Hospitality Industry Is ‘The Most Distressed Sector Due To COVID19’ In The Country – FHRAI
The Federation of Hotel & Restaurant Associations of India (FHRAI), India’s main hospitality association and the industry’s voice, has written to the Hon’ble Prime Minister – Shri Narendra Modi, demanding immediate attention to the deteriorating situation in the hospitality and tourist sectors.
The Association, which has been designated as the country’s ‘Most Distressed Sector owing to COVID-19,‘ has urged the Prime Minister to provide a sector-specific special assistance package as soon as possible to aid the sector in its struggle for survival. Over the previous two waves of the epidemic, 30% of hotels and restaurants across the nation were permanently closed, and the remaining operating enterprises are still losing money.
According to the FHRAI, the pandemic’s repeated waves and interruptions have produced a precarious economic climate in the industry. Hospitality, being a capital-intensive sector, must handle a large number of overhead expenditures even when it is not in operation.
“The third wave of COVID has ripped apart the hospitality industry. The recent restrictions came right in the middle of Christmas and New Year festivities and preceded the marriage season. The revenue loss incurred due to the cancellations of celebrations and bookings to the hospitality industry is conservatively estimated at Rs.200 crores. Half of the hospitality sector was on the ventilator caused by the ripple effect of the lockdowns and restrictions during the first and second COVID waves.
The sector somehow tried to tide over the crisis by availing the credit facility provided by the Government and infusing its own capital. But then, all of a sudden, the third wave came as a debilitating blow. FHRAI has knocked on the doors of all the concerned Ministries for bringing them up to speed on the existential crisis faced by the sector. At present, the entire hospitality industry is hanging on by a thread and only a special relief package can reinvigorate the industry. We plead to the Hon’ble PM to offer a sector-specific special relief package for the survival of the Tourism and Hospitality sector,” says Mr Gurbaxish Singh Kohli, Vice President, FHRAI.
“After the second wave had subsided and restrictions partially withdrawn, in the beginning of the third quarter of FY 2021-22, hotel and restaurant businesses saw a marginal rise in occupancies and footfalls. By the middle of December 2021, occupancies in resorts and holiday destinations had reached 60 to 70 per cent, while in the city and corporate hotels it touched approximately 25 to 30 per cent. Likewise, restaurants had just started to return to normalcy as corporate offices and businesses had opened up. Although this was much lower than the pre-COVID levels, the signs were encouraging. But, things started changing for the worse by the end of December and since then there has been a drastic plummeting of rates and occupancies in hotels and footfalls in restaurants. City hotels are back to 10 to 15 per cent occupancy accompanied by low room rental rates and restaurants are deserted. Resorts and holiday destination hotels that were otherwise doing well have drastically fallen below 40 per cent,” adds Mr Kohli.
According to FHRAI, the current restrictions are nearly similar to a lockdown. The hotel and restaurant business is almost non-existent in all major cities around the country.
According to the Association, such limitations exacerbate the current crisis, inflicting significant damage to the industry. It is expected that the sector would take at least five years to recover to pre-pandemic levels.
“It is imperative for the hospitality industry to have an environment conducive for businesses to sustain. Frequent lockdowns and restrictions coupled with travel restrictions are anti-business especially, for the hospitality and tourism sectors. Every time the situation eases a bit and the industry receives a glimmer of hope a new hurdle presents itself. The cyclical ‘stop-start-stop’ arrangement hasn’t allowed the industry to do anything. Hotels and restaurants are in a state of suspended animation since 2020.
The current situation also has a cascading impact on employment in the sector. Apart from another round of lay-offs and pay cuts, the situation will pose another serious threat to the industry in the form of the unavailability of trained manpower to work in the sector. The volatility in the sector and continued disruptions has dissuaded people to continue working in the sector and large numbers have moved to other sectors for viable employment opportunities. With another tourist and business season washed off, the sector has nothing to hope for now.
It is staring at a dark future in the midst of increasing debt burden, obligations and statutory liabilities with no means to meet them. Under the present circumstances, without adequate support from the Government, many more hospitality establishments in the country would be compelled to shut shop,” concludes Mr Kohli.
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