Coronavirus 0 – 1 Indian Hospitality

The covid-19 pandemic has brought the global economy to a standstill. This can be easily termed as the darkest phase in the last century of the history of mankind. Majority-if not all- sectors have taken a severe hit during this turbulent phase. One of the first industries to witness a major crisis is the travel and hospitality industry. The industry has no doubt witnessed a nightmare in terms of impact but still looks to bounce back soon post the issue. One of the major service providers of the industry, hotels are supporting the nation in fight with the COVID-19 by offering rooms as quarantine facility, helping the stranded travellers, converting rooms into workstations for corporates, which is a much bigger and needed service during this unprecedent scenario.

Hospitality turns hospital, workstations; hoteliers turn hero

When there has been a lot of negative sentiments around the industry and across the 7.8 billion people across the globe who are all potential travellers, here is a bright side of the hospitality industry where hoteliers are turning into heroes and helping the community during these never-seen-before-times.

Speaking about the community service,  Vijay Dewan, Managing Director, Apeejay Surrendra Park Hotels and Chairman, CII West Bengal State Council said, “Zone by The Park Kolkata is working with the West Bengal Government and have assigned 20 rooms on a daily basis for the health practitioner, medical staff battling the COVID-19 outbreak. Few of our hotels are operational and we are ensuring our best to deliver the services and to keep everyone safe. We are also working with the central government, state government and various authorities to support them in this time of crisis.”

Apeejay Surrendra Park Hotels is also undertaking various initiatives to support senior citizens and the underprivileged who are suffering the most due to lack of food supplies and essential items. “We have launched a neighbourhood service initiative, #THEParkHeartOfHope across our hotels, wherein anybody especially the senior citizens can call us for any help, be it groceries, medicines or food. The team respond to the request immediately taking all safety precautions. We are also providing free food every day to the underprivileged and community warriors countrywide across our hotels. Till now we have provided free food to more than 3,000 people,” Dewan added.

Shwetank Singh, Vice President – Development and Asset Management, InterGlobe Hotels (IGH) said, “At ibis Delhi Aerocity, we are providing full support and assistance to the government in their efforts to control the Covid-19 outbreak. At present, we have reserved 149 rooms across three dedicated floors for guests who have been instructed by authorities to undergo a self-quarantine process after returning from abroad. We remain committed to continuing this facility till this pandemic is managed. We have also coordinated with the concerned embassies and have offered our services to international travellers who are stuck during the lockdown. Our hotels have offered the best available rates to these guests and are in constant contact with the airport authorities and embassies to ensure these guests can be transported to the airport as flights are arranged by their respective countries to take them back.”

Also, a lot of the IGH properties have been converted into work from home facilities. “Our properties in Pune Hinjewadi and Chennai SIPCOT have been taken over by our key accounts to provide work from home facilities from the hotel rooms for employees as a part of their respective business continuity plan.”

Extending similar services to the nation, Rajneesh Malhotra, Vice President Operations & Asset Management, Chalet Hotels said, “With the rising number of COVID-19 cases across the country, hospitality industry has come forward to pledge their support to those who are working tirelessly through these trying times and the community at large. We have always been conscious about our role in the community. Over the last few days we have rolled out several initiatives such as distributing food packets to government employees and healthcare professionals who have been working tirelessly despite the lockdown. In these troubled times we also wanted to do something that would usher in cheer so we’ve lit up our hotel buildings with messages of hope and positivity, this has definitely brought a smile on many faces.”

Adverse impact

The global travel and tourism started witnessing almost a total downfall with majority of the governments issuing travel advisories for their citizens asking them not to travel in February and March. Occupancies started diminishing, ARRs have taken a backseat and cash flows have become a major challenge for the industry.

“A dynamic services industry like hospitality and travel have been adversely impacted due to the spread of novel Coronavirus. The growth and the business have come to a standstill, where the hospitality sector is facing the adverse effects of global health crisis with occupancy, cash flow and ARR taking a backseat. This is going to be a very challenging year for all of us. Since, our industry is allied with tourism, travel and trade sectors, the loss is being faced by all of us. Undoubtedly, we will need a good amount of time combined with support from the government to slowly get back the track,” Dewan said.

As per reports, the industry is set to witness as high as 80 per cent degrowth compared to 2019. The sector is still coming to terms with low room demand and uncertain future bookings as the hotels are unable to secure any future business.  “Largely, the corporate travel, leisure demand and MICE have also been severely hit in the last few weeks. The calendar year had a strong start with January and February bringing in usual business, however, with Covid-19 outbreak, the circumstances triggered cancellations and fall in occupancies. Research papers such as HVS and Hotelivate have estimated the losses would range anywhere between US$ 1.5 Bn (early stage assessment) – US$ 3.5 Bn (assessment post the lock down) for the organised sector of hotels, given the situation is controlled by July 2020. Having said that, these numbers may differ and can even go up to US$ 4.5 Bn if the situation remains the same till Q3 of FY 2021,” Singh said.

Citing STR, report Singh said that the occupancies for the country wide hotels were earlier estimated at ‘-44 per cent’ against last year. “The same number is now reporting as low as ‘-80 per cent’ according to the data available till March 2020. As a matter of fact, the occupancy pan India during the last week of March was as low as 11 per cent which is extremely rough for the entire sector. The same goes for the blended nationwide average daily rates (ADR) which have seen a drop of around 14 per cent – 20 per cent.”

Cancellation and Refund policy

Initially, a lot of questions have been raised that hotels are not willing to refund the booking amount. But as per official statements, majority of the branded chain hotels have borne the brunt and given either 100 per cent refund, credit notes, or have requested to postpone the bookings. “Our hotels are managed by reputed global brands and their cancellation policies are in sync with the need of the hour,” Malhotra informed.

Echoing similar opinion, Dewan added, “Apeejay Surrendra Park Hotels have been very accommodating in its booking policies, cancellation as well as postponing dates for later. We understand that these are challenging times and we want to comfort our guests in such time of crisis. Our teams are available in case there is any issue.”

With a guest first strategy, players like IGH have taken a step to ensure all refund for room bookings and MICE bookings. “Our hotels have not had any such problem as we have returned all booking amounts for cancellations made for room bookings and events scheduled at our hotels. This was a business decision taken at the beginning of the pandemic as we understand the impact this has on travellers and guests during these situations. It is important to understand that these cancellations have resulted due to circumstances which are beyond one’s control and we support not only the government but also our guests in these difficult times,” Singh revealed.    

Construction slowdown

The pandemic has not only bought the hotel construction scenario to a temporary standstill but there is a possibility that the restart of the work will take much longer time. As the entire industry has witnessed a major cash crunch, the priority for the industry is to stock up cash for survival. And, the construction of new projects will be the least priority which will slowdown the pace of supply for a while.

“Most hotel companies including us have stopped work on the construction sites due to the lockdown. But even once the lockdown is lifted, we expect the development side of many projects to witness a slow recovery due to the following reasons : Cash conservation – capital availability will remain constrained, but debt rates are likely to reduce; remobilising of the labour force - as most workers have left from site areas during the lockdown, their return may be restricted and can take time; weakening of Indian rupee – this will make the imported items expensive for the Indian developer; supply chain disruption- many hotels including us are dependent on foreign countries (including China and Europe) for the material supply. This is likely to remain effected for a while,” Singh said.

Some players feel that not only there will be a slowdown in the hotel construction, but there will be a lot of modifications to the project depending on the scenario post the Covid-19 pandemic. “All ongoing projects will experience delays and some of the projects may be modified substantially basis the business environment that emerges post COVID,” Malhotra added.

Revival Strategies

The scale of the covid-19 spread across the globe has been vast and this has left an air of uncertainties hovering around. Predicting a recovery time period looks extremely difficult at this moment as even if the lockdown is lifted, not every sector and service will be operational with immediate effect.

But being optimistic, hoteliers have started to chalk plans to relook their businesses post the coronavirus issue.

With a hint of positivity, Singh said, “Such dire situations come with a silver lining. We see this as an opportunity to take out all business inefficiencies that may have crept in over the years. Once the travel restrictions are removed, we will relook at our hotels with a fresh lens. We will be treating each hotel as a new opening and will reposition them accordingly. Furthermore, we are already working on a detailed sales, marketing and PR plan along these lines.”

With a complete process in place, Chalet Hotels is also set to work on timebound strategies. “A comprehensive strategy document is in works and we will roll it out as soon as clarity on the COVID timeline emerges. We are working on short, medium, and long term approaches to mitigate the impact of this crisis, however these will take shape once we have clarity on how long the COVID-19 crisis is going to last,” Malhotra added.

Also, at the prima facie stage, hoteliers are looking at the domestic market to help them bounce back. “Our focus will be on the safety and hygiene of all our guests and employees. We will focus heavily on local and domestic market to start with. The hospitality and tourism segment are expected to see an upsurge in demand from domestic travelers post the containment of virus. Since, movement of foreign tourist arrivals might still be limited, there is a huge potential for all the hotel segments to attract domestic travelers from nearby cities,” Dewan said.