Every drop counts when dealing with a crisis like Covid: CGH Group Director

In a chat with Anjuli Bhargava, Jose Dominic says his hotel group hacked salaries right up to the MD level, but didn't terminate a single permanent staffer on its rolls on account of the pandemic

Jose Dominic, a director of the CGH group of hotels, says that they are lost in a desert with a half-filled water bottle. The water in the bottle is rapidly diminishing as each member takes a sip. The name of the game is to keep the bottle filled long enough to ensure survival till rescue arrives in some form. Refilling the bottle to the brim is far away from anyone’s mind. The idea is to make the water last long enough to live. That in a nutshell is where the tourism sector finds itself post Covid-19.  

The CGH group runs 18 boutique hotels and wellness resorts in the peninsula of India - Kerala (13), Tamil Nadu (2), Pondicherry (2), Karnataka (1) and two coming up in Andaman and Nicobar – with 1,300 employees. Five hundred employees are on its rolls directly and 800 others are on short and longer fixed-term contracts. Like aviation, Covid-19 has struck the tourism sector like a bolt of lightning and the sector is grappling with how to mitigate the impact. CGH group's director Dominic spoke to Anjuli Bhargava on the past, present and future as he sees it. Excerpts from a detailed conversation: 

Q: What kind of impact do you see in the short- and long-term on Kerala’s tourism and your own group’s fortunes? 

A: Kerala has been a late starter on the tourism front, and traffic picked up in the state only in the late 1990s but grew at double digits for most years since. 
 

Let me step back six months. 2018 and 2019 were very bad years for the state with floods in both, 2018 worse than the following year. But for all the challenges the state faced, the spring-back by the end of 2019 was sharp and tourism in the state shot through the roof between October 2019 and February 2020. In fact, the state government said that the financial year was likely to see a 24 per cent increase in tourist numbers, a record rise. This reflected in our numbers too. 

Then Covid hit and we fell off the cliff and into the desert. Kerala has been the first hit (first case from Wuhan showed up in the state), the worst hit (since it was coming on the back of two bad years and a sharp bounce back) and the longest hit in this crisis (no recovery is in sight). 

In March we (the CGH group) had 320 sets of foreign tourists in all our properties combined and we sent all back safely to their own countries. Revenues hit zero almost immediately and we started to scramble for survival. We are currently in the early stages of constructing two new properties in Andaman and Nicobar, for instance. 

We managed to pay March salaries. In April, we knew we had a fixed kitty that was not growing at all. We did have some surplus but we have not been keeping money idle waiting for a catastrophe like this. Most of our surpluses have been invested into new properties. 

Instead of firing staff, we approached the government with a proposal to allow the staff to stay on our rolls but without pay. I even spoke to the chief minister on this: that the government should recognise the concept of employees on the roll, but without pay. That way the employee at least has the security net of a job (and all the benefits a full-time employee enjoys) as and when the crisis is over, instead of facing a double whammy of severe pay reductions and no jobs at the end of this tunnel. 

We cut salaries drastically, capping the maximum at Rs 30,000 a month. So anyone in senior management, including the managing director, draws this amount for now. All lower level staffers draw at least Rs 10,000 a month, a floor amount. So if you are earning Rs 3 lakh a month, you would draw Rs 30,000 and if you earn Rs 15,000, you would draw Rs 10,000.  

We asked for salary support – a subsidy for lower level salary payments - like in many countries, but this was not possible as the state finances do not permit it to subsidise the salary of 1.5 million employees across the state. They asked us to approach the Centre. 

Q: Did you approach the Centre and what has come of this? 

A: For us, our biggest assets are our people and we need the enterprise to survive. A moratorium was announced soon after the crisis that would allow some enterprises to survive. 

On the wage front, the proposal was taken forward through the industry body (Federation of Associations of Indian Hospitality and Tourism) headed by chairman Nakul Anand. It was suggested that a fund should be created – an interest- and a collateral-free fund - with principle payable over 10 years, including a moratorium of two years. It would be in the nature of a soft loan, to be paid back by employers once the crisis was over. Five or six measures were proposed by the industry, but nothing has come of it so far. 

Q: So what happens now and when do you expect any kind of revival? 

A: International reports and all indications are that there will be no kind of recovery before the last quarter of this year. Eleven million foreign tourists come to India each a year and they will not be coming. Some 24-25 million Indians go overseas to holiday. They too are not going to go out. So the only hope is that these some of these 25 million holidaymakers decide to explore some destinations within their own country and find value in it. The trend of Indians holidaying within India has already been picking up in the last decade. Covid will probably accelerate this. We have to look inwards for tourism as well. Atmanirbhar.  

But even that is not going to be a piece of cake. Every state is putting its own barriers on interstate movement. I don’t see how the quarantine rules will work: can’t leave the room, can’t move freely, you have to avoid contact with everyone including room service! Who will spend good money to go into solitary confinement? 

Many feel that flights are not safe so we expect more tourists to come in by road. Even across states is uncertain, so as I see it for now, those who live in Kochi can travel within Kochi or the state. You know the place but you can see it through new eyes and in new ways. So one can offer a heritage walk or a cuisine tour in Kochi for instance. It will be more experiential and immersive. 

But let me clarify here: this will be small numbers and far lower revenues. But at present nobody is looking at profitability. The idea is just to add more water to the proverbial water bottle so that one can pull on till rescue arrives. Every little drop counts.