MUMBAI: The hospitality sector has become one of the biggest casualties of conflicts between India and Pakistan. Hotel chains are grappling with business slowdown, with more than 50% of bookings getting cancelled over the past week across Mumbai, Delhi, Bangalore and Chennai, as companies have issued travel advisories, sources said.
As a result of cancellations and the decline in fresh room bookings, hotels are staring at a 40% slump in businesses for May, hospitality executives said.
“Revenue from inbound international tourism accounts for almost 10% of the Indian Hotels Company’s (IHCL) total revenue and about 15% at Ventive Hospitality. As per our calculations, everything else being equal, Indian Hotels could face EBIT losses of around Rs 1-1.5 crore per day and Ventive Hospitality could face per-day losses of Rs 50 lakh on the loss of inbound international tourism,” a report by HSBC Global said.
IHCL runs and operates the Taj brand of hotels under the Tata Group while Ventive Hospitality is the Indian partner to global hospitality giants like Marriott International and Hilton Worldwide.
Over the last week, companies like HDFC Bank, Axis Bank and Tata Communications have issued travel advisories, restricting domestic travelling. Global multinationals have also taken steps along similar lines, reducing the inbound business for hotel chains across the board.
“The safety and security of our guests and associates is of paramount importance to us. This is an evolving situation, and we are monitoring developments and the business impact,” an IHCL spokesperson said in response to FE queries.
Besides cancellations in room booking owing to limited leisure and corporate travel, meetings and conferences have also been cancelled, leading to loss of business. The Chennai property of a pan India 5-star saw 100 room bookings for an event cancelled late last week. Another 5-star in Mumbai’s Juhu area saw event cancellations resulting in loss of business to the tune of Rs 1 cr in just two days.
“Corporate travel and MICE (meetings, incentives, conferences and exhibitions) are also feeling the impact, with companies restricting non-essential travel, promoting remote work and rescheduling events to ensure employee safety,” Mandeep S. Lamba, president and chief executive at hospitality consultancy HVS ANAROCK, said.
Things were made worse by the temporary suspension of the Indian Premier League (IPL) by the Board for Control of Cricket in India (BCCI) which contracts more than 30 high-end hotels for team, crew and commentator accommodation during the two-and-a-half-month tournament. The BCCI has contracts with chains like Indian Hotels, Trident Oberoi and ITC, among others.
The 74-match tournament was to take place across 13 venues – Mumbai, Ahmedabad, Hyderabad, Visakhaptanam, Chandigarh, Delhi, Bengaluru, Guwahati, Jaipur, Lucknow, Chennai, Kolkata and Dharamsala. The match between Punjab Kings and Delhi Capital being held in Dharamsala last week was called off. Later, the BCCI decided to suspend the tournament for a week.
Hotels have now started taking measures to protect margins in the light of declining business.
“Late last week, multiple hotels held top-level meetings to decide on measures to control costs as business dwindles. Some of them are expected to effect a hiring freeze, minimising even gig hiring for now and control HLP (heating, lighting and power) costs by optimising occupancy at their properties,” an executive with a 5-star chain said.
Optimising occupancy would mean giving out reservations on specific floors to ensure consumption of less electricity and power.
Source: The Financial Express
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