70% small hotels on brink of closure, says industry body

The industry, which also employs people from different educational and economic background, faces the biggest human resource challenge with 70% of overall jobs now in danger directly or indirectly.

New Delhi: Hotel Association of India (HAI) on Thursday said its preliminary data suggests a deep impact of the pandemic on the hospitality sector. The association said more than 40% of hotels have shut and about 70%, mostly small ones, will face closure as pandemic-led restrictions continue to disrupt business.

“The total damage has not been assessed yet but our preliminary understanding is that more than 40% of hotels have shut and about 70%, mostly small ones will face closure. Smaller hotels are facing grave problems. If this prolongs for a longer duration without remedial action, the sector will have irreversible dent on its business," said MP Bezbaruah, secretary general, HAI.

The industry body has recently appealed to Prime Minister Narendra Modi for immediate intervention to provide relief to the hospitality industry which is on the verge of collapse. It highlighted five key areas that require immediate attention. It sought one-time settlement of loans and extension of loan moratoriums till September 2021; waiver of all statutory liabilities at Centre, state and municipal levels for the pandemic period; stimulus package-subsidising of salaries of hotel employees, according ‘Infrastructure Status’ and to bring Tourism & Hospitality to the concurrent list of the Constitution.

HAI has requested PM to offer stimulus package-subsidising of salaries of hotel employees by 50% from April 2021-March 2022 as is being done by many countries as a part of their economic recovery programmes.

Hotels in India are staring at a steep 20 to 40 per cent fall in occupancy rates during the three months ending May as lockdowns due to COVID-19 (Coronavirus)

While the plunge in occupancy could be 30-40 per cent for mid-scale and two-star hotels, the same for four-star hotels and above categories could be 20-25 per cent for the next three months beginning March -- which is peak season due to summer holidays and weddings,citing the increasing number of cities going under full or partial lockdowns.

On revenue side, hotels under the four-star or above categories could see 65-70 per cent fall in revenue per available room, while for two-star hotels it could be 50-60 per cent.

During the global financial crisis, the average absolute occupancy rates fell by over 9 per cent, with the highest fall being 10.40 per cent for four-star and above hotels, followed by three-stars at 8.5 per cent.

Markets like Singapore, Indonesia and Hong Kong, where the outbreak began in January, have seen sharp decline in occupancy rates -- much higher than seen during the SARS outbreak in 2003 when it fell to sub-20 per cent from around 70 per cent in China.