The rise and decline of companies because of COVID-19
By: Giulia Micallef
Tags: Companies, Covid 19, Digital Economy

By now, everyone’s aware that the COVID-19 outbreak has turned the economy upside down. According to visualcapilist.com, the hardest hit companies are those that make a part of booking, entertainment, live events, airlines, cruises, casinos and hotels. The impact across these industries is far-reaching, with some valuations declining to nearly a quarter of their previous total. For example, Hilton hotels witnessed share price declines of over 35% since the peak.

Air Malta is one of the hardest hit companies on the island, as it laid off 108 of its 134 pilots in an attempt to cut costs after the COVID-19 pandemic. There was an “extraordinary amount of cancellations” as well as “aircraft lease payments” which led the company to “necessitate mitigation of costs”, according to a Times of Malta report.

How are companies responding to the coronavirus crisis?

As previously discussed in my previous articles, we are witnessing a period where people are becoming fully dependent on the internet. Sure, things are going back to ‘normal’, as Prime Minister Robert Abela has just announced over the weekend that all restrictions are to be lifted. But companies are going to take a while to recover, especially considering that prices are getting higher — Virtu Ferries just notified their clients that trips to Sicily are now going to be more expensive.

There are impressive examples where companies have changed course and transformed their businesses by integrating digital technology to fundamentally change how they operate and how they deliver value to customers. ‘Working from home’ has become a common trend now, due to the pandemic. Many businesses have had to adopt to using technology out of necessity. So given that on Friday 5th June businesses are given the opportunity to open without any restrictions, will they continue the digital transformation, or revert to the previous way of conducting business?

Businesses all over the world have adapted their workforces during the current pandemic by embracing technology to provide connectivity to data and networks, videoconferencing, collaboration tools and cloud services. In my opinion, businesses should really consider the opportunity to deliver a mix of online and in-person — just as the countless restaurants that never delivered prior to the pandemic, are now embracing that. It also makes me wonder if lecturers will be more open to some of their lectures being held online, especially during times when the students would prefer to stay at home to focus more on their work.

Taking a Chance?

The situation caused by the pandemic has forced short-term adaptation but should be viewed as a step, or leap, towards digital transformation, offering more flexibility to customers and employees and potentially opening new revenue opportunities. Given the fact that this pandemic proved to be a catalyst for change, on a scale not seen since the world-war. Even before COVID-19 hit, 92% of companies thought their business models would need to change, given digitisation.

Tech-enabled businesses on the other hand, have been able to adjust faster; they were already one step ahead. For many companies, their only option was to accelerate their digital transformation. Also, when referring to companies, I also mean smaller businesses or individuals, that would normally face their clients in-person. A simple example of this is my younger sister’s Maltese private lessons, which are entirely held through Zoom nowadays. I also received an email from my gym a couple weeks ago, announcing that they would be having live online work-out classes, again via Zoom.

What’s next?

I really do wonder how the next few weeks will unfold. Are restaurants going to completely stop bothering with food deliveries, considering they are free to open now? Will people even go to the gym? And how are people supposed to ‘party’ whilst social-distancing? Is this all a fantasy?

Personally, I believe that COVID-19 created an opportunity like no other for businesses that have been meaning to digitise their content. I also feel that it’s their loss if they didn’t engage with the online community. It’s also understandable that certain businesses couldn’t switch their work onto a digital platform, however, one cannot do nothing at a time like this. What do you think?