Covid-19: Indian hospitality sector bears brunt of slow revival forecast

Reuters

Pune - 40 per cent of hotels and restaurants have shut down permanently, says industry body

Published: Sun 25 Jul 2021, 1:08 PM

By
Nithin Belle

The ongoing Covid-19 crisis has crippled the hospitality sector in India, as millions of professionals and workers lose their jobs and hotels shut down their operations with unflinching regularity.

It is estimated that over 20 million people have been rendered jobless due to the pandemic, which is around half of the total strength of the sector ahead of the viral outbreak that struck early last year.

From five-star properties to smaller budget hotels, the pandemic has roiled the sector, experts said.

The Federation of Hotel & Restaurant Associations of India (FHRAI), an apex industry body, has stated that 40 per cent of hotels and restaurants have shut down permanently.

About 20 per cent are not operating at 100 per cent since the first lockdown last year; the remaining 40 per cent are running up massive losses in the face of the country's unprecedented healthcare emergency.

The industry has seen a 75 per cent wipeout of its revenues in fiscal 2020-21, as compared to the previous year.

"I do hope this is a temporary phase and the situation improves, as the country is trying hard to rein in the contagion," J.K. Mohanty, honorary secretary, Hotel Association of India (HAI), and managing director of Swosti Premium, told Khaleej Times.

Mohanty, who is also the chairman of the Hotel and Restaurant Association of the eastern Indian state of Odisha, said the sector faced an acute cash crunch. He erred on the side of caution and said that the tourism sector is unlikely to revive at a rapid pace.

The Narendra Modi-led government recently announced that it would issue half a million free visas to foreign tourists till March 31, 2022, in a bid to boost tourism.

However, Mohanty felt that the scheme should be extended by another year.

G. Kishan Reddy, India's tourism minister, told Parliament last week that the sector reported a 62 per cent employment loss during the first three quarters of 2019-20. Worse, the tourism economy, as measured by tourism direct gross value-added, fell by 93 per cent. Foreign exchange earnings from tourism in 2020 plunged by 76 per cent.

Gurbaxish Singh Kohli, vice-president of FHRAI, believed that it would take at least five years for the hospitality and tourism sector to return to normalcy.

In Maharashtra, over 40 per cent of restaurants and hotels have been permanently closed, said Sherry Bhatia, president, Hotel and Restaurant Association of Western India. Recently, Hyatt Regency announced the shutting down of its hotel in Mumbai. Many others have also followed suit.

Several hotels have not been paying salaries to their employees or repaying their loans to banks and other institutions. Vendors and suppliers are also in a fix with their outstanding dues piling up.

Earlier in March, the FHRAI had warned that 70 per cent of the 55 million-strong workforce, including those employed directly and indirectly, could lose their jobs because of the pandemic.

The Indian tourism industry has an estimated value of 5 trillion rupees.

Vidhi Godiawala, business development manager for south and central Asia at STR, the leading international firm that monitors the hotel industry globally, weighed in on the crisis.

"We saw India's resilience as an emerging market play out in the early part of this year. Unfortunately, lockdowns, triggered by the lethal second wave of the viral scourge, have restricted movement and businesses have taken a major hit over the last few months," he said.

However, he observed that "recovery from the first wave gives us reason to believe there is light at the end of the tunnel for the hospitality sector".