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COVID: India's luxury hotels take a massive beating

Murali Krishnan New Delhi
July 7, 2021

With the coronavirus pandemic wiping out profits, the Indian hotel industry has been left in a state of total disarray. It will take years for the sector to recover, experts say.

The Taj Mahal hotel in Mumbai
With reduced travel and economic slowdown, the pandemic has done immeasurable damage to luxury hotel chains across IndiaImage: Punit Paranjpe/AFP/Getty Images

The hotel and restaurant business in India has been among the sectors hit hardest by the coronavirus pandemic, with the resulting lockdowns and economic slowdown decimating revenues and profits.

When the second wave of the virus was at its peak in April and May, the Federation of Hotel and Restaurant Associations of India (FHRAI), the apex industry body, sought immediate help from the government of Prime Minister Narendra Modi.

It was a desperate appeal for government aid to save the hospitality sector from imminent collapse. 

The FHRAI requested a moratorium on loan and interest payments and insisted that, without the support, the sector would collapse.

Hospitality sector is bleeding

"Without wasting any more time, the government should make necessary special provisions to waive statutory charges for the hospitality sector. Ignoring the industry even now will push it to the point of no return," said Gurbaxish Singh Kohli, FHRAI vice president.

Hotel executives and analysts stress that repayment of loans with interest has been difficult under the current harsh economic environment.

"For starters, we have asked the government to offer us a waiver of property tax, water charges, electricity charges and excise license fees for the lockdown period," a senior executive who asked not to be named told DW.

With travel reduced to a bare minimum and an economic slowdown, the pandemic has done immeasurable damage to luxury hotel chains across the country.   

Almost every segment associated with the hotel industry — meetings, conferences, restaurants, destination weddings and family entertainment, among other things — has been crippled by the impact of the health crisis.

According to FHRAI, the Indian hotel industry took a hit of over 1.3 trillion rupees ($17.4 billion, €14.7 billion) in revenue for the fiscal year 2020-21 because of the pandemic.

There are some 150,000 branded hotels in India and about 20-25% of them face the risk of permanent closure, according to the Hotel Association of India.

Jobs at risk

Many hotel chains have taken measures such as freezing new recruitment, partially closing hotel floors and shutting down restaurants. In some cases, they have also begun job cuts.

For instance, the Indian Hotels Company Limited (IHCL), South Asia's biggest hospitality group, reported a loss of about 7.2 billion rupees in the pandemic-stricken 2020-21 financial year, as opposed to a profit of 3.54 billion rupees in the previous fiscal year.

Last month, the iconic Hyatt Regency Hotel near the Mumbai Airport shut down temporarily because of financial stress.

"This is to inform all the on-roll staff of the hotel that no funds are forthcoming from Asian Hotels, the owner of Hyatt Regency Mumbai, to enable payment of salaries or to support the operations of the hotel," Hardeep Marwah, the hotel's general manager, said in a statement. 

In March, Marriott International put out a statement saying it would soon begin furloughing tens of thousands of employees worldwide. The group runs 84 hotels in India and hoteliers said these establishments and staff working for them have also been affected by the company's policy.

It's not just luxury hotels that have been affected — even many small and medium-sized players have also been hit.

"Forget about luxury hotels. Mid-market hospitality players are ruined, and many can't even pay their electricity bills and have decided to either shut shop or are up for sale," Geeta Mehta, a public relations executive, told DW.

'Setback for national employment'

Hari Sukumar, a senior executive of the Jaypee Palace Hotel, told DW that millions of jobs in the hotel industry are at risk due to the pandemic.

"The Indian tourism and hospitality industry is staring at a potential job loss of around 38 million, which is 70% of the sector's total workforce, due to COVID," he said.

"If this trend continues, it will be a setback for national employment," Sukumar added, pointing out that the hotel sector directly and indirectly accounts for about 12.75% of all jobs in India.

Apart from announcing furloughs of staff, leave without pay, closing of hotels and postponement of new hotel plans, many top chains believe that a sense of normalcy will only return if domestic tourism returns.

But the likelihood of such a revival in the short term remains uncertain, casting a dark shadow on the prospects of the hotel sector and employees working in it.

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