Covid-hit hospitality sector in ‘free fall’, seeks government help

Hoteliers & restaurateurs look to the government for easement of liquidity via bank loans.

Every summer, year after year, hoteliers in the Indian hospitality industry have found themselves busier than ever before. Handling scores of bookings was a norm every peak summer season as domestic and international tourists flocked to their favourite destinations to get a respite from the hustle and bustle of their busy lives. But this time the situation is different; hotel rooms are occupied, though not by tourists but by tired corona warriors, who the hotel industry has opened their doors to, as infections continue to spike in the country despite weeks of lockdown. “We could be headed towards a very unfortunate and virtual collapse of the sector. We are in the bright red zone — the first to decline, and it takes us the longest to bounce back. Even if the lockdown is lifted today, there are businesses that are going to shut and there are jobs that are going to be lost. That is the unfortunate truth,” says Gurbaksh Kohli, vice-president, the Federation of Hotel and Restaurant Associations of India. The situation is no better for restaurants as the hotel, travel and restaurant industry are inextricably interlinked.

The restaurant industry, which is bleeding profusely due to the impact of coronavirus, is hoping for some support from the government. “Our ability to bounce back and regain a foothold gets lost every day that support does not come in. I don’t want to sugarcoat my words: we are looking at an existential crisis,” says Anurag Katiyar, president, National Restaurant Association of India (NRAI). Not just restaurants, but also the hospitality industry as a whole claim they need some support from the government, simply to stay afloat. “The government needs to understand that hospitality is a highly capital-intensive business. None of the fixed costs that are part of our business, has there been any relief of any kind. Business and profit aside, just for the sake of people in our industry, I think they need to wake up and smell the coffee. First priority is liquidity, and then have the other parts thrown in. The government cannot wait any longer as we’ve been breathing fire for too long.

Too many industry players won’t be able to survive beyond a 30-60-day period. The government will be staring at a huge unemployment crisis,” says Ratan Keswani, deputy MD, Lemon Tree Hotels.  The situation seems so grim that the biggest names in the hospitality industry claim that they are struggling for bare survival. “Right now, nobody knows anything. I can’t predict anything for the next 3 or 6 months. The issue before us right now is how do we pay our people… The most critical need is deferment of loans and principal and interest of loans for 12 months,” says Ajay Bakaya, MD, Sarovar Hotels and Resort. Another challenge in front of the industry seems to be regaining the trust of the customers back. “The fear psychosis that will exist in the minds of travellers is a big problem. It’s important to think about the traveller’s point of view, how do we give them the comfort and confidence to start travelling? I think they will be an overzealous lot that will start travelling. But there will also be conservative people, who will need confidence to travel that the places and hotels they are entering are safe to enter,” says Bhanu Chopra of Rategain, a travel and hotel software company.  Kapil Raizada, Co-founder of RailYatri, seems to agree. “We need to address the fresh concerns of travellers, maybe change the construct of our products, at different price points which we don’t know what they will be. Revival won’t be easy and the industry needs to act now to formulate a strategy feel many,” he says.

“We need to quickly work in a certain direction for the actual delivery of our product post the lockdown. It’s not going to be a flip of a switch,” says Varun Chaddha, CEO of Tirun, a leading travel company with an expertise in cruises.  Most of the industry leaders The Daily Guardian spoke to batted for the US model, where the loan given to companies is passed on as wages. “That is the way we need to go. We cannot have millions of people desperate for cash. This is going to become a societal problem. People cannot survive without basic livelihood,” says Rohit Khosla, Executive VP, Operations, IHCL. With the losses of the hotel industry pegged at Rs 650 crore as a direct result of the pandemic, the industry feels it needs to act now, not only to press the government for relief but also to create a long-term strategy to regain customer trust as things start limping to normalcy.