A bustling domestic market, drawing on its population of 1.4 billion, sets India hotels up well for recovery, despite what hoteliers say is a lack of government help.
REPORT FROM INDIA—Indian hoteliers still are coming to terms with COVID-19, but have found innovate ways to generate revenue, cut costs and make optimum use of resources.
Still, the road ahead is far from clear, sources said.
Vishal Kamat, CEO of Kamat Group of Hotels, said “it is very premature to talk about chalking a road ahead or to even think of which segment will recover faster or slower.”
“Holding on to what is there at the moment and taking care of it on a day-to-day basis is the priority,” he said.
Achin Khanna, managing partner of business consultancy Hotelivate, said, “The organized Indian hotel sector has been reeling under the stress of almost no revenue and significant fixed costs.”
“The past four months have played witness to the worst period for hotels across India, possibly in recorded history,” he said.
“That being said, the resilience and zeal of the industry’s stakeholders must be recognized. The hope is that (the third quarter 2020) and (the fourth quarter) capture further growth in demand, crawling the nationwide number up to close to 40% to 50% (occupancy) across some markets.”
Nationwide, hotel occupancy is currently closer to 25%, he added.
Indian hoteliers said the country was caught off guard by the pandemic.
Steve Borgia, chairman and managing director at INDeco Leisure Hotels, said, “The lockdown happened suddenly without a warning, and we were all caught unawares. In eight hours, I had to lock my properties, pay my staff three months’ wages in advance.”
He added suppliers had to be paid and the normal business cycle was affected overnight by huge financial pressures.
“It is not easy to lockdown a property. It still has to be maintained so that when it is reopened, it is in a fit condition. We had to move a lot of equipment, tighten security and retain staff for maintenance. I am spending 75,000 (Indian rupees; $1,000) per day to maintain the property in lockdown situation.”
Kerrie Hannaford, VP of commercial for India and South Asia at Accor, said the last few months have been tough.
“It has been more difficult than ever expected, but at the end, when we would be looking back, it will be a very rich adventure, humanly,” she said.
Sources said locking up properties and the pressure to retain staff is affecting hoteliers the most.
The government could do more to help, they said.
“The government has done little to support us except talk. All the moratorium and loans offered to (small and medium enterprises) come with riders. Most of it goes to pay the banks, so what is left for day-to-day operations? If coronavirus had happened a few years ago, the hoteliers were in a better position, as there was a surplus. Today, we are reeling under collective losses. Unlike other countries, the government is not supporting us with payroll support,” Borgia said.
Hoteliers the absence of clarity on guidelines make opening and running a hotel difficult.
Many guidelines already passed are rejected at local administration levels, supplemented with district and city rules.
“As we all are aware of the uncertainties attached with the current scenario, we are tackling situations as they appear,” Hannaford said.
“Revenue inflows have been extremely limited for the last three months, since the majority of our hotels were shut or operating partially. … Tough decisions were made considering an unprecedented situation, (and while) 45 of Accor properties are operational currently, as we move towards phase three of unlocking, we are confident that the remaining hotels will soon be operational as well,” she said.
Borgia said the government should allow hoteliers to open hotels and run them.
“The administration at ground level is not equipped to handle the situation, so we are told to keep our hotels shut. You cannot keep paying staff without generating income. The recoverability is a huge problem. I’m afraid from a pandemic crisis we will move into economic crisis and from there to a poverty situation. I know of several properties … up for sale. There are several hotels which are closing down,” Borgia said.
Khanna said some hotels and ownership firms will be unable to recover.
“There will be (non-performing assets), foreclosures and distress sales. There will be more job losses and increased unemployment in this sector. However, it must be stated that there will also be those who manage to wade through this period and come back with a roar on the other side,” he said.
Huge home market
As with many global markets, the Indian hotel industry is looking to woo the domestic traveller.
“The market for the luxury segment in India had grown exponentially in the pre COVID-19 days, and in certain cities we had witnessed an increased demand from the well-heeled and upper middle-class travellers seeking a slice of the luxury experience,” Hannaford said.
“While we will continue to see a minor percentage of bookings in the luxury segment, in times to come, initial demand would be driven by the midscale and economy segment.”
As far as segments, “recovery of midscale and economy would be faster than luxury,” she added.
“(Overall), pickup would be a gradual process, but we are confident that we will soon attain some normalcy,” she said.
The other priority after opening is convincing guests about safety, sources said.
“The biggest challenge in hand at the moment is to instil confidence in our guests to start travelling again. … Gaining trust of the guests and ensuring them that it is safe to travel is the most important thing,” Hannaford said.