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Hospitality industry implores for help to tide over Corona crisis

Wednesday, May 13, 2020, 13:06 Hrs  [IST]
Asmita Mukherjee | Hyderabad

Many hospitality industry experts are stating that the coronavirus pandemic is one of the hardest hits that the industry has faced. An unprecedented turmoil has been generated across the hospitality industry which has put both owners and employees into a spot. The sector is looking at a severe cash crunch with nil revenue inflow, which may lead to millions of employees losing their livelihoods. With no viable signs of recovery on the horizon, the industry associations have placed multiple appeals before the government for respite from this critical situation which might change the face of the hospitality industry forever. Asmita Mukherjee understands the precarious situation on the ground by speaking with industry experts about their most pressing issues during the pandemic, expectations from the government, and action plans post lockdown.


“We hope that the government will announce substantial relief and aid for hospitality and aviation”

Rattan Keswani, Deputy MD, Lemon Tree Hotels and Director, Carnation Hotels


Will there be any changes to the business model post lockdown? 

Much the same way that 26/11 changed the way security is handled in hotels, I think this pandemic will bring about newer hygiene standards, changes in the reservation processes (such as changing table settings for better distancing), lesser movement in common areas, and on-ground health checks for guests and team members. 

The new normal will see an elevation in the standards of cleanliness and sanitisation followed by guests, and the same will be expected from hotels. Social distancing will become a new norm, at least in the short term, and people will prefer not to visit overcrowded or cramped places. Personal and communal space definitions will change, with the former becoming a high priority for most people. Weddings and MICE segments may be relooked at – with large scale gatherings decreasing, and focus on more frequent, but smaller events.

For companies, working from home, staggered work hours to decrease contact, and reduced travel may become the new norm. Engagement and employee motivation will need to be heightened. 

We are also relooking at every customer touch-point, and working towards either removing or restructuring them to ensure the safety and wellbeing of both guests and team members. Some of these include initiatives for contactless billing, contactless dining, completing check-in formalities over email, sharing of e-papers etc. 

 

What are your expectations from the Indian Government to spring back from the pandemic impact?

We hope that the government will announce substantial relief and aid for hospitality and aviation, the two industries that are the worst hit at this time. We are amongst the largest employers in the organised sector, and we need assistance from the government to be able to protect jobs and livelihoods. 

Industry bodies from across the country have sent their critical recommendations to the government. We hope that they will be considered favourably for the survival of both the sectors in the long term. 

What has been your biggest pain point during the lockdown?

Possibly the greatest need has been to keep employee morale at a high. Our unsung heroes are the teams on the ground, working tirelessly in our operating hotels, to ensure that the guest experience is not hampered. The incubation period and high infection rate of this virus can be truly worrisome, and we are trying to review every single feasible method to ensure the safety, security and wellbeing of not just our guests, but our team members as well. Every one of us spends time every day researching additional safety and precautionary measures to incorporate in our current operational practices.

What is the immediate plan of action post lockdown?

The most critical part for us post the lockdown will be re-opening of our hotels wherein operations had been temporarily suspended, in keeping with the government norms. 


“Revenue potential per cycle is going to come down by more than 50% because of social distancing”

Vineet Verma, MRICS, Executive Director & CEO, Brigade Hospitality Services Limited


With the current collapse of the hospitality and travel industry, how has your revenue been impacted?

We have been as badly affected as rest of the industry, of the seven operating hotels, that were doing well till early March, four have had to shut down. The other three have been operating with single-digit occupancies and negligible revenues that are grossly inadequate to meet even a part of our fixed costs. Our losses run into several crores and these will further increase if the situation does not improve in the immediate future.

Will there be any changes to the business model post lockdown?

The world of hospitality, post-COVID-19, is expected to go through a paradigm shift. It will certainly not be ‘business as usual’ and we are sure to see radical changes, both from operations and guest behaviour perspective. 

It is critical for the properties to bring in more stringent levels of health & safety standards, to reassure our guests that they will have a safe stay with us. 

At almost every hotel, social distancing and touchless experience will be the new norm and we are preparing for it. Our guests will be offered mobile functionalities, such as keyless entry, mobile check-in, and check-out. I am certain that digital resources are going to be fully exploited with many more innovative measures being adopted across the globe. Digitisation in the MICE segment is also expected, now that our guests have experienced the benefits of Zoom, Microsoft Teams, GoToMeeting etc.

We have also seen a spurt in-home delivery and take-away orders and this is certainly the way forward for hotels to augment their revenues. Catering packed meals to corporate offices is another service that should gain better traction. 

The present situation appears to have also impacted people’s choice of food. There has been a sharp decline in the consumption of non-vegetarian food and many have found new joy in turning vegetarian or egg-itarian at best. Most hotels may need to further tweak their menus to include a larger selection of such items. 

More importantly, hotel revenues are expected to be severely impacted by the implementation of social distancing norms in restaurants and public spaces. This is going to necessitate a reduction in the number of covers to achieve minimum distance between two tables etc. and as a result, revenue potential per cycle is going to come down by more than 50%. The same thing will apply for the banquets, where we will need to permit a limited occupancy per event. We will need to work around these challenges and explore other options to augment our F&B revenues.

What are your expectations from the Government to spring back from the pandemic impact?

While industry bodies such as FHRAI and FAITH have already made representations before the Government and we do expect a favourable response, some key areas where we do need support are:

The deferment of all statutory fees payable during rest of the year 2020-21.

Liquor license fees to be waived for the duration of lockdown and to be adjusted against next year’s fees.

Centre to consider permitting GST collections to be deferred by a few months, which can be used as working capital by hotels.

Electricity Supply Companies (Escoms) to waive MMD charges on electricity, as has already been done in Maharashtra and Gujarat.

Reconsideration of Government’s directive against employee layoff and salary cuts as most companies will soon be unable to pay if the situation does not immediately improve.

Moratorium on insurance premiums, without losing risk cover


What has been your biggest pain point during the lockdown?

Most of our hotels are completely shut down with zero revenues, whereas our liabilities towards fixed costs including payroll, statutory fees and taxes have remained largely unchanged. While this has placed us under immense pressure, we are not sure about our position a month or two down the line, as there is zero visibility on what the future holds for us in our industry.

What is the immediate plan of action post lockdown? 

The pandemic calls for the restructuring of services and offerings on many accounts. It becomes imperative for us to be ready with an exhaustive lockdown exit strategy. Each department must adhere to detailed responsibilities and ensure proper execution at all levels. Once we reopen our doors for business, we are expecting a cautious response in the initial months from our guests. MICE activities will take a back seat at the beginning, given the limitations of large public gatherings. However, we are optimistic that the rooms will start getting occupied and our restaurants will be resuming dine-in business, where we must strictly implement social distancing and hygiene. Apart from food, regular temperature checks at the entrance for both the guests and associates, regular sanitisation of elevators and public spaces, restricting the number of guests entering elevators as a part of social distancing, will continue to be a common sight at the hotels. 



“To ensure livelihood in the post-COVID-19 phase, support from the government is critical so that the industry survives and recovers at the earliest”

Anshu Sarin, Chief Executive Officer, Keys Hotels


With the current collapse of the hospitality and travel industry, how has your revenue been impacted?

The onset of coronavirus (Covid-19) in March brought a quick performance decline in the hospitality and travel industry. This global health crisis has triggered a national response such as the closure of borders and various levels of lock-down which resulted in the economic slowdown, an unprecedented market reaction and a behavioural change in people. 

To me, it is irrelevant from what level the downward trend started. We all know the drop has been large. What is more relevant now is how long would this impact last and more importantly how do agile and nimble organizations repurpose themselves to survive this pandemic. 

From a financial standpoint, the immediate to short-term focus is on the cash-flow, financing, credit line and creation of positive operating leverage. To this effect, we as a category leader have a nimble metric-driven cost platform. This holds us in good stead.

Will there be any changes to the business model post lockdown?

An event of this magnitude which necessitates safety and healthy parameters to be paramount will surely have ramifications on how businesses run. What we do know for sure is that business models will change. Categories of hotels (like mid-market hotels) where there is a higher risk spread from the demand side, and in terms of geographical width, genre depth (leisure/business to Fly or Drive too) and strong operating margins - will emerge stronger. 

Trends which were already underway such as transition from ‘asset-heavy’ to ‘asset-light’ model will only get accelerated. Brands which have demonstrated strong fundamentals in the pre-COVID-19 phase and continue to evolve and deliver today will become the preferred partners for many asset owners. Over the next 12-24 months, one could expect consolidation via the M&A route.

The time it will take for the curve to flatten and for a curative/preventive solution to be found will decide the eventual changes in the long-term offering of service and product. 

What are your expectations from the Government to spring back from the pandemic impact?

Most (albeit not all) industries have been deeply impacted by Covid-19. The two key reasons that travel and hospitality companies need favourable government initiatives at this time are:

• Highly intensive on capital and labour 

• Nature of this crisis indicates that travel and hence lodging will take the longest time to recover

To ensure livelihood in the post-COVID-19 phase, support from the government is critical so that the industry survives and recovers at the earliest. To this effect, many industry leaders and associations have made representations. Nature of assistance ranges from support in debt payment, wage bills, statutory levies and load charges. 

What is the immediate plan of action post lockdown?

Safety and security of our guests, team members and stakeholders are of paramount importance. In consultation with professionals from the healthcare field, we have created a robust set of standard operating procedures. These SOPs cover every facet of hotel operations and guest interaction. Providing transparent and exhaustive safety protocol is the priority. The resurrection of revenue streams and continued cost optimisation would be our priority.



“There are a lot of cash flow issues as we are not able to collect our funds from debtors”

Satyen Jain, CEO, Pride Group of Hotels 


With the current collapse of the hospitality and travel industry, how has your revenue been impacted? 

In the last few months, things have accelerated drastically for the industry-leading to a minimum or no occupancy in some properties. Because of the uncertainty in the lockdown period, we are experiencing a big drop in new reservations and increase in cancellations on both the business and leisure end. 

Will there be any changes to the business model post lockdown?

Post lock down more emphasis will be given to the safety and security of guest and staff. The biggest challenge will be to keep the safety measures intact. Keeping it at the forefront of every strategy, we have taken several measures and have even launched a few initiatives to navigate through the crisis. Post lockdown, each of our properties will carry out extensive SOPs in the area of health & hygiene. In these uncertain times to avoid any safety threats to the guest and staff, the hotel will start its service with the only minimum required workforce. 

What are your expectations from the Indian Government to spring back from the pandemic impact?

The hospitality industry is one of the hardest-hit industries as compared to the other industries. We welcome the government’s move to offer a moratorium for three months loan. No doubt it will help us, but the problem is that the period is too short. 

The measures, that we want the government to take includes conserving cash flow, GST withholding and compulsory directive to be given to the banks to extend principal & interest payment for two quarters. Also some tax credits for payments, some waivers on property taxes, and other measures to uplift the industry.

What has been your biggest pain point during the lockdown?

There are a lot of cash flow issues as we are not able to collect our funds from debtors since the offices are shut. Also, it has been difficult for us to operate to our full potential due to the lockdown, as even getting the required material to operate the hotel has become difficult. Also, since the guests are not being able to get to the hotels, there have been considerable cancellations.  

What is the immediate plan of action post lockdown?

During the initial few months of post lockdown period, the industry recovery will be gradual because of travel restrictions around the world. 

However, post lockdown in India, MICE will play a vital role in the recovery process. Pride Hotels has already launched a few of its initiatives, as a revival plan for the future while keeping all the precautionary measures in mind. 

As a precautionary measure, we will resume operations across our properties with the required minimum workforce. For our guests, we have initiated a package wherein we will provide them with an alternate workspace. It is specifically designed for the mid-senior level people who are accustomed to travelling and working in isolation. All working professionals, especially in the field of IT/ Finance/ Business Development among others, can be benefited from this initiative.



“There will be a great change in the entire business model both in the short term and long term”

Vikram Kamat, Founder Chairman, VITS Kamats Group


With the current collapse of the hospitality and travel industry, how has your revenue been impacted?

It has been greatly affected. We are over 20 per cent down, both because of March, April, and even advance bookings of May.


Will there be any changes to the business model post lockdown?

There will be a great change in the entire business model both in the short term and long term. In the short term, many common areas and facilities will be discontinued / not encouraged, such as banqueting, discos, and bars where the crowd gets very close. On a long-term basis, many business avenues may discontinue altogether. At least for the short term, the areas of conferencing and banqueting and weddings will be greatly affected.  

What are your expectations from the Indian Government to spring back from the pandemic impact?

While the specific demands have already been highlighted by The Federation of Hotel and Restaurant Associations of India (FHRAI), the entire focus of all demands is to allow hotels and restaurants keep cash flow rolling and let the units function to encourage continuous employment. So, the requests range from conserving cash flow through GST withholding to wavering off local costs like excise license, property taxes, etc., so that maximum money can be directed to payment of salaries and wages. 


What is the immediate plan of action post lockdown?

We have planned various steps such as bringing medical officers to implement new procedures for deep cleaning, sanitization, and hygienic cooking.   



“We could even see bankruptcies in the hospitality business”

Vibhas Prasad, Director, Leisure Hotels Group 


With the current collapse of the hospitality and travel industry, how has your revenue been impacted?

The COVID 19 pandemic and the impact of the Indian lockdown have had a disastrous impact on the country’s tourism sector for now and perhaps forever. Massive cancellations in recent weeks leading up to the lockdown and closure of all our hotels have witnessed complete erosion in revenue. Seeing the current status of new cases, and the trajectory of the curve, it will be many months or even a year or more, before business comes to levels that we have seen in the past year.

Leisure Hotels Group operates properties majorly in leisure destinations, and the summer months are peak season for us across most of our properties. We attract guests during these summer months, from almost all parts of North India which is severely affected by lockdown due to the pandemic. Travel during the first quarter (AMJ) itself contributes a significant percentage of our overall business in a financial year. Hence, we expect revenues to take a beating of 40% or more, in this financial year.

Will there be any changes to the business model post lockdown?

We all know and expect that the country and the world will change post corona. There will be a new normal. There will be changes to how people travel for work or pleasure in the immediate future (if at all) until a vaccine has been formulated, produced and distributed for everyone in the world. This process might take a year or more.

In the near future, we only expect domestic leisure to pick up wherein people would take their own car and travel to areas where there are limited cases or chances for exposure. Small boutique properties would be attractive for customers due to their layout which provides privacy and protection. The hill areas of Himachal and Uttarakhand have many such properties in close proximity of Delhi NCR, Western UP and Punjab.

We don’t expect inbound tourists to come to India for another year or longer. Indians looking to travel abroad for leisure will also be in a small minority. Business travel will also take time as WFH routines have become the norm and organisations would ideally not like to expose their workforce to the threat of the virus. MICE (Meetings, Incentives, Conference & Exhibitions) segments and social events including weddings will take from 6 months or longer to recover.

Our hospitality business is built around human contact and touchpoints. In today’s environment, social distancing, and contactless services will become the new norm for a while. Accordingly, our Value Proposition will get affected. All our properties are getting geared up to become fully COVID-19 compliant as per the norms issued by WHO, in order to provide our guests with a worry-free vacation. We are currently working on our second set of SOPs which will ensure that our guests have little to worry about as and when travel restrictions are lifted and customers travel again.

What are your expectations from the Indian Government to spring back from the pandemic impact?

The Central and State Governments are expected to come out with a relief package before June 2020. Various tourism bodies and Associations have already made several representations. Some of the expectations are listed below: 

Moratorium for Loans for 3 months (1st March – 31st May’20) has already been offered by the RBI. This is expected to be extended to 12 months

COVID Emergency Line of Credit: Lenders have announced an emergency line of credit unto 10% of Working Capital limits

Classification of NPA: 90-day NPA norm to exclude moratorium period between 1st March to 31st May availed by borrower. Ensure that Credit Rating agencies do not down-grade ratings of businesses

Subsidise employment for 3 months by government contribution per employee of 50% of the salary

Lease, License, Rentals and Excise Fees as well as Property Taxes to be suspended effective 11th March till the end of COVID-19 period 

Enable GST collected to be used as Working Capital for 6 months. Complete GST & Income Tax holiday for 12 months

Property tax to be reduced and deferred for FY2020-21

Utility costs like Electricity to be charged on actuals versus the load 

Waive off PF contributions for Employer & employee for 12 months. Waive off ESI for 12 months

Deferment of excise duties & vat & all other levies

Deferment of Advance Tax

Incentivise travel by introducing an onetime opportunity for Leave Travel Allowance to be part of the new income tax slabs

Annual renewal of licenses paid for in 2020 should be extended till the end of 2021 without an incremental fee or charges

What has been your biggest pain point during the lockdown?

The pain and ambiguity of small-medium business owners like us are likely to be very substantial. The biggest pain point is maintaining the cash flow while there has been no revenue and reduced/ no customer demand. We have been forced to take drastic steps to continue being in business, with no support/ help.

If we do not see a revival of the business in the near future along with no government measures or reliefs, then we will be forced to downsize our workforce in the first tranche. Over the medium term, we will be forced to default on our re-payments to banks and financial institutions, possibly become NPA in the eyes of the RBI. In the long term, we could even see bankruptcies in the hospitality business.

What is the immediate plan of action post lockdown?

Everyone is hurting right now, and no-one has the answer as to when this crisis will be over. Out immediate plan of action post lockdown to update the customer touch-points and be ready for potential customers to find us/ book online once travel resumes. We shall be communicating via all mediums about the actions taken/ COVID compliances across all hotels that support the current social distancing measures to ensure stress-free vacations for our customers. 

 

 

“We will be focusing on rationalizing cost, cutting down expenditure as per changing customer needs, automation, and adoption of technology to improve service levels”

Pushpendra Bansal, Chief Operating Officer, Lords Hotels and Resorts


With the current collapse of the hospitality and travel industry, how has your revenue been impacted?

Novel Coronavirus pandemic has hit 150 countries, affecting over 800,000 people and leaving several thousand dead. Our industry depends on people travelling, for work and pleasure. With over half of the world's population under lockdown, our hotels are also under lockdown which has affected our revenues completely.

Will there be any changes to the business model post lockdown?

Due to limited travel options after the crisis, we will promote staycation for the local travellers. We will be focusing on rationalizing cost, cutting down expenditure as per changing customer needs, automation, and adoption of technology to improve service levels.

What are your expectations from the Government to spring back from the pandemic impact?

Various hotel fraternities have written to the government on revival plans for our industry and we fully support the same and look forward to economic relief packages from the government to save our hospitality industry.

What has been your biggest pain point during the lockdown?

COVID-19 has rudely pulled the rug from under the feet of the hospitality industry, leaving it in a state of complete disarray. 

According to recent estimates, hotel revenues in India will decline by anywhere between USD 8.5billion and USD 10 billion in 2020, not to mention the job losses. This pandemic will have a huge economic impact on owners, operators and our front line staff as well.


What is the immediate plan of action post lockdown?

We have gone back to our drawing board to redesign our plans for this financial year. The revival of business is our focus area. Sales and marketing strategies are going to be programmed around the domestic traveller because domestic demand will open up first and drive growth in the short term. Special focus will be on guest and associate health and safety parameters.


 asmita.mukherjee@saffronsynergies.in


 

 
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