“The owner (of this property) could not reopen it after the lockdown. The monthly electricity bill alone was in lakhs and they decided to shut shop permanently,” Rishi Puri, Senior VP (Operations) Lords told TOI.
This and the suspension of operations by Hyatt Regency Mumbai are not separate cases. federation of hotel The End Restaurant Association of India (FHRAI) says that 40% of hotels and restaurants have closed permanently. industry tracker STRData from the U.S. shows that 270 branded hotels (20,000 rooms) have temporarily ceased operations in India. “The number of establishments closing down due to the second wave would have increased by 10-20%. Most do not have working capital and it is difficult to get loans from risk-averse banks,” said Pradeep Shetty of FHRAI.
Industry ‘survivors’ are pinning their hopes on a revival in the journey seen after the second Covid wave subsides and praying that there is no third wave. Holiday-hungry Indians have started driving to nearby holiday destinations.
like big chains Bye The group’s Taj, Oberoi and ITC hotels have also crossed their fingers as they exhausted critical reserves to survive the pandemic and need to be replenished for future aftershocks. crown parent Indian Hotel Company (IHCL) reported a loss of Rs 720 crore with revenue of Rs 1,740 crore falling 62% in FY21.
According to hospitality consulting service Hotelivate, there are currently 1.4 lakh branded and over 26 lakh unbranded hotel rooms in India, which puts the sector’s combined debt of Rs 50,000 crore.
Contractual breaches would lead to a dispute between the owners and operators of the property (the brand that gave the property its name). Hotelivate estimates that the total revenue generated by India’s branded and organized sector in general is around Rs 37,000 crore and the revenue loss last year could be between Rs 11,000 and Rs 30,000 crore.
In such a situation, many property owners and investors in financial stress will seek to get out or reduce debt, which will lead to a spurt in M&A (mergers and acquisitions), said Mandeep Lamba, president (South Asia) of real estate services company HVS Anarock. it is said.
Job losses and salary cuts have hit the industry badly. “25-33% of the people employed in this sector have lost their jobs and some could have been fired permanently,” said a hotelier.
Pre-Covid India used to attract around 10 million Foreign Tourist Arrivals (FTAs) annually. According to IHCL’s FY21 Annual Report, “During 2020, the number of FTAs stood at around 27 lakh as compared to around 11 million in 2019.”
FHRAI said, revenue since April 2021 has not been able to cross 8-10% of April 2019 level. It takes a long time for hotel fees to increase after the events of Black Swan. “Covid has pushed hospitality back by four years in terms of occupancy and five years in terms of fees,” said Manav Thadani, Founder President, Hotelivate.
Given the long recovery period, it remains to be seen which hotels will survive. Hotels run in properties owned by diverse groups with favorable debt-equity ratios will emerge from this perfect storm.
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