Coronavirus lockdown has disastrous impact on hospitality sector

New Delhi: The lockdown to contain spread of COVID-19 in the country has had disastrous impact on the hospitality sector, especially for hotels, hoteliers said.

"The impact is disastrous. The hotels are businesses which are very capital intensive and also have very high fixed costs," Lemon Tree Hotels Chairman and MD Patanjali G Keswani said.

The capital intensive component is normally debt and it has to be serviced by payment of interest on debt and repayment of debt. Hotels are also labour intensive, so they have lots of fixed costs such as wage bill, besides paying government levies, minimum load charges, among others, he added.

"Earlier Indian hospitality industry was on average witnessing 65 per cent to 70 per cent or full occupancy till end of the February. First few days of the March were fine, once the things started accelerating, the occupancy has gone down to minimum," Keswani said.

Going ahead, occupancy in India is going to be very low. So hotels will have to either shutdown or run in a very limited manner, he added.

The government has also requested industries to not lay off staff and cut salary, where in liquidity is a problem, Keswani said.

Under this situation, the industry is going to go sick very fast unless you have the external source of capital, like holding company.

The industry is not looking for a dole but is asking for minimum support to survive by pushing back repayment of instalments, some support for paying salaries and waiver in government levies, he added.

In similar vein, Cygnett Hotels and Resorts founder & MD Sarbendra Sarkar said, "The lockdown has adversely affected the hospitality industry.We are experiencing a big drop in new reservations, and increase in cancellations, etc."

While RBI's three-month moratorium has come as a relief, the industry hopes that the government will soon offer schemes that will enable the sector, he said.

The Associations have put forward multiple proposals to stay alive as well to ensure the employees are taken care of and retained, he added.

Amatra Hotels and Resorts co-founder and COO Anurag Dua said hospitality and travel sectors have been amongst the worst affected segments, with the businesses coming to a standstill as governments across the world locked down their countries to stop the spread of the coronavirus.

"The moratorium of three months would provide the much-needed relief for the hospitality sector in India provided banks/NBFCs approve it unanimously with no condition precedent following the RBI move," he added.

However, businesses working on rental models with private owners have not received any benefit which might act as a deterrent to operators at large, Dua said.