Lockdown has had disastrous impact on hospitality sector; govt support needed: Industry

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 told PTI.

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 govt took a good first step to announce the moratorium on interest and principle repayment for three months. But the problem is the period is too short. One can not plan on the basis of three months.

"Ideally government should have done a 12-month moratorium and said the amount you are not paying in these 12 months shall be added in the debt," Keswani said.

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."
Stating that COVID-19 has severely impacted the industry, Bird Group ED Ankur Bhatia said, "With occupancy crashing to a below 5 per cent against 95 per cent last year due to the unfortunate impact of COVID-19 mayhem, the tourism industry was in the front line and is the worst hit. No wonder a slew of hotels will fold up under pressure."