Madan Prasad Bezbaruah, Former Union Tourism Secretary, Govt. of India and Secretary General, Hotel Association of India, shares his perspective on the current status of the hospitality industry as well as road ahead…
Industry witnessed some positive signs post the lockdown last year. However, the second wave totally devastated the industry. What is the impact of the second wave on the industry, according to you?
The Indian hospitality sector is among the most affected sectors due to the ongoing pandemic. It almost came to a standstill during the initial six months of the lockdown imposed in 2020. As the pandemic-led restrictions were eased, the business started to witness a ray of hope for its survival. With the signs of improvement in economic activities, the hotel industry started its journey to recovery. However, with the sudden onset of the second wave the beleaguered sector is again reeling under the impact of the crisis as travel restrictions and curfews continue to pose challenges leisure and business travelers. All the major tourist destinations are facing the brunt of extended curfews and lockdowns. The preliminary indications are that approximately 40% of small-scale hotels have shut operations across the country while large numbers of others are looking at a possible collapse if no respite is offered in the coming months.
How do you anticipate the revival of the industry?
The industry has the inner strength and core competence to revive its primary position in the tourism and hospitality sector and as the little lull period before the second wave showed it can bounce back quickly. But the devastation has been too deep and extensive, and it requires the helping hand of the government to find its feet. As the country continues to fight against the virus, it is expected that with faster vaccination drives and herd immunity the situation will ease. Furthermore, the recent announcements like increasing the size of the Emergency Credit Line Guarantee Scheme (ECLGS) from Rs. 3 lakh crores to Rs. 4.5 lakh crore, liquidity support by the Reserve Bank of India and tax exceptions given by some state governments, are some of the measures that will help the sector gain confidence towards recovery.
However, the hospitality is a highly capital-intensive sector. Hotels have a high percentage of fixed costs of operations that have become unsustainable owing to nil or negligible revenues. The recovery of hotels will also be slow process as borders will reopen with extreme caution. The traveler confidence too will take extended time to return to normalcy.
Currently, the sector is burdened with high taxation and excessive licensing and regulations. Therefore, according “Industry” status to the hospitality sector will be game changer for the recovery of the sector as it will allow the sector to avail some benefits like lower electricity and water tariff, lower property tax, rationalization of license fees and simplified approval process for hotel projects and operations. This will strengthen the Indian hospitality industry, preserve and unlock its immense potential while also helping our country with the post-pandemic economic revival.
As one of the leading associations in the country, what role have you played to support members during these difficult times?
As an industry association we have tried to support the members in many ways. The first support has been to give the industry a voice. We have started a magazine The Engage to create wider awareness of the problems, keep members informed of the policy and other developments.
Second, we have strengthened the advocacy with the government through direct approach to Ministry of Finance, Ministry of Tourism, RBI and others and by extensive use of the media. Our share in the print and electronic media has been very high. We feel that such pressure has contributed a lot to whatever little relief that has come from the government. Third, we know that tourism depends largely on the states’ initiatives. We have expanded to the states, created chapters and helped them in collaborating with the state governments to gain support for the industry. The results from Maharashtra, Tamilnadu, Karnataka, Punjab etc have been very encouraging and hope will give rich dividend in PPP in the long run. Fourth we also try to help the members by collecting and collating information, ideas about changes taking place in the industry globally and how the members can adapt to the new emerging situations.
Govt has extended some relief in pieces. What are your expectations from govt. to reinstate business?
We are deeply grateful for whatever support our government has extended. The move will go a long way in bringing relief for the hospitality sector. But much more needs to be done and that too quickly. We have explained that these supports are needed not because of inefficiency of the industry but because the circumstances are beyond the competence of the industry and government support is justified by the lives and livelihoods in millions that will be saved in the process and the fillip that it will give to the economic recovery. HAI has outlined a transparent long-term interest rate regime and strategy for restructuring of debts. As we move from survival to recovery, the basic problems will continue to revolve around liquidity — the need for working capital, managing fixed costs, payroll support — these are some of the issues that will affect the industry. We want these aspects to be factored in while preparing the blueprint of recovery by the policy makers. Strong interventions for supporting small and mid-scale businesses are the need of the hour. These consists of one-time re-structuring of loans along further extension in case of granted moratorium on loans. The growing burden of loan with zero scope of income over an extended time will only increase the NPAs of Banks. The moratorium extension will give adequate time to the industry and help it to pay its dues. We have also asked for waiver of all statutory liabilities at Centre, State and Municipal levels for the pandemic period because the circumstances were beyond the control of the industry. HAI has requested for stimulus package-subsidising of salaries of hotel employees by government to 50% from April 2021-March 2022. Many countries have provided this support to employees as part of their economic recovery programmes. In addition to this, infrastructure status to Hotels will prove to be a tipping point of recovery and growth for the hospitality sector. It will also enable the sector to access long term funds at subsidized rates as available to other infrastructure industries such as airports, railways, ports etc. Infrastructure status will gravitate greater investments in the travel and hospitality sector around the country. This in turn will create income and have a ripple effect on demand and will therefore help economic recovery of the country. In short, we have urged that tourism should be given the strength to become a pillar of development as the PM has often mentioned and a pragmatic sectoral recovery plan should be mooted.
As the member of the association, what roadmap you have outlined for your association?
We believe that the future of tourism and hospitality depends on stronger, pragmatic PPP. HAI wants to be that constructive partner. Secondly our vision is of a stronger, wider representative body and HAI will be the platform for the body to interact, introspect, provide leadership, pursue excellence not as exception but as the hallmark of its members. We would also like to forge more collaborative relationship with other stakeholders. The need of the hour is to stand together. We all must work together and work with resilience. Only then the future can be bright for people in the sector as well as our invaluable guests. HAI is focused on the survival and revival of the hotel industry. We plan to help guide stakeholders through these challenging times and achieve the objectives of HAI, that is – to practice excellence in all that we do. To impart more confidence among our stakeholders, our resolve is to continue to function with transparency and highest level of hygiene.
Anything more you would like to add from your side…
It is recognized all over the world that subtle changes are coming in tourism and hospitality sector. For some time to come, as UNWTO says trust will be the most valuable currency. It is likely that there will be larger use of technology for booking etc. and therefore the hotels have to be geared to put in place a transparent system of direct dealing with consumers. In future survival will largely depend on use of innovative practices, Information Technology, Artificial Intelligence, virtual reality in everyday operations. But at the end of the day it will be the human touch that will make the difference. Therefore, the manpower in hotels will have to be multi- skilled, properly trained and motivated to drive growth and customer delight.
