Hotel occupancy at 10%; industry seeks govt loans amid COVID-19 crisis

Despite the uptick in economic activities after the unlocking stages, the hospitality sector is still reeling under the impact of COVID-19 pandemic. The sector did get permission to operate from June 8 (with certain conditions) but the state-specific restrictions and the general fear among travellers hampered the ability of the hospitality sector to rebound.

According to Gurbaxish Singh Kohli, vice president of industry association FHRAI (Federation of Hotel & Restaurant Associations of India), the nationwide hotel occupancies are just 10-15 per cent despite nearly all the hotels being functional. "We need the government to step in here and tell people to go out and travel. We are following all SOPs (standard operating procedures) to make the travel safer," he says.

In order to tide over the current crisis, the FHRAI has also asked the government to give soft loans to hotel and restaurant players. Financial support will cover for their required working capital, which in turn will help them sustain since the pandemic has already resulted in the closure of over 30 per cent of the hospitality units in the country, especially in the unorganised segment.

The association argues that the pandemic has caused large-scale damage to the industry. In more than seven months of FY21, hotels have reported about 20-30 per cent of average pre-pandemic revenues across the country. "We are not asking for direct relief. We demand soft loans and deferring or cancellation of statutory dues. The governments cannot ask us to pay excise fee and other charges for the months when our units were closed," says Kohli.

A total washout of the inbound tourist segment is only adding to the woes of the sector. For instance, 10.89 million foreign tourists visited India in 2019 spending $29.96 billion. The sector hopes to make up for this loss by promoting domestic tourism but some state-specific restrictions are playing spoilsport. The sector also fears that countries like Sri Lanka, Cambodia, and Thailand have started campaigning aggressively to woo tourists.

"We might have a situation where inbound tourists would be missing for the next 12 months but Indians would be travelling abroad for vacations. We should not let that happen and focus on keeping these tourists within the country," says a hospitality consultant. Even though the domestic travel demand is weak, it is expected to bounce back sooner than the inbound segment. According to Bain & Co report, Indians spent around $94 billion on three billion domestic and foreign trips in 2018. Most travel and tourism firms are mulling over ways to tap this demand when it revives.

Experts say that the pick-up in the aviation sector is not helping much. This is because the airlines are reporting nearly 60 per cent occupancies but most travellers avoid staying in hotels or eating out when they are on a personal or business trip. The sector is also hurt by last month's announcement of the central government to allow its employees to purchase goods and services in lieu of the tax-exempt portion of their leave travel allowance (LTA). "Such decisions are going to push us deeper into the crisis when wheels of the sector are clogged," says a hotelier.

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