‘Hospitality sector needs to survive now, revival will come later’

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The hospitality and tourism sector has been among the the worst-hit industries due to the disruption and standstill caused by the coronavirus pandemic. The Hotel Association of India (HAI), a top industry body, is of the view that it is a matter of survival now for hotels, rather than revival.

HAI Vice President K B Kachru has said that it has sought support from the government, such as deferment of statutory liabilities including EMIs for around 12 months, stressing that these measures are required for the sustenance of the industry.

“There is one issue with all of us… and we want to survive, before we can think of reviving ourselves,” he said.

Foreseeing a grim picture for the sector, Kachru said that the sector is staring at a job loss of 3.5-4 crore employees and the revenue decline in the financial year 2021 would be around Rs 5 lakh crore.

He said that as the income for the sector is almost nil, the government should defer all liabilities, and suspend lease, rental and property taxes for 12 months.

About the gravity of the financial situation in the sector, he said: “We were the first to be affected and probably will be the last to come out of this.”

Kachru said that there couldn’t have been a worse situation for the section as its income currently is “basically at zero”.

In a presentation, the apex hotel industry body has said that there is limited scope for inflow of foreign tourists even after the pandemic sudsides and corporate travel would also be delayed due to the travel bans, which will continue to hurt the sector.

Along with these, high fixed costs including license fees, lease, rentals, employee salary and other expenses and levies would further accentuate the pain.

Kachru stressed that the industry is not seeking a waiver of any liabilities or dues, it just wants them to be deferred till the time the cash flow in the industry improves.

With an economic valuation of $247 billion, the Indian hospitality segment accounts for 9.2 per cent of the overall GDP.

In a letter to Prime Minister Narendra Modi, HAI has said that the sector is globally considered as a major contributor to GDP, foreign exchange earnings, creation of jobs as well as the biggest multiplicator of jobs.

“In India especially, hotel industry is a key driver of jobs especially through 90 per cent of its inventory which is in economy,budget or mid-market hotels. In the current scenario, almost 70 per cent of the jobs are in danger directly within the hotel sector and several in other hotel related support sectors,” the letter said.

In the letter, the industry body has outlined the impact of the coronavirus crisis and the possible aftermath and has sought relief for the sector, including the deferment of all statutory liabilities including EMIs to a minimum of 12 months at the central, state and municipal levels.

It has also urged the government to subsidise employment for three months by government contribution per employee of 50 per cent of the salary.

HAI has also suggested that lease, license, rentals and excise fees as well as property taxes to besuspended effective March 11 till the end of COVID-19 period and has sought permission to enable the sector players to use the GST collected as working capital for six months.

Further, as the operations are curtailed, it has asked for the utility costs including electricity bill to be charged on actual basis rather than the load.