Hotel industry might take 6 to 9 months to recover fully: Puneet Chhatwal, MD and CEO , Indian Hotel Company

By Lijee Philip

The global pandemic has impacted the hotel industry severely. The industry has done some number crunching and the international travel could be adversely impacted by upto 25% this year, which is equal to a loss of three months of travel. This is a huge dent. While it will take a long time for tourism and travel demand to come back to its normal levels; a conservative estimate is that it could take anywhere from 6 to 9 months to recover fully, once the outbreak is effectively contained, said Puneet Chhatwal, MD and CEO , Indian Hotel Company and president of Hotel Association of India in an interview with ET.

1. The hotel industry was seeing a recovery of sorts before the Covid 19 outbreak. Even if the lockdown is lifted, how soon do you see the recovery happening in the sector?
India like many other countries has imposed a total shutdown of air traffic, both domestic and international. The 21-day lockdown is preventing movement of people till April 14. Re-opening of air travel will have a phased approach. In India, we have a very strong domestic tourism market, over 87%, a key factor in the industry’s recovery.

Consequently, it will take a long time for tourism and travel demand to come back to its normal levels.

2. Do you see faster recovery of mid-tier ,5-star, business hotels or resorts in that order?
The market will remain price sensitive in the short term and this will probably help the upscale and midscale segments. Outbound travel could be impacted – we foresee people taking more breaks within the country and domestic travel will be a key driver for the industry. Business hotels should see faster pickup as essential business travel picks up, when compared to leisure, especially international leisure travel which is more discretionary in nature.

3. What is the impact on human cost post the Covid 19 outbreak?
The human impact is unprecedented as this is a people intensive business. As per statistics, there could be a potential loss of 5-7 million jobs in India alone, within the hospitality sector. As per the 2018-19 data, the Indian Travel and Tourism industry size is US $247 billion. It is one of the fastest growing sectors , contributing 9.2% of the country’s GDP and employs 43 million people – which is 8% of all jobs in the country. The percentage contribution of job creation by hospitality sector to the nation could see a short-term fall on account of COVID-19.

4. What kind of government support do you need?
We are looking at support from both the Central Government as well as the State Governments.

From the Central Government:

-Extend moratorium to 12 months on payment of all loans for both amounts – principal and interest

-Subsidize employment for 3 months by Govt. contribution per employee of 50% of the salary

-Lease, License and Excise Fees as well as Property Taxes to be suspended effective 11th March till the end of COVID-19 period

-Enable GST collected to be used as Working Capital for 6 months

From the State Governments :

-A complete GST holiday for 6 months and lower tariffs for utilities like power and electricity for FY 2020/21

5. If the outbreak escalates, have you considered converting hotels into quarantine facilities? Is there a possibility to monetise such an arrangement with the government?

Many State Governments have reached out to Hotel Association of India (HAI) member hotels for quarantine facilities. For example -four IHCL hotels – Ginger MIDC Andheri Mumbai, one wing of Ginger Bhubaneshwar, Ginger Faridabad, Ginger Inner Ring Road Bangalore are being used for quarantine purposes. Ginger and some other hotel groups has also partnered with Apollo Hospitals , an initiative under Project Kavach called “Project-I”, across locations. There are definitely opportunities for monetising this with the Governments.

We will overcome the challenges through resilience. History tells us that while there could be a period of lull, business ultimately comes back.


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