Hotels along highways feel liquor ban pain

Premium hotels along highways have suffered a sharp drop in business since a court order against selling alcohol at these properties, with some reporting losses up to 60%.

The Supreme Court in December prohibited the sale of liquor within 500 metres of state and national highways, ruling on a public interest litigation to curb road accidents due to drunken driving. While some hotels have shifted their entrance to circumvent the rule, others will not be able to. Hotel owners and industry experts said this will create an unfair business environment.

“The total contribution by food and beverage to the overall revenue might just be 20% but there is a domino effect that happens. Total footfall to the hotel gets affected. The MICE (meetings, incentives, conferences and exhibitions) and restaurant business gets affected. Overall, there is a drop of 60% to my hotel business since the court order,” said Ankur Bhatia, executive director of Bird Hospitality Group and a member of the Federation of Hotel & Restaurant Associations of India (FHRAI).

Bird Hospitality runs two hotels each in Delhi and London. One of its Delhi hotels, operated under the brand Roseate Hotels & Resorts on NH8 with 65 rooms and three restaurants plus a banquet hall, has been badly affected.

Bhatia said alcohol worth ₹70 lakh has been sealed and he is now worried one of his other hotels, currently under renovation near a highway in Rishikesh will also be impacted.

In a report last week, research firm Crisil Ltd said 25-30% of premium segment hotels will bear the brunt of the ban, with the most significant hit on hotels in Pune, Kolkata and Agra. Liquor sales account for about 10-30% share of the total food and beverage revenue. This forms about 5% to 15% of overall revenues and varies property-wise, analysts at Crisil added in the note.

“Not only will revenue from beverages (5-15% of total revenue) be impacted but the food segment will also witness a decline as customers will prefer dining at other restaurants that serve liquor,” it added.

According to Vimal J. Singh, managing director (South Asia) at the Louvre Hotels Group that runs 27 hotels in India, it now depends on the government to figure out how to deal with the issue by denotifying highways.

“There’s nothing much we do can about it, because it’s not in our control. If it goes on like this, there will be a serious impact going forward,” Singh said.

“The hotels that are getting affected will have a short-term impact for sure, but that business will then, over a period of time, move away to hotels which don’t have this problem. So, it creates an unfair situation,” said Manav Thadani, chairman of hospitality consulting firm HVS Asia Pacific.

PREMIUM HOTELS SEE SHARP DROP IN BUSINESS, WITH SOME REPORTING LOSSES OF UP TO 60%