What is the impact of COVID-19 on the Hotel Industry? | Coronavirus: Impact on the Hospitality Industry

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What is the impact of COVID-19 on the Hotel Industry? | Coronavirus: Impact on the Hospitality Industry

Since many countries, including India, remain in partial lockdown and continue to implement strict social distancing steps, the question on everyone’s mind today is how quickly will we return to “business as normal” after almost four months of standstill?

The COVID19 pandemic has brought the world to a standstill, with the hospitality, travel and tourism sector being the most affected due to travel restrictions across the world and within India. Undoubtedly, the hardest-hit industry is aviation, hospitality, and tourism which are interdependent.

Except for essential services, all businesses are currently facing revenue and operational crises, particularly those in the leisure and hospitality sectors.

The Indian hospitality industry is facing a big challenge, one that is more severe than what the sector had witnessed after the financial crisis of 2008.

It has been estimated that the Indian hotel sector will see its revenue decline by ₹90,000 crores in 2020. India’s hospitality industry was at $247 billion in FY2018-19, contributing 9.2 percent to the GDP, employing 43 million people and bringing forex earnings of $29 billion, becoming the third-largest foreign exchange earner in the country.

As per the Federation of Associations in Indian Tourism and Hospitality (FAITH), around 70-75 percent out of a total estimated workforce of 5.5 crores (direct and indirect) could get unemployed (around 3.8 crores).

More than 50% of the Hospitality industry contacted in this pandemic has shut down more than 80% of their inventory during the nation-wide lockdown period.

The expected time, as per the experts, for hotels to come back to 2018-2019 RevPAR levels are 12-24 months of 60%, 6-12 months 20%, and More than 24 months 20%.

The hospitality industry stands to lose, basically a ‘people’ industry, if people are afraid of traveling and meeting other people. Perhaps one of the most important challenges that hotels will have to tackle is to restore guest trust in the quality of safety, health, and hygiene maintained by hotels.

Small hospitalities will be bigger. Developers conceptualizing one big 200 room hotel will look at multiple properties of 25 rooms each as these will be cost-effective and mean less debt on the balance sheet.

Also, shortly, people will be comfortable being in smaller boutique hotels with 10-20 guests rather than a hotel where you have 100 people at the breakfast buffet or the pool. Also, these will be easier to sell as 4-5 families that have followed all quarantine protocols will like to go ahead and book the entire boutique hotel. That is the behavioral change we can expect.

Luxury business hotels, especially those in suburbs, will be the last to recover as international travel is not expected to pick up before November. Delhi, Mumbai, Chennai, Hyderabad, and Bengaluru that had a lot of business visitors should be ready for a tough time for the next few months.

Post COVID-19 the number one consideration will be on health and safety which translates into hygiene and sanitation issues of the hotel. The checks and screening will have to be erected for health purposes.

During this lockdown period, a systematic and comprehensive review should be undertaken to ensure that business recovery as after the unlock happens in all areas, it has to be in a safe and well-organized manner. While many storms in the form of SARS, swine flu, and the like have been weathered by the hospitality industry, the current situation is also ‘novel.’ Flexibility and adaptability will go a long way to ensure the road to recovery is navigated successfully.

In the next post, we will share about, How the Hospitality Industry is gearing up for ‘touchless hospitality’ and how can they survive these tough times? Do share your views on the topic.

Editor: Mehul Singh

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