Hospitality industry which comprises travel, tourism and accommodation had created 4.2 crore jobs which accounted for 8% of the total employment of the nation. It also ranks third globally in terms of investment in travel & tourism, with national investment in it up to 6%.
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Webinar on hospitality industry
1. Webinar On Hospitality Industry- The way forward
Resurgent India Knowledge Series Presents
Webinar On Hospitality Industry- The way forward
Speakers- Mr. JB Singh, CEO- InterGlobe Hotels
Speakers- Mr. Ashish Kumar, VP-Corporate Finance & Treasury- InterGlobe Enterprises
Speakers- Mr. Dilip Puri, Founder and CEO- Indian School of Hospitality
Moderated by- Mr Jyoti Prakash Gadia, MD- Resurgent India Limited
Key Takeaways
Industry Overview
● Hospitality industry which comprises travel, tourism and accommodation had created 4.2 crore jobs
which accounted for 8% of the total employment of the nation. It also ranks third globally in terms of
investment in travel & tourism, with national investment in it up to 6%.
● The tourism & related business activities are worth at over $28 billion. As per the reports, around 70%
of the total estimated workforce is likely to be unemployed. The profitability & revenue will also
plummet down to 20-25%.
2. Issues outlined by Industry experts
● The ability of the hoteliers to institutionalize massive changes in the organisation in multiple ways, will
serve as a barometer of how successful they will be going forward. They may also see significant
improvements in the margins & the way hotels operate once lenders/bankers can mitigate the risk to
overcome the survival time.
● Even with SOPs of health and safety becoming more defined in big branded hotels, the business of bed
& breakfast models will also pick up speed in India, like west, alongside.
● Repurpose hotels have different lenses attached to it and one has to think out of the box as to how
existing hotels can be repurposed into different real estate models if their survival is at risk for another 3
years.
● The industry runners will have to probe distinct ways and means to preserve and conserve cash in all
aspects, while taking enough support from the regulators & socializing the issues with stakeholders. It
will look at things from quantitative and qualitative facets, against issues faced by the industry because
of the COVID 19
● Businesses with presence of more than a decade will have some mechanism of cash element being
diverted in the business, equity support that has to be demonstrated.
● In the long run, one has to keep an eye on the best practices happening globally.
● Support from the banks/financial institutions are legitimately huge in the international market for this
industry. Separate funds have been created in the past.
●Reinventing of wheel in terms of cost management, manning ratio, cash management & support from
stakeholders like banks in form of short-term working facilities/OD, EPCG scheme, GST, waiver from the
property tax, liquor taxes, and many more ways which can give sufficient breathing time to the industry
to jump back on its original level.
● The industry is currently averaging out close to 8-10% occupancy depending on which part of the
country it is operating in.
Webinar On Hospitality Industry- The way forward
Cost-Cutting & Compliances
● Hoteliers will have to be mindful of the capex, they will incur in the process of making their hotels safe
and hygienic. There is a possibility that these solutions are for short-term pre vaccine era which might
become redundant in the future. One should not go overboard & have a balanced approach for incurring
capex.
3. ● The organized players, because of scale & enough intervention, usually can recover 60-65% of the cost
faster than unorganized players. They have structures and processes that unorganized players lack &
hence impact will be far reaching.
● As the customers will increasingly prefer compliance, independent operators will have to ramp up to
get them in order. India is going in a direction where the need for compliance, transparency,
sustainability, responsibility is growing.
● This crisis will force the unorganized sector to obtain a level of compliances in terms of hygiene &
safety in the near-term. Government & regulators might enforce certain guidelines or we may even see
certifications that will take care of safety issues.
● Social changes brought about because of this pandemic in lifestyle will also affect travellers and
tourists while booking accommodation.
Technology & Communication
● Technology will remain a big differentiator and young professionals will have to be friendly with the
fact that AI, machine learning & automation are not here to take their job but make them more
distinctive & unique.
● The re-skilling of staff and professionals will require them to embrace digital and online learning. Their
mindset will have to be aligned with the new future that will prepare them for Covid -like environment
of uncertainty.
● Payroll forms a tremendous part of P&L for this industry, and cost-cutting measures in this area is to
reduce the room to staff ratio. This has to be done while enhancing the productivity of the staff so it
does not affect the business. And this is by identifying ways to adopt technology in operations.
● For structured hotels, health & hygiene specifications were already in place except for few basic
changes, the change that may be forthcoming may be in plethora of other forms like sustainability,
energy saving, staffing & recruitment, & many other ways.
● There is a digital explosion which has opened up fresh opportunities amid uncertainties. It will be
interesting to see how this will affect & benefit the industry as a whole. India is in a unique place at the
moment. It is demarcated as the one that will lead the future as the economic shifts happen.
● With the emphasis on bringing down the manning cost, there is a need to re-skill the manpower. Re-
skilling will be important because the time & expectation will differ from what it was pre-covid era. This
industry has also lagged in an adaptation to technology as compared to other sectors.
● Companies will have to learn to effectively communicate in this virtual environment and identify non-
verbal cues in absence of physical nuances.
Financial outlook
4. ● Only businesses with enough reserve will be able to weather this storm. Hotels who were doing well,
owners & management would take out cash & invest in either upgrades or capex, expansion & growth.
So if they have not kept a pile of reserve or contingency aside, they will be greatly challenged in
upcoming times.
● As the numbers are quite terrifying because of the shutdown of business, the government has offered
respite by being considerate and proactive in their response. However, this industry will need more aid
by a combination of solutions because it is sitting on a close to $8 billion of loan book, organized &
unorganized combined.
● Financial institutions and bankers need to back up this under penetrated industry, which has an
enormous amount of potential for growth and expansion by placing the right bets on a calculated class
of assets.
● International capital markets are more flexible in decision making as they are not dependent on
regulators for guidelines. Banks in Germany, UK & New Zealand are taking independent decisions based
on the history of the borrower and providing all the essential support.
● Second, international sovereigns are also providing support to corporates in form of reimbursing the
payroll, which is a key expense anywhere.
Recommendations by industry
● we aspire for an extended moratorium of a year. As deferment of interest is announced till March
2021, industry recommends capitalization of it.
● Onetime restructuring of the accounts with details to be worked out about the qualification of
account & etc.
● Creation of an AIF, similar to the fund for reviving real estate projects, stuck for funding reasons
● Mid-scale operators cannot recover excise fees from the sale of liquor & are paid through cross sales
of F&B, hence deferment of the fees can help with the liquidity crisis.
►Watch the webinar here: https://www.youtube.com/watch?v=EEpB-6OQo68