COVID-19 Has Forced Businesses to Find Alternative Revenue Sources
Published June 19 2021
When the Israeli historian, best-selling author Yuval Noah Harari was asked to choose the most significant invention in the history of humanity, he picked vaccines over the Internet and AI. This undoubtedly attests to the catastrophic consequences pandemics can have on our society if appropriate measures are not employed at the right moment. Furthermore, businesses, being an integral component of our modern society and culture, have unquestionably taken a knock due to the challenges posed by the pandemic - necessitating alternative streams of revenue. Therefore, COVID-19's upended lifestyle has been a stimulus for many industries to diversify their revenue sources - from hotels to jewelry stores, technology companies, and airports, various economic agents have developed an additional source of monetary gain.
With business travel taking a hit and many Americans opting to stay at home rather than go on vacation, the U.S. hotel industry recorded its worst-ever year in 2020. With an occupancy figure of only 44%, the lowest in history, the hotel industry went beyond 1 billion unsold room nights for the very first time in the industry's records. What's more, according to American Hotel & Lodging Association, it will take until 2024 before the travel industry can record similar figures to 2019's results.
That said, to remain financially sustainable, hotels are to consider diversifying their streams of income, at least in the short term, as it would alleviate their financial struggles amid the pandemic. A significant number of hotels, for example, now offer rooms on an hourly basis instead of the traditional night stay: an initiative previously unimaginable due to the risks associated with reputation.
Nevertheless, throughout the lockdown, this option gained much interest among individuals who work from home and find the environment lacking in their educational or work interests. In addition, the neighborhood factor was at play - opera singers, for instance, would typically prefer not to get on the nerves of their neighbors with their daily practice and embraced the new offering of hotels.
However, the idea of having hourly rentals perhaps does not appeal to hoteliers as they do not view them as a sustainable solution and attribute the practice of hourly rentals more to their interests in community service rather than a sustainable income stream.
Moriarty's Gem Art, a family-owned jewelry store in Indiana, was among the companies which had to shut down due to the government policy of closing all nonessential businesses. Before the pandemic, the company was selling a range of jewelry items such as gemstones, custom rings, and necklaces.
"When we closed our doors, we had to come up with different strategies to keep business going and engage with our customers," - states Jeff Moriarty, the marketing manager at Moriarty's Gem Art. "We did know we would open up again sometime, but we didn't want just to wait, which is why we did everything we could to continue to bring in sales."
Millions of small-scale businesses in the U.S. went through a similar challenge as due to the COVID-19, many shops were shut down, and consumers remained in lockdown to slow down the spread of the virus. To not fall behind, adapting well to the challenges was necessary - thus, many business owners incorporated creative solutions in their operating models.
For example, at Moriarty's Gem Art, the owners launched a live-streamed gem show in an innovative attempt to develop an alternative source of income. As they state, starting the show was in their plans for a few years, but they did not have much time to record it while running the store - COVID-19 changed that. According to Jeff Moriarty, live streaming enabled the company to connect with customers and increase sales.
Even companies that boast sophisticated business models – such as Uber – were compelled to review the list of services they offer. A substantial decrease in demand for taxi services, for example, caused Uber to expand the services it provides, and it today delivers items such as medication.
Often, people do not have the ability to conveniently or consistently pick up their prescriptions at pharmacies due to a range of factors. The coronavirus has made the need for quality prescription delivery options more urgent—especially for the most vulnerable members of society—and caused more people than ever to look for comfortable options for getting medications delivered home.
Thus, one can note that Uber's initiative perfectly satisfies the emerging market demand.
Small vending machines have become a hit in airports around the world. At Oakland International Airport, for example, vending machines provide travelers an alternative means of Covid testing. Vending machines like these also provide alternate revenue streams in the form of food, personal protective equipment, and in-flight items. Airport have been one of hardest hit sectors from the pandemic, and therefore one of the most open to trying alternative revenue streams.
In a nutshell, Covid has forced many industries to find innovate solutions in order to remain financially viable. Many of these, it turns out, will continue to be good business models for the post-pandemic world. The old adage “necessity is the mother of invention” rings true – it is unfortunate that it took such a catastrophic year for these innovations to occur. On the upside, business, and by extension society, will reap the benefits in years to come.