The grim challenges presented by the pandemic have had a far-reaching impact on multiple sectors, and numerous assessments—including one of the Reserve Bank of India—have acknowledged that the hospitality industry and its allied sectors have been the worst hit. Globally, revenues have plummeted, share prices have fallen, properties are being shut temporarily, if not permanently, and millions have lost their jobs or are on reduced pay. As per industry reports, the sector in India is looking at a revenue loss to the tune of INR 90,000 crores in the year 2020. By Madan Prasad Bezbaruah
The seasonal nature of the industry globally and the ethos of its professionals have given the sector an inbuilt resilience. Companies have been working hard to survive this stressful period and are making efforts to create new streams of revenue that help them stay afloat. Hotels have always put the comfort, safety, and service requirements of their customers at the top of the agenda and would often go the extra mile to fulfil the same. These are the motivations that are driving the industry forward today. The sector is re-inventing itself at enterprise and operational levels in order to meet and overcome the challenges mentioned above.
There are several urgent measures that need to be taken for helping in the industry’s survival. The Hotel Industry of India has asked for an extension of the moratorium on repayment of EMIs of principal and interest to 12 months without any accrual of interest. Further, hospitality companies should get an enhancement of working capital limits and overdrafts at subsidised or interest-free rates at least for a period of 12 months.
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Government assistance in restructuring of loans would be of significant help in the revival of the sector and we keenly look forward to the recommendations of the Kamath Committee. The government could direct banks for the restructuring of loans without provisioning or downgrading of assets or credit ratings. A 12 to 18 months of protection on sales of loans by banks would also be extremely helpful. Local entrepreneurs and large companies of the industry would be protected from international investors if these measures are implemented. Another significant assistance would be the notification of hotels under ‘priority’ sector lending via official directives. This would help hospitality enterprises in getting substantial relief from the no income situation.
In many countries across the world, governments are providing hospitality companies with assistance for the salaries of employees. There are also examples of disseminating allowances for temporary workers, providing support for minimum basic pay, and conditional cash transfers to help businesses and employees. Such measures have provided substantial relief for small hospitality businesses. Mostly, governments have helped companies and industry workers by a combination of short- and long-term measures. These include interest-free or low-interest loans in the short-term for helping business rebuild their operations. Longer-term assistance includes a delay of statutory dues by six months to a year, as well as three to six months moratorium on all working capital principal and interest payments on loans and overdrafts.
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Hotels across the world are now putting in place Standard Operating Procedures (SOPs) for ensuring smooth functioning along with strict hygiene and social distancing compliance in the operations of all departments. They are taking measures to ensure that adequate preventive measures are taken to safeguard the health and safety of customers and industry workers.
The sector does face significant challenges. The industry is doing all it can to overcome them. However, if there is speedy government intervention, there would be substantial relief to large and small businesses. In addition to sectoral relief, hotels are reinventing themselves using strategic planning, changed operational procedures, and technology-based innovations to overcome their challenges. Most industry experts would agree that the hospitality industry has the strength and resilience to combat the challenges raised by COVID-19 and eventually come out with flying colours.
Note: Madan Prasad Bezbaruah is the Secretary-General of Hotel Association of India (HAI)