Challenges faced by the Hospitality Industry in the Pandemic
Indian Hospitality Industry was bleeding from inside at the time of pandemic and has faced many challenges. Let’s know challenges faced by the industry from different industry experts Mr Pradeep Shetty Jt. Hon. Sec., Federation of Hotel
Indian Hospitality Industry was bleeding from inside at the time of pandemic and has faced many challenges. Let’s know challenges faced by the industry from different industry experts
Mr Pradeep Shetty
Jt. Hon. Sec., Federation of Hotel & Restaurant Associations of India (FHRAI).
The hospitality industry has been severely impacted ever since the pandemic hit the country in early 2020. The first lockdown and restrictions brought the sector to a standstill for almost eight months. The industry was hoping for some revival post-November 2020, but the second wave hit in April-May 2021 and completely disrupted the business once again. The financial loss to the industry from the two waves caused around 30 per cent of hotels and restaurants to shut down permanently. During the third wave, the restrictions again lost any momentum gained. The hospitality industry has suffered a whopping Rs.1.40 lakh crore loss and millions of people lost jobs. The last two years have been one of the toughest phases for the hospitality industry. Business was at an all-time low due to the pandemic led restrictions which resulted in liquidity issues and businesses getting squeezed. The restrictions were eased out in phases and it was always a stop-start-stop nature of lockdown for the hospitality sector which did not help either.
A complete lockdown during the first wave, while was the most pragmatic step taken by the Government, spelled doom for the industry. After the second wave, businesses that had gone under during the first wave just did not dare to re-open. Those that did are carrying massive debts even today and are coping with limited staff. Disruptions and interruptions are never good for any business. Even when the restrictions were eased restaurants were allowed to operate with only 50 per cent capacity and also, were required to shut down sooner in the evenings which are prime business hours. Obligations including payments towards utility bills, statutory fees and levies and taxes, among others continued without any reprieve from the Government. A large number of hotels and restaurants across the nation was forced to close down and many others absorbed losses that they couldn’t afford. Millions of families lost their livelihoods. Over the last two years, hospitality as an industry largely did not see any business.
The hotel industry is a long gestation industry which incurs losses in the initial years of operations and profitability improves only after few years. The hospitality industry’s total revenue in FY 2019-20 stood at Rs.1.82 lakh Cr. and it employed over 50 million people. During the period, the tourism and hospitality industry reported Forex earnings of US$30 billion making it India’s third-largest foreign exchange earner. However, Forex Earnings for the last two Financial Years have been entirely wiped out due to restrictions which also forced approx. 30 per cent of hotels and restaurants to shut business and millions lost their jobs.
Mr. Raoof Dhanani
Managing Director, Sayaji Hotels Limited.
The World has sailed through a number of challenges in the due course of two years with Pandemic. It’s not been easy for anyone not only humans but businesses/industries have all been on a constant ventilator fighting a war for their survival, no one has done anything exceptionally to survive but the basics. The basics of hygiene, safety, cleanliness and above all health. The only teaching of take-away from this pandemic is nothing in this world is constant, there will be days good/bad but survival of the fittest will remain the only thumb rule. However, this being equally true in all cases Industries/Businesses have learned this lessons from a bird-eye view.
Hospitality Industry also had its equal share of challenges and up’s and down’s. The biggest changed faced by the industry and is still being faced till date is the change of consumer behaviour. The guest has not only become more attentive but have also become very particular about their choices and demands. The biggest challenges during the COVID faced by the sector was the mere demand for survival. The outlets were shut, no guests/travellers, no room occupancy, no movements, no functions/weddings no revenue and all basic costs of salaries and others remained same. Casuals and staff were stuck at the properties there daily expenses, food, well-being, hygiene and health was our top most priority. The conditions were tough but the results have been better. We all have overall come out more strong and one team with one ambition.
Post-covid the demand of the leisure guest requirements has drastically gone up. People are now more health driven, conscious about sanitization, careful about their belongings, hygiene maintenance has become the utmost priority for such audience and that’s where probably the biggest challenge has come up for the hospitality sector that cost incurred is higher or at par with revenues, profitability has gone down. But still the primary goal for all of us is the same that our guest is our God and we try to maintain the highest standards of safety & security for them.
Director, Brigade Hospitality
The pandemic was a black swan event which wreaked havoc across the Indian Hospitality Industry. Several factors like India having the second highest caseloads, three waves of the virus, two severe lockdowns and a host of travel restrictions had created such a devastating impact that even after two years the hospitality sector is still reeling from this.
There was an unprecedented level of business loss for the industry as the sector had to deal with a travel ban across the country and no corporate movement as offices have moved to a work from home mode. There was a ban on gatherings and various curfews impacting all F&B and banquet business. Even after the removal of the restrictions the hotels did not witness any growth in demand for months, as the fear of the pandemic remained with the guests. While there was a lack of demand, the industry also faced a challenge of managing the safety of the staff and their availability given the humanitarian crisis.
The biggest challenge yet was the hotel’s ability to ensure the operational costs are covered given the low revenue situation and how are they managing their debt coverage and statutory payments as this is a capital-intensive industry.
Despite the challenges, the industry worked proactively to manage the situation. Hotels were the first to implement strict hygiene SOP’s and the focus never wavered from fulfilling the societal responsibilities through active CSR engagements. After realizing that the recovery curve is likely to be slow, the commitment never wavered as there were aggressive marketing campaigns to highlight great offerings and emphasizing on all health protocols. The industry worked hard on cash conservation, reengaging with all financial institutions to raise additional capital or refinance their debts and reviewed all cash reserves. We have now mitigated the survival stage and are on due course towards a strong revival. The corporates have resumed travel, international flights have restarted, the Indian wedding industry is back and strong and the people are well versed with the safety protocols to stay safe. Our caseload today is at an all-time low and restrictions are almost over. Our MICE industry is booming again, and leisure markets are seeing the crowds back. The business is moving fast towards recovery, and I strongly believe we will emerge stronger from this battle-scarred pandemic after working hard through troubled waters
Director at Cult House, Cult Terra, Satgurus Punjabi Rasoi
The scenario in the hospitality industry has changed. There has been a stable footfall after the government decided to lift restrictions due to the pandemic.
The response in the brand demand and sales had taken a hit during the pandemic, there was a decline in the graph in regards to walk-in customers. Most of the restaurants lost their regular customers and the only option was home deliveries. The hospitality industry had to be extra precautious when it came to taking care of all the safety measures in terms of preparing food items. Now, people are conscious with regard to dining, they are going out but they are paranoid because of the pandemic. Restaurants and hotels also took the necessary precautions and maintained the government guidelines.
Managing Partner, Tree House Hotels and Resorts.
Covid-19 and its resultant lockdowns have shaken the hospitality industry which have brought about unprecedented hardships. Overnight the Entire world came to a standstill. India was no exception. It’s economy was shut down almost overnight. Lockdowns, social distancing, stay-at-home orders, travel and mobility restrictions resulted in temporary or permanent closure of many businesses in the hospitality sector. Due to which a lot of people lost their jobs while others witnessed significant changes. In a nutshell, everyone faced one or the other challenge hit her to unknown, but the difficulties faced by Hospitality industry were most challenging.
Even after 2 years into the pandemic, the situation hasn’t stabilized fully. As soon as there is surge of pandemic, the travel bans and curfews are imposed that directly impacts travel and Hotel industry thus becoming the first casualty of the pandemic and probably the last to recover. To avoid spread of disease, government restrictions are imposed that leads to Immediate cancellations of bookings, reservations and events. Unfortunately, Hospitality industry is the hardest hit by the pandemic.
Direct affect of cancellations is impact on revenues leading to financial distress. Some projects that were at their initial stage were called off due to the fear of losses. The pandemic has impacted the hospitality industry with unprecedented challenges.
Reopening process began slowly and gradually. While people want to go on vacations there is a lot of apprehension and concern for safety and hygiene. Hotels opened but occupancy remained low.
Hospitality industry is witnessing sea change in the behavior and expectations of travelers. They are more concerned about their safety and sanitization. Hotels need to make substantial changes in their operations and work environment in order to ensure health and safety of both employees and guests, while the fear of Covid-19 is still lingering on. It is clear that to survive in this industry one has to adopt the new ways of functioning or perish. It is a long road to recovery for The hotel industry but this too, shall pass and the industry will see good days because of its resilience.