HURT BY COVID, HOTELS BRACE FOR THE LONG ROAD AHEAD

Almost a month after reopening, occupancies across hotels remain at a fourth of the original capacity. This, too, is largely coming from the Covid-19-induced quarantine business. Associations and industry executives have said that if the moratorium period is not extended, at least a third of the hotels will be in danger of shuttering down.

“It’s a grim situation,” said K B Kachru, vice-president, Hotel Association of India (HAI), pointing that a lack of consistent and uniform policy has been one of the biggest hurdles in smooth operation.

Lease money for a property that is shut and a license fee for something that is non-operational are hurting businesses. Therefore, there is an urgent need to bring out a policy reform for a sector that has been one of the worst hit. “If something is not decided soon, it will have a huge cascading impact,” he said.

HAI pegs the current debt levels in the organised part of the industry — which is less than 10 per cent of the total — at ~45,000 crore. The hotel association, which comprises 237 hotels across all categories in 70 cities, is seeking a longer-term solution. A short-term measure like an extension of the moratorium will not help much, said Kachru.

With demand drying up, hotels are surviving on quarantine centres and isolation facilities. “Delhi, Bengaluru,

Mumbai occupancy has picked up largely due to Vande Bharat flights,” said Anil Chadha, chief operating officer at ITC Hotels. But there is demand for staycation packages, he said.

Till such time restrictions are lifted fully, the pick up speed will not be as desired, said Chadha. Ajay Bakaya, MD at Sarovar Hotels & Resorts, agreed. He doesn’t see the occupancy rates at his hotels go beyond 35 per cent in six months. “Presently, 60 out of 90 hotels are open, and 80 per cent of the demand is Covid-related,” he said.

Zubin Saxena, MD and vice-president of operations, South Asia, Radisson Hotel Group, said: “We are seeing new segments such as quarantine emerge, which will continue contributing to recovery.”

Kerrie Hannaford, V-P commercial, Accor India & South Asia, echoed similar experience. “We have seen an increase in demand from our hotels in Delhi and Mumbai, which can be attributed to requests from health workers, repatriation flights, and firms working on their business continuity plans.”

Nandivardhan Jain, CEO of Noesis Capital, said while the industry has to brace for a long road ahead, “it’s a good time to be in the business for those who have a long-term view on the sector”. “It’s only a matter of time before good assets come up for sale at a discounted price. The real picture with regards to debt positions at firms will emerge only after the moratorium ends,” said Jain.