The impact of COVID-19 on the hospitality Sector

Governments across the world have sealed international borders; there is a suspension of all international and domestic flights; compounded by a nationwide lockdown, together this is bound to bring an unprecedented phase in the history of the hospitality industry.

Adding to these woes in the months to come will be the fear to travel, whether on business or leisure, as the COVID-19 pandemic wreaks havoc across the world. The tourism and the hospitality business is bound to feel the heat.

The industry has already faced mass-scale cancellations for travel bookings and hotel accommodations and will continue to do so in the months to come. Some hoteliers don't see this sector reviving any time before October'20.

A report by the Confederation of Indian Industry states that the shut down and slow down is expected to last for a period stretching from February till October, 2020. It further states, however, that the toughest part coincides with the off season period of six months, which is set to commence shortly after a compromised winter and spring season; thus the industry will see cash flows only beginning to improve in November, 2020 and perhaps get to normal levels by end of 2020.

Sarbendra Sarkar, Founder Managing Director, Cygnett Hotels and Resorts stated that "April to June 2020 at this moment looks bleak, unless a vaccine is found at the earliest and the lockdown is lifted". He added: "Though in February, we managed to achieve 97 per cent of the budgeted revenues, we've experienced exponential growth in cancellations of about 90 per cent in March, while new reservations are now almost zero. We have similar numbers in terms of cancellations across all properties."

Vijay Dewan, Managing Director, Apeejay Surrendra Park Hotels Ltd and Chairman of CII West Bengal State Council revealed that the kind of losses that they would see on a "positive side be around 30-35 per cent and on a negative side would be more than 50-55 per cent", adding, "The situation currently is extremely fluid and very difficult to comment on. We do see a lot of nervousness amongst the guests and cancellation of future bookings. The occupancy is at a low with few hotels not being open as the lockdown situation doesn't allow any movement in some of the cities."

Vikas Kapai, General Manager, Sofitel Mumbai BKC, states, "In this current scenario of the outbreak, there is no doubt that its after-effects will hurt our industry a great deal. The lockdown has had an unfortunate impact on the hospitality sector where the occupancy levels have taken a major hit and are at an alarming all-time low, resulting in some hotels having to either shut operations or run with very limited facilities. Yes, there will most certainly be losses and looking at our current business on books, it does not seem like the hotel will fully recover by June 2020."

Adding, "Besides operational issues, the reduced traffic to the hotel will also have an obvious cascading effect on revenue from F&B, MICE and other areas. Budget reallocations, diversion of marketing spends, postponing investment plans and consolidation are amongst some of the measures that would have to be taken to plan for the upcoming months."

For Goldfinch Hotel Mumbai, the de-growth has been more than 80 per cent, informed Subhadeep Datta, it's General Manager. "We don't see this sector reviving anywhere before October'20," he added.

Similarly, Dr Ankur Bhatia, Executive Director of Bird Group that owns Roseate Hotels and Resorts said: "We have not had guests arrivals in the hotel since a month now. And we don't expect the situation to ease out very quickly, even after the lockdown is over."

He noted that most of the hotels currently have an occupancy of not more than 5-10 per cent. These are the people who are stranded because of the lockdown. Roseate House Aerocity is operational and has 5-10 per cent occupancy with long staying guests and some moved in from its other property, The Roseate, which has been temporarily shut. The group had expansion plans in Hyderabad, Rishikesh, Jaipur and overseas as well which are now being postponed.

In the Capital, to continue making some revenue and in a bid to keep customer engagement, hotel chains like the Hyatt and Hilton are offering customers the opportunity of home delivery of food items. Both Hyatt and Hilton have partnered with Zomato and Swiggy and share their menus on WhatsApp. IHCL and ITC are offering clients the opportunity to order and have their food collected via contact less delivery.

On the other hand to tide over tough times some hotels which have leased or licensed out spaces on a commercial basis, continue to demand rentals and license fees from their in-house commercial partners. A privately owned hotel in the heart of Lutyens Delhi has neither offered any relaxation nor moratorium to its licensors; this despite having negligible occupancy, a government mandated lockdown, inaccessibility to these commercial spaces along with no footfall of tourists.

A leading daily reported in Maharashtra that department store chain, Shopper's Stop, told it's landlords it would not pay license fees and other charges till the reopening of its premises. The newspaper also reported that an International coffee chain which has 61 branches in Mumbai has also written to it's landlords, while We Work India has sought reduction in rentals. The daily also reported that the "Lodha Group announced a full waiver for it's retail partners who rent spaces in its properties until the government lifts the lockdown." On Sunday the Chief Minister of Delhi appealed to landlords not to force tenants to pay rent for two to three months, however if this appeal also extends to commercial establishments is still unclear, when small companies and businesses have been hardest.

On a positive note some hotels are offering their hospitality services to help those immediately affected by the COVID-19 crisis. Anant Leekha, Deputy General Manager, ibis New Delhi Aerocity stated, "ibis New Delhi Aerocity homed close to 200 guests as part of the Delhi Government's initiative to offer paid quarantine facilities at the hotels in Aerocity. A separate hotel team was working with the Government authorities and medical team to service these guests and rooms. All the guests under quarantine tested negative and were cleared by the medical team. After the quarantine period these guests could choose to continue staying at the hotel or go back to their cities with the assistance and support provided by authorities to issue passes. The hotel team arranged transportation to Pune, Mumbai, Bhubaneswar, Mohali, Assam and other cities for those who chose to go back to their hometowns."

Leekha added, "There are a few guests in-house (both domestic and international), who had to extend their stay due to the lockdown. We understand that this is a testing time for all of us, but it has been great to see our staff extend all the assistance they can."

Even travel agencies and online travel portals are affected. Amanpreet Singh Bajaj, Country Manager, with leading travel site Airbnb India, states, "With travel being impacted due to COVID-19, as a company we stand in solidarity with our hosts, guests and the front line workers who have been on the forefront of this outbreak. To help protect our community in these unusual circumstances, we have rolled out our extenuating circumstances (EC) policy, which covers our hosts and guests with eligible reservations who are being impacted by the coronavirus (COVID-19) outbreak.

In an ingenious way to keep people connected the site recently launched our Airbnb Online Experiences. Bajaj revealed, "Through this unique platform, we are providing our host community the opportunity to connect with guests and earn an income despite the COVID-19 disruptions. Additionally, we also announced a new program to allow hosts to open their homes to those on the front line of the pandemic. Our generous hosts have offered 100,000 places to stay people for responding to the pandemic across 160 countries and regions. Since it is a rapidly evolving situation, we will continue to monitor the official guidance from the local government, health authorities and the World Health Organisation in order to support the health and wellbeing of our community. We will continue to take the necessary steps and update our policies and programs accordingly."

Out of 22 hotels under Apeejay Surrendra Park Hotels Limited, five hotels are operational with an average occupancy of 10-30 per cent. In Kolkata, they have also assigned almost 20 rooms for health staff and medical practitioners. They have also introduced special staycation packages for locals across cities to help people practice self-isolation and social distancing.

Biswajit Chakraborty, General Manager Delegate (Area General Manager), Pullman & Novotel New Delhi Aerocity stated that, "Majority of the guests staying with us currently, are foreign nationals awaiting return to their country. We are ensuring guests continue to have a safe and comfortable stay. With Restaurants & Bars and Wellness areas closed in line with government guidelines, a dynamic in-room dining menu has been implemented to ensure our guests have the required dining facility served with utmost care. Further, in Room Active Fitness Kits and Yoga Mats are available on request. Guests can play fitness videos by scanning a QR code placed in the room."

Goldfinch Hotel is also partially operational, and accommodates people from the essential services. They have kept one floor of their hotel on standby by the collectors' for any requirement by the Bombay Municipal Corporation.

Dewan, however, anticipates that domestic travel will pick up sooner and the industry can take a sigh of relief. "We need to be cognizant of the fact that people will be hesitant towards getting back to using hospitality or travel services. International travel will only happen once the situation is better, and customers are sure about safety and security."

Datta, on the other hand, believes that business travel will bounce back once the situation gets normalised. He said: "Being in Mumbai, we feel that this is the city that bounces back the fastest which is an added advantage for us. Also, Mumbai does not depend on leisure travellers, it gets more business travellers, so once the lockdown is over, we are expecting some business travel to happen."

When contacted, hospitality chains like IHCL, Hyatt, Radisson Blu, The Leela, ITC and The Oberoi Group refused to comment.