To say that these are testing times for the hospitality industry, may sound a trifle repetitive. But the truth be told, the industry is waging an unprecedented battle against COVID-19 – a crisis that threatens the existence of a large chunk of businesses, especially those with thinner pockets to tide over the impending liquidity crunch.
Zubin Saxena, MD & VP, Operations, South Asia, Radisson Hotel Group, shared his understanding of what lied ahead for the industry and how travel and tourism were going to shape up in the post-Corona world. He suggested a slew of measures that could provide much-needed respite to the industry in these times of crisis. Excerpts from a detailed telephonic interaction follow:
Will domestic tourism rescue businesses? May be
In his admission, he is an “eternal optimist.” But the gloom and doom of what’s unfolding have mandated a serious consideration on the road ahead. “The pandemic has set the industry back by several years,” he said, sharing his first impression of the development. He noted that foreign inbound and outbound travel was going to be the most significant causality of the post-Corona world. “The phobia of travelling in an aircraft will be quite long-lasting, and international travel is sure to be impacted,” he stressed.
He believed that these developments were going to bring about more resilience in the domestic market. “Thankfully, the domestic segment fuels almost 87 percent of the industry’s demand,” he said. Much like the USA, people were going to take more road trips and undertake train travel, he added. He expected the domestic airline market to pick-up “eventually.” “Once there is a sense of confidence in travelling safely, the leisure market is expected to pick up,” he said. He added that he expected to witness a “good demand” in the leisure market, in destinations famed for their leisure travel – Kashmir, Shimla, Manali, and Goa, among others.
Saxena believed that the money, usually spent abroad, was primarily going to be consumed domestically. He did, however, question whether these developments were going to be enough to keep demand and businesses at par with the levels in the pre-Corona times.
“The change and churn will propel tourism in India, in the longer-term, and open up new destinations, bringing about a culture of safety, security, and hygiene taking precedence over others. “It will perhaps help branded set of hotels more than the others,” he said in a reflective tone.
Examining the positives, he suggested that the travel season was almost over, and the next season was 6-8 months away, perhaps indicating that it provided a breathing space to recalibrate strategies.
Why the hospitality industry needs urgent intervention by the government
Every hotel room, directly and indirectly, contributed to 16 jobs, Saxena said, stressing on the importance of the sector in generating meaningful employment in the country.
The foremost challenge for the government was to create an impression of India being a COVID-19 safe society, he argued, taking stock of the big picture. “The impression of safety will be the most important element in deciding the fate of the larger tourism industry, be it airline, trains or hotels,” he summed. He advocated a campaign around domestic marketing, which, in turn, would drive a more extensive focus on augmenting health and cleanliness levels. “There need to be extreme-levels of awareness on these issues, and even then, I think the Corona-issue is going to have a lasting impact on the people’s psyche,” he said.
The liquidity crisis was the most pressing challenge staring the hotel industry, he noted. He lauded the owners for their magnanimity in responding to the situation, ensuring that lay-offs were curtailed, and the workforce was supported to the hilt. The sentiment of safeguarding the continuity of employment was very high, we were told. “Preserving the lowest rungs of the workforce and supporting them as long as they (owners) can, has been the uniform voice, by and large,” he said.
He, however, did caution that businesses in the absence of cash flows were not going to be able to support the workforce for a sustained period. Batting for a comprehensive “tourism stimulus package,” he advocated the government’s support to the industry with very low-interest rates. “The government must fill in the sustainability gap. There could be a working capital loan with low-interest rates,” he said, adding that the three-month moratoria on loans needed to be extended for a “little longer.” He suggested making them interest-free, if possible. At the same time, he did concede it not being the most suitable measure and wondered whether there were other means of infusing liquidity into the system. “Some respite on property taxes, excise taxes, and others, could cumulatively ease the burden on the industry in these testing times,” he said.
Voicing the concerns of the owners, he noted that there were genuine apprehensions on their assets coming under severe financial pressure. He suggested providing waivers and ensuring that no NPAs were declared in this financial year. “This could mean extending the term of the loan and providing longer moratoriums” he said, insisting that it could, at least, help preserve businesses and save them from the worst.
He minced no words and said that the industry was currently in a tailspin, and the only viable solution was to jumpstart the economy. “For us, it means demand in the business, and that is not happening right now,” he concluded.