Across the global spectrum, the pandemic brought on by the novel coronavirus, known as the coronavirus disease 2019 (COVID-19) pandemic, appears to have made people, especially employees, more vulnerable to the financial stress they experience at work. Given its perceived effects on employee reward systems, the epidemic has disastrously affected hotels across South Africa. The hospitality and tourism industries were particularly heavily hit, forcing hotels and restaurants to close and operate at a reduced capacity when reopening (Ali & Anwar, 2021). The COVID-19 pandemic adversely affected hotels in South Africa, which also impacted rewards programmes. There were many layoffs and no annual award ceremonies or staff social gatherings. Circumstances forced management and staff to examine their current planning and reward systems.

Management provides reward systems to influence or steer motivation in a particular direction and positively impact desired performance (Ali & Anwar, 2021). This study sought to ascertain the COVID-19 pandemic’s effect and influence on employee motivation and the reward programmes provided by Cape Town hotels. Following the detrimental effects of COVID-19, the South African hotel industry was severely affected by the nation’s economic circumstances in 2020 (Cwibi, 2023). The hotel industry had financial difficulties because of a decline in tourism. Managers were thus forced to reduce employee benefits to lessen the financial strain. Employees were compelled to work without being compensated because of the prospect of retrenchment (Cwibi, 2022). This specific incident resulted in unhappiness at work, which impacted employee motivation. A reward system is crucial for employee motivation (Nkouangas, 2023). It is impossible to ignore the costs of not providing hotel staff with the right rewards, even during a pandemic such as the COVID-19 pandemic (Daniel, 2019), as it could negatively affect staff performance, directly affecting guests’ experience of the hotel.

In order to properly understand motivation in hotels, it is necessary to historicise the theory behind it (Alghazo & Al-Anazi, 2016). The most well-known motivation theorists are Douglas Hall, Maslow, Hertzberg, Vroom and Alderfer (Obiekwe, 2016). Maslow’s hierarchy of needs is recognised as the most widely used theory of motivation (Suyono & Mudjanarko, 2017). According to this theory, humans have five levels of needs that must be satisfied: physiological, safety, belonging, self-esteem and self-actualisation (Alghazo & Al-Anazi, 2016, p. 3). This theory is applied in much research related to the hotel sector, such as that by Putra et al. (2017), Holston-Okae and Mushi (2018), Sabri et al. (2019) and Ahmad (2021). Prior to Maslow’s theory, researchers often concentrated on pinpointing elements such as biology, success or strength to describe what drives, guides and maintains human conduct (Suyono & Mudjanarko, 2017). Nonetheless, because of its simplicity, Maslow’s theory has become highly popular among managers (Rao et al., 2019). Its management implications are clear: to inspire workers to pursue their higher-level needs, managers must provide work settings that satisfy their lower-level needs (Rao et al., 2019). Maslow’s theory was pertinent to this study as it addresses human needs and the intrinsic and extrinsic desire to satisfy them. Hotel management can meet these demands by offering a competitive wage, incentives, perks, secure employment and a safe working environment.

Apart from using Maslow’s theory to address employee motivation and performance, the best way to evaluate hotel employees’ performance is to look at their demeanour, observance, dispositions and amicability (Du Plessis et al., 2015). Pakurár et al. (2019) state that high customer satisfaction levels directly result from employees performing well, improving the possibility that guests will use the hotel’s services and return in the future (Du Plessis et al., 2015). While motivating staff can be challenging, Sabri et al. (2019) notice that it is always important to remember that doing so is essential to the hotel’s success. According to Du Plessis et al. (2015), hotels typically only pay the minimum salary stipulated by government laws, impacting employee motivation and job performance in the hotel and hospitality industries. The challenge is that this minimum salary might not meet an employee’s fundamental necessities. The second problem with many hotel companies, particularly small- to medium-sized ones, is that they restrict the age at which they hire new employees. Those whose age groups are not given preference at their specific hotels feel left out or unfairly treated, leading to tensions (Josten & Schalk, 2010).

Sabiri et al. (2019) investigated the components of employee motivation in the hospitality industry. Their study used a case study approach to apply the qualitative method to understand the factors that drive employees in the hospitality sector. The study revealed eight crucial components for maintaining workers’ motivation: commitment, a healthy work environment, recognition, relationships with coworkers, job satisfaction, salary, employer relationships and career development.

The hospitality industry has long employed reward programmes, and this sector has been the subject of numerous studies. However, relatively little research has been carried out on how reward systems might improve motivation and performance, despite policymakers, scholars and practitioners’ interest in hotel and hospitality reward programmes. There is inadequate research on the subject underpinning this study. Numerous research studies have addressed the question of how rewards affect employee motivation, as well as employee recruitment and retention. Even though those studies have looked at this issue in great detail, it has been found that the majority of them were performed and researched in sectors other than hospitality or hotel industry, such as banking, health, retail, mining, education and technology (Nkouangas, 2023). For this reason, there are insufficient data available for human resource professionals and other interested parties to examine the hotel industry’s reward programmes (Nkouangas, 2023). As a result, it is imperative to look at how reward systems motivate employees and other aspects of employment to resolve employee reward discord.

An organisation’s reward system is crucial when monitoring employee performance. In the past 25 years, additional components have been developed to give employers a more comprehensive range of rewards to inspire employees. Employers understand that a reward system will benefit both sides when directly and indirectly tied to the organisation’s vision and objective (Noorazem et al., 2021). Latham (2012) found that maintaining employee motivation is a crucial component of companies’ human resources and management. According to Noorazem et al. (2021), reward systems play a significant role in an organisation’s ability to motivate and retain employees and help them reach high-performance levels. Thus, organisations must create incentives such as reward schemes to meet their workforce’s needs and inspire people to work. A reward system can take different forms, such as extrinsic and intrinsic rewards (Karayanni & Nelken, 2022). Therefore, an organisation must have a critical understanding of the reward schemes that might spur an individual to deliver quality work.

Employee motivation is greatly aided by intrinsic rewards, which are typically qualitative (intangible) in nature (Karayanni & Nelken, 2022). This non-tangible form of emotional incentives for workers includes demanding tasks, a sense of accomplishment, acknowledgement, flexibility in the workplace, involvement in decision-making, authority and attractive positions in the hierarchy. These factors may have varying degrees of influence on individuals (Chantal et al., 2022). These intrinsic rewards are the rewards that meet a person’s psychological demands. When one is engaged in work that they are passionate about, they work more efficiently and with increased enthusiasm (Alimawi & Laili Muda, 2022).

Apart from intrinsic rewards, there are extrinsic rewards, which are visible and tangible rewards given to a person or employee in recognition of their efforts (Alqudah et al., 2023). Extrinsic rewards are defined as rewards that have a monetary component, such as money, retirement benefits, health insurance plans, wages, salaries and bonuses (Victor & Hoole, 2017). Employees value extrinsic benefits because they are essential to their social, familial and personal lives (Alimawi & Laili Muda, 2022). This type of compensation meets most employees’ physical demands, making it necessary for their continued employment (Chantal et al., 2022). Research indicates that higher-level employees prioritise intrinsic benefits, while lower-level employees focus more on extrinsic rewards. Therefore, managers need to combine these two reward categories so that employees stay motivated and engaged (Riaz et al., 2018).

It is argued that the tourism industry is highly susceptible to disruption from hazardous events, including localised phenomena such as earthquakes, bushfires, volcanic eruptions, tsunamis and floods, as well as global phenomena such as disease pandemics (Lenggogeni et al., 2022). The COVID-19 pandemic represents an extraordinary shock event that has posed the biggest challenge to the tourism and hospitality industry since the 2008 global financial crisis. According to Zenker and Kock (2020), the COVID-19 pandemic is unprecedented in its scope, combining a natural hazard, a socio-political crisis and an economic crisis. The World Health Organization (WHO) proclaimed coronavirus disease 2019 (COVID-19) to be a global pandemic in December 2019 after additional virus cases were discovered (Davahli et al., 2020). As occurred everywhere in the world in 2020, the epidemic destroyed South Africa’s hotel and tourism sectors (Rogan & Skinner, 2020). The effects on travel and hospitality were quickly felt after the South African President declared a national state of disaster on 15 March 2020, followed by a 3-week statewide lockdown period that was eventually extended until 30 April 2020 (Rogerson & Rogerson, 2020).

The severe lockdown laws and regulations in South Africa impacted the tourist and hospitality sectors as they were not recognised as essential services (Rogan & Skinner, 2020). Small tourism businesses worldwide went from usually solid businesses to ones in financial trouble, with some undergoing layoffs and others negotiating salary reductions (Joubert, 2020). Most companies had to temporarily close their doors because of the initial impact on the country’s urban accommodation services (Anderson, 2020). Hotels in South Africa were negatively impacted by COVID-19 (Rogerson & Rogerson, 2021), which also impacted the existing rewards programmes.

The COVID-19 pandemic created additional difficulties for the hospitality sector and the academic community (Gursoy & Chi, 2020). The pandemic posed numerous obstacles for this study. A study by Alonso et al. (2020) found that the economic repercussions of the pandemic had the most significant effects on the hospitality industry, followed by an atmosphere of uncertainty and the interruption of business operations brought on by fear, quarantine regulations and solitude. Several businesses in the hotel industry experienced significant business losses because of the limitations they had to enact, effectively closing them down (Alonso et al., 2020). During the outbreak in India, the hotel sector endured significant job losses, salary cutbacks and compelled paid leave that was either permanent or indefinite (Kaushal & Srivastava, 2021).

This section presents the study’s findings regarding management perceptions of employee reward systems on employee motivation and the impact of the COVID-19 pandemic on employee rewards.

The function of an employee rewards programme is to motivate employees to increase performance and accomplish organisational goals. According to this study, reward programmes positively influence employee performance at hotels in the Cape Town CBD. The managers interviewed for the study agreed that rewards are essential for increasing production and enhancing employee efficiency. Employees are encouraged to perform better and meet the organisation’s goals and objectives when they receive rewards. The study also found that rewards and recognition schemes raise staff morale and motivate workers, establishing a link between output, performance and motivation.

The results of this study support Vroom et al.’s (2015) expectation theory, which holds that workers are more likely to be motivated to perform when there is a clear connection between their work and their compensation. The research findings highlight that financial rewards are significant to employees. The findings show that monetary benefits, more precisely, cash, are the most coveted rewards, supporting the claims by Victor and Hoole (2021) that financial rewards are unique in that they can meet the various demands of different people. Money is significant because it is necessary for hotel employees to survive and feel secure. The results imply that the hospitality industry’s minimum wage rate may cause employees’ preference for monetary rewards, as hotel staff are only paid what is mandated by labour laws (Du Plessis et al., 2015).

The COVID-19 pandemic has been shown to have had a catastrophic impact on the hotel industry overall (Gursoy & Chi, 2020), adversely affecting employee reward programmes (Korn Ferry Digital, 2020). A decrease in hotel revenue was found to impact both intrinsic and extrinsic rewards negatively. This is comparable to a study by Korn Ferry Digital (2020) on how COVID-19 affected monetary benefits such as salaries, which found that most organisations experienced salary freezes or only minimal increases. The study also found that several non-monetary rewards had changed, including the cessation of staff gatherings for award ceremonies and Christmas end-of-year events. In addition, managers stated that the pandemic negatively affected the work environment because five-star hotels were compelled to lower staffing levels or work fewer shifts or hours. This indicates that the hospitality industry has suffered greatly economically because of the COVID-19 pandemic, particularly in South Africa. However, the hospitality sector has improved how it conducts business and its reward packages since the COVID-19 pandemic (Nyathela et al., 2021).

As managers are the ones who implement rewards, and employees report directly to them, it is crucial to gauge how they view employee compensation systems. Extrinsic incentives are effective for employee retention and job performance. According to hotel managers, employees in the hospitality sector favour extrinsic rewards the most. Furthermore, it was discovered that the COVID-19 pandemic had a detrimental impact on the hotel sector and resulted in several modifications to the reward schemes, such as eliminating staff events, annual awards ceremonies and extrinsic rewards. The study sought to establish the influence of reward systems within the hotels in line with the study objective and the retention strategy within the hotel industry. However, these rewards were limited during the COVID-19 pandemic owing to the scarcity of resources that managers could use to incentivise employees. Therefore, the study sheds light on the possible alternatives of employee rewards other than extrinsic rewards.