Down With COVID-19, the Hospitality Industry Remains Hospitalised With No Vaccine in Sight

“Hello sir, I want to cancel my booking for the month of May. Can you please process the refund? Here are my account details,” read a whatsapp message from Mr. Sinha, our guest to be in our latest Sikkim property. I thought of requesting him to change his mind and accept our offer for extension instead of cancellation but resisted the temptation. It was futile though. Almost everyone before him had turned down the offer. Almost every advance booking had been cancelled by now. Transferring the refunds was a big challenge. Once you receive a payment, it does not stay in the bank account. Either it gets invested or spent in various other business activities. No one ever thought of a cent percent cancellation rate and we cannot blame anyone for this. The current COVID-19 crisis has left everyone vulnerable.

Most of the hotels across India work on the lease system. Instead of buying a property from the owner or building it from scratch, it is always beneficial to opt for a lease. This way, one has an option of winding up the business, lest it fails to click. This is the segment the recent COVID-19 crisis has hit the most. Most of the business owners rely on the summer months to cover up the lease value. The school break, peak wedding season and an intolerable heat wave across the country make the summer months an ideal time for family vacations.

People plan their trips well in advance. The advance bookings start right from the winter season. Now that the turn over for this quarter will be a big ZERO, there are now question marks on even recovering the lease amount, let alone the profits. Summer season has always provided meaty profits to the hospitality industry. The outcomes are swollen bank accounts and a hope of a profitable season. These are high motivating factors as hotel industry is cost intensive. Property and staff maintenance require hefty sums. A little negligence on any front can lead to a below par rating across web portals leading to negative publicity and drop in sales. No one in the hotel industry can afford this.

 

Despite the revenue dropping down, staff salaries need to be paid. Staves who have been with the owners through thick and thin also have families to feed. While discussing their hardships I should mention the case of Mr. Pratap, our head chef. Once the situation worsened and we stopped operations, naturally, he desired to leave for his native place in Bengal. However, he was stopped at the Sikkim Bengal border. The Sikkim government had sealed the borders the same morning. Poor chap has been staying in a small lodge near the border and paying for his rent and food, away from family and work.

Some of the hotels have been converted into quarantine centres while some are hosting the stranded tourists. The hoteliers still receive regular electricity and utility bills at commercial rates. The tour operators who form the backbone of tourism are also under immense pressure. The fleet of vehicles need regular maintenance and timely overhaul. Owing to lockdown extensions, the machines will face degradation. Most of the transport services thrive on bank loans. In these turbulent times the EMIs pose a serious challenge. Till now, nothing concrete has been said or done in this regard. Several places where tourism serves as the sole source of income for the people have been the worst affected. List of people affected the most include hotel and lodge owners, drivers, travel agents, tour guides, owners of small restaurants and eateries, and regional craftsmen and artistes.

The government has been mostly proactive in dealing with the pandemic. The nationwide lockdown and economic package for the poor bear a testimony to this. The Prime minister in his latest declaration has announced a substantial chunk of GDP as a relief package for medium and small enterprises. It is still unclear how much of that is aimed for revival of hospitality industryan industry that contributes close to 10 percent of the GDP and employs over 8 percent of the labour force. One can just hope of a generous share out of the package. It may just be the panacea for an industry whose death is imminent. State governments also need to lend a supporting hand. Lowering electricity and other utilities rates, suspension of various local taxes and easing other regulations may also reduce the burden. Waiver of the bills for the next few months will be a welcome measure.

Across the country we have SEZs, why can’t centres of tourism come under the ambit of SEZs? Such centres may be provided with some additional perks like tax relief, subsidised rates for hotel supplies, subsidised fuel etc. Since the goods producing industries will now operate with a much lower labour force, the cost of production will also increase. Add to it the mandatory sanitization protocols, the prices of general use items may shoot up by 25 to 30 percent. All this will trickle down to the customers, the tourists, in this case. This will also act as a deterrent to tourism. Exempting tourism from GST might just pull down the rise in cost. The tourism industry is thus at the mercy of the government.

 

Once the lock down is lifted, other economic activities will resume, albeit slowly. Agriculture will restart, markets will reopen and production of essentials and even non-essentials will commence. Now that people focus on bare essentials, planning a vacation will be the last thing on their mind. Various modes of travel are suspended. Even if the services resume, people will hesitate in stepping out. The future is bleak and there are no signs of recovery for the future. The hospitality industry is looking into a dark tunnel with no ray of hope.  

One solitary positive aspect of the COVID-19 has been the restoration of nature. Mother nature has been at her prime in the past few weeks. Pollution levels have dropped and air and water quality have improved significantly. A deep breath of the mountain air or a gulp of the clear river water is sufficient to rejuvenate the gloomy minds. Hope sustains life! So one can be just hopeful of a COVID vaccine sometime soon. It is the only development that can restore faith in people’s minds. People will travel to new places, meet new people, make new friends without hesitation. Well, all this needs to be seen in the future, but till then the heart can only pray for the well-being of all.

“सर्वे  सन्तु  निरामयाः”

About the Author: An engineering graduate from MIT, Manipal, Nitin Tibrewal, ventured into tourism with his hotel start-up in Sikkim. His company Shree Kunj organises tours and holidays to the north east. Also, as a dedicated teacher, he runs a coaching institute – Mathemagic thereby fulfilling his passion for teaching. You can find more about his venture at here.

Cover Image by K. Kliche from Pixabay