COVID-19 and gradual adjustment in the tourism, hospitality, and related industries

Abstract

In this Note, we take up the problem of post-COVID-19 gradual adjustment in the industry as well as whether and to what extent opening with limited capacity might be feasible. We find that (i) reopening gradually requiring only nonnegative profits is quite feasible but (ii) reopening requiring the same level of profit as in the pre-COVID-19 period is considerably more difficult, and seems feasible by reopening at capacity near 33%. Lower capacities would require governmental subsidies which could vary considerably from hotel to hotel.