock portfolio. We follow the literature and use the squared returns as a proxy for price variations (e.g., [ 59 ]). The table lists the F-statistics of the Granger-causality test. For robustness, we set the lag-length of the model using the Schwarz Bayesian information criterion and run the Granger procedure for five different order lags to gain insights into the dynamic relationship between the two variables.

https://doi.org/10.1371/journal.pone.0255819.t004

The results, illustrated in Table 4 , reports relatively large F-statistic values which indicates a major rejection of the null hypothesizes that uncertainty does not Granger-cause the variations in returns. In other words, the results suggest that the uncertainty driven by the COVID-19 pandemic is a strong driver of the variations taking place in the equities of hospitality firms. This result is in line with the view that the intensity of news and media coverage contributes to the variability of the stock market (e.g., [ 60 ]).

Table 4 illustrates the results of the test conducted on the data between December 31, 2018 and April 30, 2020. The results reported here are straightforward and indicate that this type of uncertainty drives price fluctuations in hospitality as well as other closely related industries. In line with a battery of studies documenting the link between the stage of the outbreak and equity returns (e.g., [ 10 ]), our results go one further step. They confirm that the most significant factor during pandemics, particularly for the hospitality industry, is uncertainty.

It is also worth noting that a possible source of the high levels of uncertainty might be the strong government interventions and the frequency of the interventions themselves. Pastor and Veronesi [ 23 ] presented a general-equilibrium model according to which changes in government policy create two types of uncertainty: impact uncertainty and political uncertainty. The former is the uncertain impact a particular policy will have on the profitability of firms. The latter is the general uncertainty resulting from changes in policy. In equilibrium, these types of uncertainty lead to increased volatility when the government changes its policy.

The results in Table 5 lend support to this contention. We examined the average values of uncertainty on the day of and the day following government intervention. For robustness, we utilized three different proxies for uncertainty, and they include: the CBOE S&P 500 volatility index VIX, the pandemic-driven uncertainty developed by Baker et al. [ 46 ] and the squared returns of the hospitality sector. Overall, the picture emerged in Table 5 indicates that intervention days as well as the day following were associated with increased uncertainty. Therefore, one of our main conclusions is that governments should be transparent about their future actions and interventions regarding the hospitality industry.

https://doi.org/10.1371/journal.pone.0255819.t005

Furthermore, decision makers and businesses operators in the hospitality industry should make their best efforts to increase their transparency and make their transactions with consumers as comfortable as possible. Reducing the degree of uncertainty is a key element in rebuilding the hospitality industry and making government actions efficient, with minimum financial and economic damage.

Policy implications and recommendations

Our findings have important implications and suggestions for the hospitality industry managers, investors exposed to this industry, and policy makers at both the firm and state levels. We demonstrated that the impact of COVID-19, as well as government interventions, is not limited to the hospitality industry alone, but also affects other industries related to it. However, as a sector that relies on people’s disposable income, the hospitality industry is particularly sensitive to economic upheaval. When the economic situation is uncertain, consumers typically tend to put off their consumption of hospitality in favor of more basic products. Furthermore, the sudden, widespread outbreak of COVID-19 caught everyone by surprise.

Governments groped in the dark in an effort to find ways of dealing with the situation. Their frequent changes in policy stoked the uncertainty surrounding the situation. One method that governments can use to reduce uncertainty and increase public confidence is transparency. Since time is crucial in managing a crisis, government policies should be announced publicly as soon as possible. To deal with the uncertainty related to the spread of the virus itself, governments must continuously provide as much information as possible about the evolution of the pandemic. For example, they can use campaigns, create special pandemic or crisis management websites, and provide contacts and information—all aimed at giving the public the maximum sense of control.

Regarding the second type of uncertainty, which relates to government policy, governments should be transparent about the types of interventions they plan to use, how they expect to implement them and their planned duration. Governments should publicize their plans for dealing with economic and non-economic issues, indicating how they will affect individuals, investors, employees, employers and business owners. Moreover, since one of the main concerns is loss of revenue and the instability of the economy, the government should be pro-active and set up vehicles such as a national savings fund to remove any ambiguity about the state’s financial ability to manage the crisis. In addition, it should announce the availability of income aid, debt payment relief and fiscal spending that is immediate, widespread and generous. In addition, the public should be informed precisely how the government plans to finance this spending (imposing taxes, increasing deficits and debt ceilings, etc.). Transparent policies may mitigate the uncertainty in the short term and allay fears about the economy.

Implications for investing

Our findings imply that investors, funds and portfolios managers should account for possible extreme events such as pandemics followed by governmental interventions, which may spillover to other industries and capital markets.

Investors can improve their investment tactics by paying more attention to the characteristics of the economic measures imposed to deal with infectious diseases and their resulting uncertainty, knowing now that they will have a negative impact on the performance of the hospitality industry. Hence, investors exposed to the hospitality industry should keep an eye on changes in Baker and colleagues’ index of uncertainty due to infectious diseases. By doing so, they can safeguard the value of their investments using techniques such as short positions, derivatives, forwards or any financial instruments that have a weak or negative correlation with the performance of the hospitality and tourism sectors.

In the midst of COVID-19 and its economic implications, several opportunities may arise in other related industries, as evident in the unprecedented growth in their equity prices. According to AHLA’s report, the hotel occupancy in the U.S. will increase to 52% in 2021, and to 61% in 2022, compared with 66% level in 2018–2019 ( https://www.ahla.com/sites/default/files/2021_state_of_the_industry_0.pdf ). In addition, the report projects that U.S. restaurant sales are about to increase to 11% in 2021 to $731.5 billion, but still far behind 2019’s $864.3 billion. In this respect, future studies can examine the performance of hospitality and related industries before, during and after the COVID-19.

Implications for policy making for the hospitality sector

While governments around the globe, including the U.S., have started to make interventions, recovery back to pre-crisis levels may not be immediate, but will take a longer time. During this time, owners and businesses operators in the hospitality industry can prepare for future activity and the post COVID-19 tourism environment. In addition, stakeholders should adjust their businesses for both the short and long terms and minimize the sensitivity of their businesses to the possibility of future government restrictions even after reopening the hospitality economy. They also have to consider innovations in their businesses in terms of social distancing and keeping a sanitized environment. Owners and hospitality service-related vendors such as airline companies, cruise companies and multinational hotel chains must cooperate with each other, and enforce strict protocols for the handling and preparing of food. Travel agencies can encourage people to travel by offering flexible rebooking options and free health insurance that covers COVID-19 during the trip. Fast COVID-19 tests before departure and after landing will help airline companies and airport authorities restore confidence in the safety of travel, which will encourage tourism and prevent infection in public areas.

For national policy makers, our results highlight the devastating response of the capital market to interventions, particularly closures. The main factor hurting the hospitality sector and other related industries is uncertainty. Indeed, at this point, there is still great uncertainty about the rapidity of the spread of the disease and its lethality, whether a second wave of infection will occur, the time required to develop and distribute vaccines to the public, the real effectiveness and outcomes of social distancing and whether government policy responses and interventions will become permanent.

Therefore, governments should try to be as transparent as possible in devising a clear plan and definitive goals for the near and far future. They should do so by working with the other state economic authorities in order to minimize the negative impact of uncertainty. This approach is crucial because the cumulative evidence indicates that uncertainty reduces economic growth and firms postpone investment and hiring [ 46 ]. Furthermore, unclear, inconsistent government policy creates uncertainty that commands an equity risk premium, and may, in turn, affect the weighted average cost of capital, which ultimately affects firms’ innovation activities (e.g., [ 61 ]).

Our results also underscore the adverse effect that closures have on the performance of the hospitality industry. Therefore, governments should be extremely transparent before enacting such regulations. They should also follow them with economic support to reduce not just the negative effect of the closures, but also the negative effect of the uncertainty about when the restrictions will be lifted. An important recommendation derived from our results is providing financial assistance alongside regulations that close workplaces. As our results hint, it is a key condition for providing significant relief from the detrimental impact of labor market closures. Since the labor market is an important component of the soundness and growth of the economy, especially in the hospitality industry, governments should consider mitigating the negative impact of closures with financial measures that support employees, employers and the economy. In this respect, it is important to consider the long-term implications of the COVID-19 crisis. Beyond their immediate impact, the measures put in place today will shape the future of hospitality. This outbreak is an opportunity for governments and businesses to develop new concepts of hospitality by reducing costs, utilizing green and clean energy and implementing new health protocols for safe travel. Governments should encourage the digital, low carbon, structural transitions needed to build a stronger, more sustainable and resilient hospitality economy.

Finally, scholars can use our findings to explain why the performance of the hospitality industry deviated so much from that of other service-oriented and economic sectors. They can incorporate the uncertainty resulting from infectious diseases and interventions into their pricing kernels.

To conclude, the massive fiscal stimulus adopted during the subprime crisis of 2008 showed that the intervention of government as well as other monetary and economic authorities was crucial in halting the financial deterioration of the finance sector and, consequently, the real economy (e.g., [ 61 , 62 ]). Thus, the outcomes could have been even more destructive without the quick, massive, generous government measures. While these measures did not have an immediate positive effect because of the great uncertainty and public panic at that point, they might have had a lagged effect. Fig 2B depicts the gradual effect following the economic steps during the pandemic outbreak. Nevertheless, stimulus plans are controversial. Politicians must decide whether they want to stimulate the economy by increasing debt-financed spending, increasing balanced-budget spending financed through higher taxes in the future or providing debt-financed tax cuts.

Summary and conclusions

This study explored the effects of interventions by the U.S. government on the market value and stock returns of the hospitality sector and industries closely related to it. We used an event study methodology to explore the impact of four types of interventions: economic, health, closures and mixed types of interventions.

Closures had a consistently negative effect on the hospitality industry. The closing of public transportation (e5), domestic travel restrictions (e7) and stay at home requirements (e6) had a strong negative impact on the hospitality industry. Such interventions had a direct negative impact on the revenues of this industry.

The only intervention that had a significantly positive effect on the hospitality industry was the $100 billion COVID-19 aid package, signed by President Trump on the evening of March 18, 2020. Contrary to what we might expect, the economic interventions of income support (e1) and debt/contract relief (e2) had a significantly negative effect on the hospitality industry.

Possible explanations for these results might be the uncertainty originated in the unclear and inconsistent government policy itself. The latter is viewed in the public finance literature as a source of ambiguity with a direct effect on the stability of key macroeconomic variables. In addition, the hospitality sector expected more meaningful and substantial government support, especially, due to the expectation that this industry would have a late recovery. Similarly, the package provided payments to firms that were explicitly linked to payroll or salaries but did not compensate companies in the hospitality sector or closely related industries for their massive loss of revenue. Furthermore, the resulting uncertainty driven by the pandemic in terms of the spread of the pandemic, its lethality, time required to develop vaccines, unknown economic implications, etc., played a major role in the price fluctuations of hospitality equities. In periods of uncertainty, firms always invest less and hire fewer people. Similarly, people tend to save money rather than spend it. Accordingly, such unprecedented uncertainty was translated into a sharp decline in the value of hospitality firms.

These conclusions are relevant to both regulators and the leaders of the hospitality industry. Government policy is not just about choosing a deficit level, but also about influencing public expectations. Hence, leaders of the hospitality sector must prompt regulators to develop clear policies aimed at reducing economic uncertainty and persuade them that a gradual lifting of the closures will allow the hospitality industry to recover.

Supporting information

S1 appendix. additional results for different time windows..

https://doi.org/10.1371/journal.pone.0255819.s001

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Hospitality workers ratify new contract with 34 Southern California hotels, press 30 others to sign

Unite Here Local 11 Co-President Kurt Petersen, right at podium, congratulates hotel workers and leaders as he announces the ratification results and unveiled the new contract terms at a news conference on the steps of the Intercontinental Hotel downtown in Los Angeles, Monday, March 25, 2024. (AP Photo/Damian Dovarganes)

Unite Here Local 11 workers hold a rally as they protest outside the Figueroa Hotel downtown Los Angeles on Monday, March 25, 2024. Thousands of Southern California hospitality workers ratified a new contract with 34 hotels after repeated strikes since last summer and will keep fighting for deals with more than two dozen others, their union announced Monday. (AP Photo/Damian Dovarganes)

Unite Here Local 11 workers celebrate the ratification of a new contract at a news conference on the steps of the Intercontinental Hotel downtown in Los Angeles on Monday, March 25, 2024. (AP Photo/Damian Dovarganes)

Unite Here Local 11 member, hotel housekeeper Marvin Allen attends a rally on the steps of the Intercontinental Hotel downtown in Los Angeles on Monday, March 25, 2024. Thousands of Southern California hospitality workers ratified a new contract with 34 hotels after repeated strikes since last summer and will keep fighting for deals with more than two dozen others, their union announced Monday. (AP Photo/Damian Dovarganes)

Unite Here Local 11 Co-President Kurt Petersen, at podium, congratulates hotel workers and leaders as he announces the ratification results and unveiled the new contract terms at a news conference on the steps of the Intercontinental Hotel downtown in Los Angeles, Monday, March 25, 2024. (AP Photo/Damian Dovarganes)

Unite Here Local 11 workers celebrate the ratification results and unveiled the new contract terms at a news conference on the steps of the Intercontinental Hotel downtown in Los Angeles, Monday, March 25, 2024. Thousands of Southern California hospitality workers ratified a new contract with 34 hotels after repeated strikes since last summer and will keep fighting for deals with more than two dozen others, their union announced Monday. (AP Photo/Damian Dovarganes)

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LOS ANGELES (AP) — Thousands of Southern California hospitality workers overwhelmingly ratified a new contract with 34 hotels after repeated strikes since the summer, their union announced Monday.

Workers won higher pay, increased employer contributions to pensions, and fair workload guarantees among other provisions of a contract that received 98% approval, Unite Here Local 11 said in a summary of highlights of the pact which runs until Jan. 15, 2028. The union has yet to reach settlements with 30 other hotels.

Room attendants, cooks and other non-tipped workers will receive wage hikes of $10 an hour over the term of the contract, representing a 40% to 50% increase, the union said. Half of the increase will come in the first year.

Room attendants at most hotels will earn $35 an hour by July 2027 and top cooks will earn $41 an hour, the union said. Tipped workers will see such improvements as double-time pay for holidays, vacation, sick days and increased shares of service charges. Automatic 20% gratuities at full-service restaurants will be 100% shared by staff.

The union also stressed that the contract maintains health insurance in which workers pay no more than $20 monthly for full family coverage.

“We have won a life-changing contract that transforms hotel jobs from low-wage service work to middle-class professional positions,” Kurt Petersen, co-president of Local 11, told workers at a rally outside a downtown Los Angeles hotel.

The coalition of hotels involved in talks with the union welcomed the deal.

“The ratification votes are a long time coming. We’re glad that hotel employees who have been waiting months now can enjoy the benefits of new contracts, including increased compensation, and continue the great work they do for our guests and our communities,” said Pete Hillan, a spokesperson for the California Hotel & Lodging Association.

Characterizing their demands as a fight for wages that will allow members to live in the cities where they work, more than 10,000 employees in greater Los Angeles began rolling strikes at 52 hotels in July 2023. Workers repeatedly went on strike, picketed and later returned to work. The union represents 15,000 workers but staff at some hotels have not engaged in strikes.

The union scored a major achievement just before the wave of strikes when a tentative agreement was reached with its biggest employer, the Westin Bonaventure Hotel & Suites in downtown Los Angeles, which has more than 600 union workers. Other hotels gradually came to terms with the strike actions.

Petersen also pointed out that the new contract expires just months before the 2028 Los Angeles Olympics.

“We’re demanding a new deal for the Olympics that includes family-sustaining jobs and affordable housing for workers. And let me say, if they do not give us that new deal, are we ready to do what it takes?” he said to cheers from workers.

Associated Press writer Christopher Weber in Los Angeles contributed to this report.

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Exploring hospitality workers' career choices in the wake of COVID-19: Insights from a phenomenological inquiry

Bingjie liu-lastres.

a Department of Tourism, Event, and Sport Management, School of Health and Human Sciences, Indianapolis, USA

Wei-jue Huang

b School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Kowloon, Hong Kong Special Administrative Region

c Department of Tourism, Event, and Sport Management, School of Health and Human Sciences, Indianapolis, IN 46220, USA

Associated Data

Data will be made available on request.

The COVID-19 pandemic severely hit the hospitality industry and caused employees concerns over health, finance, and well-being. These challenges may trigger their decisions to leave the profession, leading to major talent crises in the industry. Guided by the transactional model of stress and coping and the career construction theory, this study explored how their experiences with the pandemic affected their career choices moving on. A phenomenological approach was adopted, and 31 current and past hospitality employees were interviewed. The findings supported the conceptual model and addressed the connection between stress management and career decisions among the participants. It is also noted that, besides generational differences, most participants' career decisions at this critical moment were influenced by their personality traits, industry involvement, and employer-employee relationships. Thus, to create a sustainable, resilient, and engaged workforce, hospitality practitioners must commit to crafting positive relationships with their employees both in regular and crisis times.

1. Introduction

The COVID-19 pandemic took the world by surprise. With more than 45 million confirmed cases, the United States is one of the regions that has been severely impacted by the COVID-19 pandemic ( Centers for Disease Control and Prevention and C. f. D. C. a., 2022 ). Reports show that the impact of the COVID-19 crisis is nine times worse than 9/11, with 70% of hospitality and tourism employees laid off or furloughed ( Oxford Economics, 2020 ). Even though restrictions have eased and the travel trend has been increasing, nearly 3.1 million hospitality and tourism jobs lost during the pandemic have not yet returned ( O'Connell, 2021 ). Additionally, as a result of the ongoing pandemic, the hospitality and tourism industry has encountered multiple talent crises since 2021, manifested as the Great Resignation and Quiet Quitting trends ( Harter, 2022 , Liu-Lastres et al., 2022 ). While it is believed that the pandemic is not entirely responsible for these labor issues, it is evident that the COVID-19 crisis and the resulting economic shock have driven employees to take action and reconsider their career plans ( Chen and Chen, 2021 , Liu-Lastres et al., 2022 ).

Hospitality employees are the backbone of the business and firsthand witnesses to the detrimental effects of the pandemic on the industry. Therefore, it is remarked that topics related to the hospitality workforce, such as their perceptions, resilience, and post-crisis training and development, should be featured in future academic attempts ( Zopiatis et al., 2021 ). Consistently, recent studies have revealed the close association between the pandemic and various hospitality employee issues, such as stress and burnout ( Popa et al., 2023 , Wong et al., 2021 ), substance abuse ( Bufquin et al., 2021 ), damage to well-being ( Chen and Chen, 2021 ), and higher turnover intentions ( Bufquin et al., 2021 , Chen and Chen, 2021 , Popa et al., 2023 , Wong et al., 2021 ). Aside from inciting depression and negative emotions, the pandemic impacts the hospitality industry's current and future workforces' career optimism, with many of them reevaluating their future career plans and prospects ( Birtch et al., 2021 , Chen and Chen, 2021 , Manoharan et al., 2021 , Park et al., 2021 , Wong et al., 2021 ). The recent employment and resignation trends also show that the pandemic has affected hospitality employees' turnover intention, and many have taken a leap and joined other industries ( Liu-Lastres et al., 2022 ). Given that the pandemic spanned over multiple years, there is a need to examine further hospitality employees' actual job choice behavior, including those who remained in the industry and past employees who left the profession for good.

While the hospitality management literature has documented the adverse effects of the pandemic on the workforce, the crisis management literature argues that crises are unique opportunities to bolster employer-employee relationships ( King et al., 2016 ). Having the experience of working together during difficult times can enhance employee trust and help to build a more resilient organization ( Gillespie et al., 2020 , King et al., 2016 , Seville, 2018 ). This is especially important for the hospitality industry, where committed, resilient workers are essential to service excellence ( Rabiul et al., 2022 ). Likewise, it is imperative for the hospitality industry to build a workforce that is prepared to adapt to post-pandemic situations ( Schwaiger et al., 2021 ). Notably, considering that most of the hospitality workforce's current perspectives are derived from their pandemic experiences, it becomes vital to understand what they have gone through during the pandemic, especially how they coped with the challenges and how those experiences shaped their ultimate decisions to remain in, return to, or leave the hospitality profession in the wake of COVID-19.

Thus, guided by the stress-coping transactional model and career construction theory, this study develops a conceptual model and tests the model through a theory-based qualitative approach. From a theoretical perspective, the findings of this study explicate not only how hospitality employees manage uncertain, unexpected, and adverse situations but also the interpretive process through which they construct their vocational behaviors and career decisions. Practically, the findings of this study can be applied in ways that support hospitality employees in crisis situations and help to sustain and build a resilient hospitality workforce in the long run.

2. Literature review

2.1. understanding the hospitality workforce' covid-19 experiences.

Tourism and hospitality businesses are especially vulnerable to this prolonged crisis involving the COVID-19 pandemic ( Zopiatis et al., 2021 ). With border closures, travel restrictions, and social distancing regulations in place, many hospitality businesses ceased operations. According to the World Travel & Tourism Council's (WTTC) Economic Impact Report (2021) , hospitality and tourism jobs fell by 18.5% globally, with more than 62 million jobs lost in 2020. In the United States, 5.4 million hospitality and tourism jobs were lost.

Job loss, wage cuts, and furlough arrangements influenced the livelihood of the hospitality workforce and their mental well-being. Zopiatis et al. (2021) revealed the pandemic's impact on the workforce to be a vital issue, with concerns such as absenteeism ( Karatepe et al., 2021 ), burnout/stress ( Yu et al., 2021a ), and increasing turnover intentions ( Lee et al., 2021 , Yu et al., 2021b ). Yang et al. (2021) also identified emotions, well-being, and mental health as key themes in early COVID-19 research in tourism, including research on both tourists and employees under the stress of COVID-19. Given the disproportionate impact of the pandemic on hospitality employment, numerous studies have examined the concept of job insecurity and its impact on hospitality worker's emotional exhaustion ( Vo-Thanh et al., 2021 ), fear, anger, and increasing turnover intentions ( Popa et al., 2023 , Yu et al., 2021a ), and mental health, self-esteem, economic self-efficacy, and life satisfaction ( Abbas et al., 2021 ).

Moreover, in response to COVID-related stress and the perceived risk of unemployment, hospitality workers have considered quitting and switching careers, which contributed to the emergence of the Great Resignation ( Liu-Lastres et al., 2022 , Manoharan et al., 2021 , Park et al., 2021 ). On a personal level, uncertainty and disillusionment with hospitality careers led hospitality employees to change career goals and consider other industries. For instance, Manoharan et al. (2021) explored the career optimism of hotel workers during the pandemic. They found that the weak job market and challenging economic outlook inhibited the career optimism of the hospitality workforce. Even for future talents, Birtch et al. (2021) found that negative emotions invoked by COVID-19 diminished hospitality students' occupational identification, which, in turn, reduced their intentions to choose jobs in hospitality.

Although the pandemic's impact on the hospitality workforce may seem similar to previous global crises and depressions, COVID-19 is different as it impacts hospitality and tourism directly. The specific nature of the coronavirus and resulting social distancing practices challenge the essence of hospitality and tourism. According to Rivera (2020), "the pandemic is affecting the DNA of hospitality at its core." Hospitality is about warmth, welcome, and people coming together, but the spread of the coronavirus is forcing people to keep their distance, use protective wear, and stay away from social gatherings ( Xiang et al., 2022 ). The pandemic also brought the phenomenon of "travel shaming," where people's perception of hospitality and tourism behaviors changed -- from prestige and envy to danger and shame ( Huang et al., 2023 ). Hence, the effects of COVID-19 are beyond business downturns and large-scale layoffs, but threaten the core of hospitality services. When considering future prospects, employees became more acutely aware of the vulnerability of the industry ( Reichenberger & Raymond, 2021 ) and developed "backup plans" outside the industry.

To summarize, it appears that this stream of hospitality management literature has shed light on the career shocks brought about by the pandemic as well as developed a new perspective on their work assignment. Noticeably, the majority of studies in this research body adopted a quantitative design and heavily relied on online panels. While such research designs reveal the association between key variables, they generally cannot reflect peoples' behavioral changes over time and the findings' validity sometimes remain questionable ( de Vaus, 2001 ). In the present context, these limitations are especially relevant, given the extended nature and global outreach of the pandemic as well as its long-lasting effects. A phenomenological approach, which is qualitative in nature, can help rectify some of these oversights given its concentration on studying people’s lived experiences as well as their deep involvement with the external world ( Pernecky and Jamal, 2010 ). This is also reflected in the findings of a recent qualitative study ( Manoharan et al., 2021 ), which found that the pandemic's effects on hospitality workers' career optimism could be temporary and employees' perspectives towards the pandemic effects varied by personal capacities and circumstances. Nevertheless, this study ( Manoharan et al., 2021 ) mainly focused on minority workers and did not examine the career changes among the participants.

It is also worth noting that the shocks and changes caused by the pandemic go beyond individual concerns, revibrating across organizations and the entire industry ( Liu-Lastres et al., 2022 ). In light of these shared experiences, both hospitality employers and employees have changed the way they approach and think about work in the future ( Hite and McDonald, 2020 ). Thus, instead of reporting issues, it is more valuable to understand the actual experiences hospitality employees encountered during the pandemic, learn from these experiences, and apply these insights to future practices. As the hospitality industry moves forward in the post-covid era, this knowledge will be essential to developing a sustainable workforce and being prepared for future complications.

2.2. Theoretical background

2.2.1. the transactional model of stress and coping.

Mental health and well-being are essential issues among the hospitality workforce during the pandemic ( Karatepe et al., 2021 ). The COVID-19 pandemic has significantly altered how we live our daily lives and has created new causes of job-related job stress for many hospitality workers ( Chen et al., 2022 ). As such, stress management is a primary component of the COVID-19 experience for many hospitality employees. Coping with stress, however, is never simple. It is a process involving both cognitive and affective attempts to develop strategies to manage the stressors and overcome the barriers ( Chirico et al., 2020 ). The transactional model of stress and coping developed by Lazarus and Folkman (1984) is a classic model that explains how individuals manage stress ( Berjot and Gillet, 2011 ). The model was first proposed as a comprehensive theory and had been through several essential revisions. The latest version defined stress as "a particular relationship between the person and the environment that is appraised by the person as taxing or exciding his or her resources and endangering his or her well-being" ( Lazarus and Folkman, 1984 , p.63). There are two key components in the processes – cognitive appraisal and coping. Cognitive appraisal refers to the "process of categorizing an encounter, and its various facets, with respect to its significance for well-being" ( Lazarus and Folkman, 1984 , p. 31), and it goes through the phases of primary and secondary appraisals. The primary appraisal is an assessment of the situation by asking the question "Is the encounter a threat, challenge, or benign?"; While the secondary appraisal involves evaluating one's resources and answers to the question "What can I do about this encounter?" ( Folkman, 1984 ).

Coping can be understood as the "cognitive and behavioral efforts to master, reduce, or tolerate the internal and/or external demands that are created by the stressful transaction" ( Folkman, 1984 , p. 843). Coping aims at achieving two goals – regulating emotions (emotion-focused coping) and solving problems (problem-focused coping). Although Lazarus and Folkman outlined the broad category of problem-focused and emotion-focused coping, there is still a lack of conceptual clarity, which makes the boundary between these two concepts blended ( Skinner et al., 2003 ). Additionally, Lazarus and Fokman (1984) suggested that the appraisal and coping process is related to various antecedents, including personal factors such as commitments, beliefs, and personal traits and situational factors, such as the novelty and predictability of the circumstances, the sense of uncertainty and/or ambiguity, and temporal factors.

2.2.2. Career construction theory

For many hospitality employees, COVID-19 not only threatens their personal health and safety but also decimates jobs and places their livelihoods at risk. The fears of the pandemic, the lack of organizational support and resources, and social isolation have all added another layer of uncertainty, making this probably one of the most challenging times for them. It also becomes apparent that most hospitality workers' COVID experiences have raised professional challenges, especially in how they can navigate their work-life amidst uncertainties and how they can manage these career changes ( Chen, 2020 ). Career construction theory offers a proper meta-theoretical perspective to respond to the question as it explicates how individuals develop their professions by aligning their self and social identity with their work ( Rudolph et al., 2019 ). Savickas (2005) outlines the three critical components of one's career construction process: (1) individual differences, which reflect differential views of careers and manifested through one's vocational personality; (2) developmental tasks and coping strategies, which shows the developmental nature of one's career and is represented through the concept of career adaptability; and (3) psychodynamic motivation, which reveals the dynamic perspectives of one's career and is typically illustrated by life themes.

The primary application of the career construction theory sets the guidelines for career development and lays the foundation for career consulting, providing suggestions for vocational choices and improving the quality of work lives ( Rudolph et al., 2019 ). Despite the comprehensive scope of the theory, Rudolph et al. (2017) found that most empirical studies have focused on career adaptability while other components of the theory have not received much attention. When it comes to tourism management research, similarly, studies found that career adaptability is positively related to tourism and hospitality employees' extra-role performances ( Safavi and Karatepe, 2018 ). The concept of career adaptability is instrumental in the COVID-19 context. For instance, Rivera et al. (2021) found that career adaptability is an antecedent of hospitality students' psychological capital, which further affects their individual resilience and life satisfaction during COVID-19. Interestingly, Lee et al. (2021) found that career adaptability operates as a double-edged sword, where the relationship between career adaptability and turnover intentions is moderated by social support. Unfortunately, these attempts have overseen the potential impacts of other components of career construction theory on one's career decisions in uncertain times.

2.2.3. Conceptual model

According to scholars ( Baum et al., 2020 , Liu-Lastres et al., 2022 ), the COVID-19 pandemic is one of the catalysts for recent rising labor issues, and our previous literature review (see Section 2.1 ) indicated the absence of a critical understanding of hospitality workers' lived experiences of COVID-19. While COVID-19 is a global pandemic, individuals experience the situation differently based on where they are and how their daily life, work, family, health practices, etc. have changed. Given COVID-19's impact on travel and social gatherings, the lived experience of hospitality professionals during the pandemic and their interpretations of its impacts are mediated through individual historicality, including their pre- and during COVID work conditions. Accordingly, this study aims to explore tourism and hospitality employees' lived experiences with COVID-19 and reveal the experiences' situated meanings in relation to their personal history and characteristics.Phenomenology, a qualitative research approach, is adopted in this study to support such an inquiry.

Built upon the transactional model of stress and coping and the career construction theory, this study develops a conceptual model, which is presented in Fig. 1 . This study focuses on the context of COVID-19, which acts as the starting point for the entire inquiry and the main stressor. The two theories complement each other. The transactional model depicts the overall stress management process, including how tourism workers appraise the situation, develop coping strategies, and reach further decisions through re-appraisal. Career construction theory offers additional insights into the two steps that are work-related. More specifically, the concept of adaptability aids us in understanding how tourism workers develop strategies to cope with the work-related challenges brought on by the pandemic. The concepts of vocational personality and life themes offer additional insights into the re-appraisal process, which investigates tourism employees' reflections on the COVID-19 experiences and the potential impacts of these experiences on their future career considerations.

Conceptual Model.

Consistent with the conceptual model, this study tries to answer the following interrelated research questions:

How did tourism and hospitality workers manage the COVID-19 situation?

What factors affected hospitality workers' decisions to stay in, leave, or return to hospitality after experiencing the impact of COVID-19?

3. Materials and methods

3.1. research design.

Ontologically, this study is phenomenological research, which "describes the meanings of several individuals of their lived experiences of a concept or a phenomenon" ( Creswell, 2012 , p. 58). Phenomenology is an increasingly popular method in tourism research, given its ability to provide a systematic means to interpret the nature of individuals' experiences and their involvement in the world ( Szarycz, 2009 ). The phenomenological approach addresses the importance of subjective experiences, sees the participants as "experts," allows their voices to be heard, and gives credibility to their accounts within studies ( Szarycz, 2009 ). Particularly, this study features the approach of transcendental phenomenology, which stays aligned with the positivistic paradigm and attempts to break down one’s experiences into essential structures ( Pernecky and Jamal, 2010 ). This approach matches the purpose of this study, as the identified essential structures not only reveal the process of how hospitality employees adapt to the evolving circumstances but also contribute to the development of the conceptual model.

3.2. Data collection

Thirty-one semi-structured interviews were conducted in the summer of 2021. The target population of this study was hospitality employees who had firsthand experiences with the COVID-19 pandemic at work. The research subjects were recruited through purposive and snowball sampling. The criteria for participant selection are: 1) above age 18, 2) with at least one year of full-time work experience in hospitality, and 3) working in the industry in the United States at the beginning of the COVID-19 pandemic. The researcher team first started recruiting eligible participants through professional networks and asked the enrolled participants to refer additional research subjects.

The interview protocol included the following sections: 1) self-introduction (Can you tell me about yourself?), 2) industry involvement and career views (e.g., Can you tell me about your work experiences in tourism and hospitality? What aspects do you value in your work life?), 3) COVID-19 experiences (e.g., How has COVID impacted you?), 4) coping strategies (e.g., How do you manage the situation?), 5) outcomes and career considerations (Moving on, what's your next step? Has there been any changes in your perception/attitude towards your profession and the industry?) The research team audio-taped the interviews, hired a professional company to transcribe the interviews verbatim, and verified the content. The length of the interviews ranges from 15 min to 56 min, with an average length of 27.7 min.

3.3. Data analysis

Thematic analysis, "a foundational method of qualitative analysis" ( Braun and Clarke, 2006 , p. 78), was used to analyze the interview data. Following Smith and Osborn's (2015) suggestions, the analysis consists of the following steps. First, the researcher(s) started with the major concepts extracted from the theory and one transcript, where the texts were read several times and interesting or significant responses were marked. These initial codes were then transformed into themes, which are high-level expressions that reflect the meanings and essences of their words. Second, the identified themes were listed in bullet points and further categorized into different components according to the conceptual framework. Third, this coding process continued with other cases. Fourth, the data collection process stopped when there were no new themes emerged from the interviews. Fifth, the researchers moved from identifying themes to a write-up, concluding statements expressing the meanings inherent in the precipitants' accounts of their experiences and feelings. Lastly, multiple measures, including method, investigator, and theory triangulations, were used to ensure the validity of the results ( Carter et al., 2014 ).

4. Results and discussion

4.1. sample profile.

Table 1 reports the participant information. The average age of the participants is 31. 0 years old; the majority are female (n = 23, 74.1%), nearly half of them (n = 17, 42%) are white, and most of them (n = 20, 64.5%) are single without children. The length of their experiences in the tourism and hospitality industry ranges from 1 to 30 years, with an average of 9.42 years. More than one-third (n = 11. 35.4%) of them worked in the accommodation sector, followed by the food services sector (n = 8, 25.8%), tourism and travel sector (n = 5, 16.1%), and others (n = 4, 12.9%), such as transportation. In terms of employment status, nearly three-out-of-tenths (n = 9, 29.0%) of the participants remained employed in the same organization during the pandemic.

Sample Profile.

Others were either furloughed or laid off during the lockdown. These participants could be further divided into three groups. The first group (n = 12) immediately returned to their original employer or found a new job in another hospitality organization. Among them, two participants were owners who resumed their businesses when the restrictions were lifted. The second group (n = 2) was temporarily out of the profession but still actively seeking opportunities in hospitality. The third group (n = 8) completely changed their career direction and decided to switch professions. The diversity of the sample is manifested through their working sectors, industry experiences, and employment status changes. The selection of the sample is coherent with this study's phenomenological inquiry, which aims at "uncovering the multiple layers of the hiddenness of a pheromone within its context" ( Frechette et al., 2020 , p.6).

4.2. Appraisal of COVID-induced stress

4.2.1. comprehending the covid-19 situation.

The first confirmed COVID case in the United States was reported in January 2020, and the nationwide lockdown executive order was issued in March 2020. However, some participants, especially those who worked at the frontline, started to notice industry-wide changes in between. They not only saw " guests leaving" (ID #12) but also were " cutting hours" (ID #3) and asked to take over multiple responsibilities beyond their own job description. The declining performance of the hospitality business during this time, naturally, resulted in participants' negative evaluation of the situation. One participant (ID#9), for example, described the situation as " really bad." Meanwhile, the shocking and uncertain nature of the pandemic has limited the participants' ability to fully comprehend the situation. For instance, the pandemic was depicted as " unexpected" (ID #14) and " rare" (ID #9). One participant (ID#3) further expressed the uncertainty embedded in the situation, commenting that " nobody knew what's going on and how to handle stuff. ".

4.2.2. Work-related stress

The negative impacts on hospitality have caused work-related and personal stress. The employment status serves as a critical point under such circumstances. Nearly two-thirds of the participants were either laid off or furloughed during the shutdown, which posed immediate challenges to their financial well-being. These participants have addressed the importance of income since they needed to pay bills and rents/mortgages and buy food. For those who remained employed, their job responsibilities have considerably changed. They needed not only to accept new job responsibilities but also to adjust themselves to the new working formats involving remote working, social distancing, and a surge in telecommunication (i.e., zoom meetings). Furthermore, this small group of "survivors" almost immediately noticed the nuances in their changing working environments, which are very different from the pre-pandemic times and causing extra stress. One participant (ID#10) mentioned that not only has the workload been doubled, but the company's view and expectations were changed as well. He/She described the new attitude held by the company, suggesting that since " You (the employees) can't go anywhere, so you might as well just work all the time." .

The job transitions and constant changes resulted in different emotional responses. For participants who were let go during the shutdown, they seemed to find this outcome " not surprised (ID#1)". While for others who remained employed, their emotions ranged from a slight sense of gratitude, anxiety, worry to the increasing feeling of job insecurity. On the one hand, they were " grateful to have a job (ID#4)." However, on the other hand, they could not stop wondering " if this is going to be my (their) last week and if I (they) am no longer needed anymore (ID#3)." The anxiety had been intensified throughout the time, resulting in attitudes such as being " extremely careful (ID#21)," " keeping the head down (ID#25)," and " hav(ing) to really work and earn it (ID#17)." The pandemic had also impacted the participants who returned after the lockdown. Negative emotions were more frequently reported among these participants. For example, one participant (ID#19) shared his/her experiences:

"Before COVID, I was pretty happy. I always smiled and sang. There were definitely some challenging times – we ran about 95% occupancy, so it was very busy. But overall, I had a lot of positive experiences. Then after March 2020, things came out much difficult and it was a job that I did not enjoy in the same way. Even my manager asked me: why don't you smile anymore?" .

4.2.3. Personal stress

Besides work-life challenges, the ongoing pandemic took a toll on the participants by raising their health and safety concerns. They not only worry about their own health and safety, but also their families', friends', and all loved ones'. The infection risk is highlighted, considering that the service nature of hospitality products requires most participants to interact with guests and co-workers directly. One interviewee (ID#8) explicated his/her situation, saying that,

"I was living with my parents at that time -- my dad was having health issues and my mom worked at the hospital. Being around my parents and my family was definitely worrisome for me … I noticed everybody who were not wearing their masks … and you never know if the people coming in got their shots. So it definitely added a stress " .

4.2.4. Employer-employee communication and relationship

Although this section mainly concerned the impacts caused by the pandemic, surprisingly, the findings showed that employer-employee communication played a critical role in assisting the participants in assessing the situation and regulating their emotional response. More importantly, transparent communication is the key to maintaining a positive employer-employee relationship during the pandemic and creating a shared understanding between both parties. For example, one participant (ID#17), who worked at a DMO, commented that " they (the employer) were very transparent, it's not like this was a done over. We were called individually and then the process in which they had chosen the employees that were kept ." Similarly, another employee (ID#10) who worked in a catering company shared his/her experience, saying that " they (the employer) were very kind in their explanation and there was no bad blood, and they gave me a good amounts of time for notice .".

However, not every participant ended their relationship with the company on a good term. It is noted that participants who did not receive clear, straightforward, and upfront communication about the employers' decisions and responses at this critical moment tended to express negative feelings and even " associate something extremely negative with the industry (ID#11 ). " They often described the employer as " cold and heartless (ID#12 ) ." Effective communication is equally essential for current employees. For instance, although not fired, one participant (ID#20) felt the pressure given their employers' lack of communication and explanation. The unsettling feeling got more aggravated when he/she constantly received calls from his/her team members, crying and panicking. As a result, this participant criticized, " I give them an F (in terms of responding to COVID-19) ." Similarly, another participant (ID#12) described their organization's response as " the opposite to transparent," where most employees were fired on the spot without much explanation. The participant further elaborated his/her disappointment:

"It was very cold, to be quite honest, after working there for eight years and being the most educated person on the team, being the youngest member on the team and handling the most accounts on the team, I felt it was incredibly cold-- how it was handled." .

4.3. Coping strategies

To respond to the challenges brought by the pandemic, the participants have developed multiple strategies, including 1) solving the financial problem, 2) building professional relationships, 3) participating in leisure activities, and 4) seeking family and social support.

4.3.1. Problem-focused strategies

First, for participants who faced financial challenges during the pandemic, some of them were able to " have enough savings to go through the situation (ID#1)," while others needed to adjust their lifestyle and " be wise with the money (ID#30)" (i.e., less online shopping, less take-out). A small number of participants compromised for lower-paying, temporary, and part-time jobs to cover their living expenses. It is also very common for the participants to rely on their unemployment benefits. However, moral dilemmas existed as around half of the participants expressed discomfort about exploiting the benefit. One interviewee (ID#9), for instance, agreed to return to the hotel once it was reopened, even though he/she got more payment from the unemployment benefit. He/she described the reasoning:

" As a young person, I wanted to be active. I feel like if I keep doing the unemployment, I mean, I don't know. There are other people doing that for real, and they don't have any employment. So, when they (the hotel) offered back my position, I took it. It was good to have three, four months of paid vacation, but I don't think that was fair with the system. I know some people are just abusing the system, but I don't want to be one of them." .

Furthermore, the results suggested that relationship-building and networking appeared to be popular strategies for participants seeking professional opportunities. They constantly attended workshops and networking events, and have been tracking job postings and applying for positions.

4.3.2. Emotion-focused strategies

In addition to extending professional relationships, the participants received support from their personal networks, such as friends and family members. Daily and weekly conversations, virtual hangouts, and even video games have become an essential part of their pandemic life. One participant (ID#19) shared, " it has been helpful with the stress having a close network of friends, who is very important and supports you. We talk things through ." It seemed that social support not only comforted them but also eased their anxieties. One interviewee (ID#1), for example, commented that,

"So I guess it's just a matter of having a positive attitude, knowing that it will work out the way that it should. And you know, I know I have a lot of friends and family that are supportive and so forth. So, you know, in the back of my head, I said, even if I ran out of money, I'm like, no one's going to let me be homeless." .

The participants also engaged in various recreation and leisure activities to help themselves feel better during such a challenging time. These activities include nature walks, exercises, reading, cooking, knitting, and house projects. One participant (ID#19) even revealed that binge eating is a way for him/her to release stress. The participants believed that constant exercise and engagement in these leisure activities made them " feel better (ID#30) , " " relax (ID#21)," and " let off some steam (ID#13)." Furthermore, some participants chose to use the shutdown as a time to reflect and reset.

4.4. Re-appraisals

As the infection rate starts to lower down in some hard-hit areas, early signs of recovery are appearing. In the same vein, hospitality businesses begin to reopen and rehire slowly. When presented with new opportunities, the re-appraisal process took place where the participants reflected on their COVID-19 experiences and reached different decisions for their personal and professional lives.

4.4.1. Reflect and reset

Regarding personal lives, some participants chose to focus on the positive aspects of their COVID-19 experiences. They treated it as " a nice little break (ID#1)," where they " don't need to always think about work (ID#7)," could "try doing something else (ID#14 ) ," " enjoy my (their) time with family and dogs (ID#2)," " have a personal moment (ID#7)," and " reflecting and thinking about myself (themselves) and goals (ID#30)." The self-learning aspect was also featured, where many participants agreed that the participants actually " made a lot of people more resilient (ID#17)." Furthermore, going through hardship enhances the participants' stress management skills and brings out more mutual understanding and empathy. As one participant (ID#5) mentioned, " I’m always trying to be nice to people because you never know what someone else is going through. And the pandemic has actually brought that out, given the wide range of circumstances that it's created .".

4.4.2. Career decisions

The re-appraisal process also resulted in different career decisions. The "survivors" who remain employed appeared to be well adapted to the circumstances, along with an optimistic attitude about the future of the industry. Some participants belonging to this "survivor" group formed an even stronger connection with the team and the employer, which increased their commitment to the company and the profession. For example, one participant (ID#14) reflected on his/her COVID experiences, saying that, " I am super appreciative. … it (the COVID experience) definitely gave me a better sense of the corporate culture, the relationship that I have, and the company that I work for .".

For those who experienced layoffs and furloughs (n = 20), 4 participants chose to return to the same organization, 6 found a different job in hospitality and tourism, two were looking for jobs in hospitality, and 8 participants had moved on to other industries (see Table 1 ). Encouragingly, most participants expressed a strong desire to stay in hospitality, and the quality of previous working experience played a critical role in the decision-making process. Positive working experiences, including a healthy working environment and a strong bond with the team, as well as a sense of empathy towards the employer were the major drivers. An interesting difference is noted between the participants who were laid off versus furloughed. Furloughed employees either returned to the same organization, or decided to leave the industry for good. For layoffs, however, although most of them didn't return to the same organization, the majority still chose to stay in hospitality and tourism. Possibly, if the layoffs were due to business shutdown, employees were more understanding of the situation, rather than feeling mistreated by the company. Even though some were unable to return to the previous employer due to business closedown, they were glad to stay in the field and search for other opportunities.

Additionally, the participants who would like to stay in hospitality tend to share a hospitality trait: curiosity about a new culture, new environments, and new places, enjoyment of meeting and connecting with people, and a passion for creating unforgettable experiences and meaningful impacts. They, in particular, value the opportunity of working in hospitality because they feel rewarded, satisfied, empowered, and highly appreciated. One participant (ID#9), for instance, summarized that working in hospitality is more than being a good employee. It is part of their personality and is " helping you as a person ." Another participant (ID#19), who started working in the industry at 16, said that " a lot of people are leaving hospitality. … it's very strange to me, because I'm old school, people like me die in hospitality ." In addition to the emotional attachment, others' decisions to continue their career in hospitality are based on assessing their professional resources, such as industry involvement, education, and all the professional relations they have built over the years.

Some participants were hesitant to continue their careers in the hospitality profession. While the participants who chose to stay in hospitality consisted of different ages, those who left and found jobs in other industries tended to be younger, single, or have no children. Considering that the younger generation tends to take risks and try new things, this is not surprising. A small number of them said they would be waiting for the " right opportunity (ID#12) " and would like to " keep the options open (ID#1)." And a couple of them chose to pursue advanced degrees in business administration, believing that this would facilitate their transition to other fields. On the opposite side, some participants who were married and had children decided to leave hospitality due to a growing sense of job insecurity and the desire to maintain a stable family life. For example, one participant (ID#16), who has already found a job outside hospitality, shared his/her insights:

"Yes, we got through the big wave of COVID, but there may be another wave that comes back in 2022, you know, that's the only thing that I worry. … I value stability. I value having a consistent paycheck. I value growth within this company. I just value different things right now because hospitality is not secure. If we have another pandemic and it shuts our city down again, I will still have a job. But if I worked for the hospitality, I've heard restaurants closing down, like all businesses, small hotels closing down. I don't want to be a victim of the pandemic, a second round of it. I want to play it smart right now, financially smart for myself and my family." .

5. Discussion, implications, and conclusions

This study's primary purpose was to understand how hospitality employees lived COVID-19 experiences fully. Through in-depth interviews with 31 participants from various professional backgrounds and pandemic experiences, this study developed and tested a conceptual model to obtain insights into the phenomenon involving hospitality workers and COVID-19. A summary of the major findings is presented in Fig. 2 . The findings not only break down the participants' experience into three critical components (e.g., appraisal, coping, re-apprisal) but also confirm the close connection between stress management and career decisions in turbulent times. The findings of this study have both theoretical and practical implications.

Summary of Major Findings.

5.1. Theoretical implications

Previous studies ( Bajrami et al., 2021 , Chen and Chen, 2021 , Popa et al., 2023 , Zopiatis et al., 2021 ) repeatedly addressed the stressful situation caused by the pandemic and reported employees' declined performances. The findings of this study observed similar results and further revealed that such pandemic-caused stress is manifested through vocational, financial, and mental perspectives. Instead of offering a general description of the negative emotions, this study provided additional insight into the appraisal process, which is driven by individual, organizational, and environmental factors. The pandemic's unprecedented nature raised uncertainties, resulting in participants' anxiety and insecurity. This feeling is common among both survivors and unemployed participants. However, this study finds that effective employer-employee communication can alter the situation. As indicated by the findings, direct, transparent, and consistent internal communication efforts help create and maintain a positive employer-employee relationship and generate mutual understanding between parties. The results also show that such a transparent working environment assured the participants and increased existing employees' confidence in and commitment to their company. Similarly, even participants who were furloughed or laid off expressed a strong desire to return to the same employer if available. This finding is particularly important, as it is commonly believed that the ruthless treatment of hospitality employees during the pandemic damaged their trust and faith in their employer and caused serious repercussions contributing to the current Great Resignation trend ( Horn, 2021 ).

When it comes to the specific type of stress, this study noted similar results suggested by previous studies (e.g., Popa et al., 2023 ; Yu et al., 2021a ). The stress is closely tied to the pandemic’s adverse results, such as being laid-off, changing job responsibilities, financial concerns, increased risk perception, mental stress, and health concerns. These consistent findings support that the pandemic is unique, especially considering its extended nature and wide-ranging impact ( Chen and Chen, 2021 ). However, this study notes a changing trend, where besides health concerns and increased risk of infections, other stresses are becoming more and more common at the workplace and often affect individuals' career decisions ( Lustig et al., 2012 ). This observation underscores the transient nature of the participants’ experiences and highlights the essence of an in-depth exploration of this phenomenon, which aligns well with the scope of this study.

Additionally, previous studies tended to focus on the pandemic's negative consequences on hospitality employees' mental health and well-being ( Chen, 2020 , Popa et al., 2023 , Yu et al., 2021a ), while this study explored how the participants developed various coping strategies based on the assessment of the situation and available resources. These strategies are both problem- and emotion-focused. This process exemplifies the secondary appraisal process and aligns well with key assumptions of the transaction model of stress and coping ( Lazarus and Folkman, 1984 ). A closer examination revealed that the problem-focused strategies tend to be work-related, while the emotion-focused strategies appear to be more self-centered. Coping is central to developing self-efficacy and resilience, which are crucial to employees' abilities to deal with uncertainty and urgent situations ( Seville, 2018 ). Particularly, this study highlights the participants' utilization of personal, social, and professional networks as well as engagement in leisure activities during the coping process.

Furthermore, this study notes the connection between the participants' problem-focused strategies and career adaptivity, which is a key element in the career construction theory and indicates one's ability to adapt to transitions and traumas in their career ( Rudolph et al., 2019 ). The application of the career construction theory in hospitality management has predominantly examined the concept of career adaptivity among current employees (e.g., Lee et al., 2021 ). In comparison, the findings of our study show that career adaptability is embedded in both employed and unemployed workers and often reflected through their strategies. More specifically, those who remained employed had to quickly adapt to the new working environments and job responsibility changes. For others, career adaptability is manifested through developing short-term solutions (i.e., temporary jobs) while actively seeking more professional growth and opportunities through personal networks and resources.

In addition, this study is one of the earliest attempts to incorporate the entire career construction theory in the hospitality management context and highlight the connection between coping strategies and future career decisions. This study finds that the re-appraisals, which determine employee outcomes, can be reflected through personal learning and future career consideration processes. In terms of personal learning, this study notes that most participants have focused on the positive perspectives of their experiences, displaying a more resilient and positive attitude. This is very different from most hospitality management studies but responds well with Luu's (2022) notion of a positive mindset, which is essential in creating individual resilience and compromises tourism workers' positive changes and adaption during pandemic times. Understanding hospitality employees’ needs, thoughts, and adaptivity at this point is critical, especially considering the long-lasting pandemic impacts on hospitality employees’ stress, emotions, attitude, and turnover intentions ( Popa et al., 2023 , Yu et al., 2021a ).

Lastly, another key contribution of this study is to shed light on the participants' decisions to stay in, leave, or return to the hospitality industry. These decisions are influenced by their family status, a desire for stability, and their passion for the profession, which can be further broken down into the dimensions of vocational personality and life themes according to the career construction theory ( Savickas, 2005 ). Family status and the desire for stability are highly intertwined in that those participants who are married and/or have children prefer to work in a stable industry, constituting secure jobs. The pandemic has raised their awareness of the fragility and instability of the hospitality industry, resulting in hesitation to advance their career in this field. Such phenomena have been widely observed across industries ( Shoss, 2017 ).

The career construction theory also suggests that vocational personality, involving one's career needs, values, and interests, often affects one's decision to enter a career ( Rudolph et al., 2019 ). This is reflected in the current findings, where participants' vocational personality is developed based on hospitality traits and their enjoyment of previous working experiences in hospitality, both of which drive a stronger desire to stay in the profession. The concentration on hospitality traits is consistent with pre-pandemic studies, which showed that individual characteristics, such as agreeability, stability, activity, and conscientiousness, all contribute to the hospitality trait of customer orientation and lead to better service quality (Liu & Chen, 2006). Extending this line of discussion, a couple of studies ( Dawson et al., 2011 , Lee‐Ross, 2000 ) have highlighted the essence of the organization-person fit, where employees' traits and organizational culture complement each other and ultimately, lead to a happy workforce, satisfied customers, and increasing service excellence. In the same vein, this study finds that the organization-person fit is more firmly established after going through difficulties together and frequently occurs in conjunction with the participants' understanding and desire to stay/return.

Life themes, which concern the alignment between one's self-identity and vocational behavior, are another critical element in the career construct theory ( Rudolph et al., 2017 ). In the current study, it seems that some participants' vocational personality has been gradually transferred into their life themes, and the transformation is more intensified with their industry involvement, education, and professional resources. In other words, the heavy investment into this profession has made it part of their personal life and identity, and therefore, they would not quickly leave. Successfully making it through the pandemic has become an unforgettable part of their career, making them feel stronger, more confident, and even more resilient.

5.2. Practical implications

The findings of this study can be further translated into various practical implications. First, hospitality employers must realize that their employees, including current staff and future talents, are experiencing extra mental stress caused by the pandemic. Besides their perceived infection risk, the employees have other concerns comparable to those of other major career crises. The findings indicate that employers' support and intervention are essential in this context. Additionally. since hospitality employees tend to rely on social support and recreation activities, employers can consider promoting various employee-assistance programs that cover aspects such as mental health consultancy and leisure/recreation activities. Related professional associations should also consider setting up support groups and networking events to offer these resources to hospitality professionals in need. The support groups can be held regularly through various free video conferencing platforms, such as Google Hangout, Zoom, Webex, and Skype. Furthermore, local chapters of the organization can arrange networking events, which can be in the form of social hangouts, workshops, or even guided tours.

Second, the findings suggest that the participants approached the situation through personal and social cues, and that a perfect person-organization match can increase their loyalty and commitment to the employer, regardless of the situation. Therefore, hospitality practitioners should attempt to strengthen employer-employee relationships and bonds at regular times and cherish the achievement in crisis times. Consistent and transparent internal communication is the first step, where employees can receive accurate updates and share feelings of togetherness along the way. As revealed in the study findings, such a communicative and open working environment is essential in comforting the workers and enhancing their confidence in the company. Extending this line of effort, hospitality businesses should also consider devoting resources to building organizational culture and connecting with their employers. These goals can often be achieved through effective training, social events, and employees' engagements in various corporate social activities.

Third, despite the challenges presented by the pandemic, most participants in this study generally share a passion for the profession of hospitality, which drives their devotion to this profession. This is particularly prominent among participants who had invested heavily in the profession (e.g., education and professional resources). Hence, this segment should be prioritized in the hiring process and outlined through effective trait-based evaluations. Meanwhile, hospitality employers should support and encourage more professional investment from their employees. The American Hotel and Lodging Association recently created an apprenticeship program to outline career growth paths for entry-level employees and connect employers and employees through co-development.

5.3. Limitations and future studies

This study is not without its limitations. First, this study is confined to the U.S. market, while the COVID-19 pandemic is a major global crisis. Therefore, future studies should explore other regions and conduct cross-cultural comparisons. Second, this study is qualitative. The study's findings only reflect the participants' viewpoint, which may not be generalizable to a bigger population. Future studies should consider developing and testing hypotheses with a quantitative study with a bigger population. Third, the data of this study were collected during the summer of 2021. New developments such as COVID-19 strains and medical inventions may change the situation. Thus, a longitudinal study can be conducted to understand the long-term impact of the pandemic on the tourism and hospitality workforce. Fourth, this study is confined to a qualitative approach. Although several triangulation methods were employed, the findings of this study can be further confirmed through a quantitative research design, such as surveys.

Declaration of Competing Interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Acknowledgements

This paper is supported by the Tourism and Travel Research Association Boeing Travel Research Grant.

Data availability

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