Founded in 2019, Wujiang Hotels targeted the mid-tier and premium hotel market. They had everything going for them, from a crucial $30 Million investment from Trip.com, China’s largest online travel agency, to branches in 8 cities, which they set up alongside 5 other hotel brands. Providing affordable rooms that ranged from RMB 200 to RMB 1000 ($28.28 to $141) per night, they were aiming to capture the mid-level hotel market and above in their target cities.
However, Covid-19 has thrown a wrench into their plans. The pandemic has hit the travel and tourism industry like never before, and the Hotel chain has suffered for it.
Wujiang Hotels – The Downhill Journey
Just a year after they began their business, Wujiang Hotels announced that they were suspending their operations on March 27, 2020. A month later, on April 30th, all the contracts with their employees had been terminated. The pandemic had made it impossible for them to generate any revenue since the business was all but shut down.
This, of course, was not their fault. The pandemic was similarly affecting global tourism, and even established companies were finding it difficult to stay in business. Covid had turned many traditional industries on their head, and tourism was especially affected.
Covid-19 and Tourism
One of the most brutal impacts of the pandemic was the subsequent lockdown and travel restrictions. When the pandemic started spreading across the world, countries were forced to shut down all international transport for extended periods, and even forced to issue local curfews.
The impact of these measures was obvious. No one could travel anywhere. Global tourism was halted indefinitely. Whatever small revenue that many establishments got, it was from local visitors. But even that was erratic for the most part.
China especially, being the origin point of the pandemic, was the first to take these measures. This meant that Chinese tourism and the revenue gain from it became almost nonexistent. There was no way for a startup to sustain itself without bleeding all cash reserves.
The lesson to be learned
A lot of the traditional industries are ill-equipped to deal with a sudden and large-scale disruption. In a world where a pandemic obstructs personal freedom of movement on a global scale, sectors like tourism cannot survive on their own. In the Hotel Industry, the revenue is solely based on the bookings of guests. When this stops, all income through that avenue ceases to exist. Covid-19 poses an unprecedented challenge to the tourism sector.
Every company that has managed to survive this has done so by adapting to the new normal. Whether it be through increasing their virtual presence or diversifying to other sectors, they found a way to overcome the crisis. As difficult as it may be, it seems to be the only way until things go back to normal.