With the Novel Coronavirus (COVID-19) removing the plug from a growing economy with a nationwide lockdown, disrupted supply chains, and mass unemployment, the government’s decision to reopen the country in a phased manner is a breath of fresh air. As part of Maharashtra’s Mission Begin Again Phase 5, the hospitality industry can reopen from Wednesday 8 July, but rules remain stringent for hotels in the MMR region, including Mumbai, Pune and Nashik.
The hospitality industry is in metamorphosis as they gear up for the post-COVID era. At the outset, hotels outside containment zones will be allowed to operate at 33% capacity subject to adherence to social distancing and hygiene guidelines. The rationale behind this is not only to avoid overcrowding but also to convert the remaining 67% capacity into a quarantine facility, as and when required by the government. Reduced operational capacity and increasing costs of running a hotel or restaurant will compel the industry to look for unconventional avenues to keep business afloat during a depressionary phase.
Moreover, several other guidelines ensuring hygiene and social distancing such as mandatory thermal screening, protective glass at reception tables, sanitizers to all hotel staff and guests, and contactless digital payments, etc. will change the entire guest servicing experience. This goes without saying that only asymptomatic guests will be allowed entry into hotels. As an additional measure, hotels are required to keep each room empty for a minimum of 24 hours post guest check-out and sanitize the room. Many of the facilities, like bars, buffet, spas and swimming pools, will have to stay shut for now and even though restaurants can open, they will only serve hotel guests for now. The State-mandated guidelines will propel the hospitality industry to provide a safe, contact-less experience from the pick up at the airport to the check-in, entire stay and until check-out.
Implementation of these guidelines is easier for chain and luxury hotels with deep pockets, however high maintenance costs coupled with fewer customers will make implementation burdensome for Bed & Breakfast, Guest Houses and unbranded budget hotels which constitute 95% of the hotel industry. In light of this, the low-priced sector in the country can ride on India’s large domestic tourism to kick start the industry. However, the prolonged impact of the COVID-19 crisis, even after the lockdown has been relaxed, is likely to have a long-term impact on the sector. Moreso, inbound traffic is bound to be slow due to travel restrictions and recessionary conditions limiting disposable income. In the organized sector, there are about 53,000 hotels and 5 lakh restaurants at present, and as per industry estimates, nearly one third could shut shop permanently with losses for the hospitality sector reaching Rs. 90,000 crores.
Corporate travel will perhaps revive the chain hotels though the lockdown has shown that corporate travel can be limited with the emergence of the work-from-home concept. As per FHRAI, hotels are seeing about 15-20 percent occupancy at present. For restaurants, a limited number of working hours coupled with restrictions on the sale of alcohol makes business unviable, thereby hurling several small restaurants, bars and hotels towards an empty treasury.
One way to drive sales upward is – continuous and effective marketing strategies that communicate with loyal guests through digital and social media during and post the lockdown. In doing so, hotels and restaurants can showcase their contributions and safety measures in wake of the pandemic for their customers. Secondly, it is imperative for hotels and restaurants to maintain adequate liquidity for working capital. This can be achieved through a combination of renegotiation and extension of payment cycles with vendors, adopting RBI’s 3-month moratorium period for existing interest and principal payments to banks, and enforce rigid cost-control measures while supporting the salaries of its staff members. As a result, more cost will be allocated to technology, where one can facilitate minimum human interaction while making the stay safe, hygienic and comfortable. It goes without saying that a resumption of economic activity is essential, but the vigil on the virus must remain. The industry is starved for relaxation from the government, but more importantly for customers to feel at ease to visit hotels and restaurants once again. In a nutshell, zero-maintenance buildings, contactless interactions, and technology-based sanitization will emerge as the “new normal” for hotels and restaurants at large.