Survival first, revival later: Hospitality industry’s mantra for 2022
When the sun rises in 2022, the Indian hospitality industry will be waking up with prayers for survival, desperately looking forward to some form of support from the government as revival from the impact of the coronavirus pandemic of the last two years will be an arduous journey.
Just as the industry was beginning to see a flickering light at the end of a long tunnel towards the end of 2021, the spread of the Omicron variant of coronavirus and subsequent extension of suspension of scheduled international passenger flights till January 31, 2022, has come as a dampener to those who were looking to have some business in the winter season. With inbound tourist arrivals unlikely amidst the pandemic, the industry wants the government to incentivise domestic travels with income tax benefits for a limited period so as to help the hospitality and tourism sector get up again by tapping the pent up demand for holidays, within the country.
Also read: US auto component maker Dana says India offers huge opportunities in EV space
According to industry body Federation of Hotel & Restaurant Associations of India (FHRAI), already 25 to 30 per cent of establishments in the organised sector comprising around 60,000 hotels and 5 lakh restaurants have already shut shop and another 15 per cent could follow suit if there is no impetus from the government to revive the sector. “Right now, we are not even talking about revival because I don’t think we should. We can’t revive. Revival is when you bring back something that’s gone,” FHRAI Vice-President Gurbaxish Singh Kohli told PTI.
The hospitality industry deals with the most “perishable commodity” because if a hotel room or a table booking can’t be sold on a particular day, “it’s gone forever”, he said. “So, revival is out of the question. First you need to survive our lost business is lost forever,” Kohli said adding certain people have utilised their funds kept for expansion and growth to meet contingency and working capital expenses and are now running out of cash.
“To survive, how long will they be able to carry on now with zero funds is a guess we have to take…So, the number one priority should be how to safeguard the industry from going down further because neither the government nor the fraternity can afford to let it happen,” he said. Expressing similar views, National Restaurant Association of India (NRAI) President Kabir Suri said, “Most of us are still trying to survive. There are a few that are sort of trying to revive but I cannot say that everyone’s on revival. I would assume 60 per cent of people are still trying to survive and any new disruption would only cause further pain.”
Reflecting on how badly the sector has been hit by the pandemic, he said, “There has been quite a lot of erosion when it comes to our industry, 30 per cent of restaurants across India have shut down permanently. “There were about 7 lakh restaurants in India in both organised and unorganised sector. There’s been a great amount of unemployment that has been caused due to restaurants closing down.”
When asked how long could the sector take to revive, Kohli said, “There is still a very long way and a long ladder ahead to go on level, which we take as the pre-pandemic level…We think to bounce back to pre-pandemic levels it will take at least a minimum of 12 months, provided things remain normal.” Yet, hope is eternal and the sector is trying to stay positive, drawing inspiration from people who are beginning to travel and dine out as vaccinations increased and COVID-related restrictions were eased and there is cautious optimism in the air albeit the threat of the Omicron variant.
“The outlook in general, there is optimism, because since September onwards, business has picked up, people are dining out,” Suri said, adding things were looking up till the outbreak of Omicron variant was reported which has made people cautious again. Kohli said more people are looking forward to travel to beat the fatigue of restrictions due to the pandemic and it is a good time for the government to hard sell India as a destination with facilitative measures and incentives to encourage the 28 million plus people who travel out to stay back and holiday within the country.
Incentivising domestic travel through tax cuts or by way of tax deductions for a pre-agreed duration of two to three years will fill the void and help local tourism survive until international travel resumes, he said. Besides, Suri said companies in the sector should be allowed to get funding from Employee Provident Fund (EPF) and Employees’ State Insurance (ESI) “when there is some disruption of this kind, and businesses are not able to sort of sustain” because that “money is already with the government”.
Moreover, he said, “Our GST input credit was removed when GST was implemented. So, as simple as giving us our input credit back would bring a great amount of relief. We’re one of the only industries in India that don’t get any sort of tax credit input credit on our purchases.” On the operational side, Federation of Associations in Indian Tourism and Hospitality (FAITH) Consulting CEO Aashish Gupta said if the Omicron variant doesn’t pose a serious threat the decision to ban scheduled international passenger flights till January 31, 2022 must be reviewed at the earliest to salvage some winter season business.
“The Indian tourism travel and hospitality industry was eagerly looking forward to the resumption of flights on December 15. Since March 2020 the inbound tourism has been shut and the flights resumption as was earlier announced was one ray of hope,” he said. Amid all these, as 2021 draws to a close, the hospitality and tourism industry will be desperately hoping that there is no repeat of the second wave witnessed earlier in the year in 2020.
Pingback: CARS24 raises USD 400 mn at USD 3.4 bn valuation