As the Indian hospitality industry prepares to open the gates for business with the easing of restrictions, Travel Newsy Spoke to Rahul Jagiyasi, General Manager, The Fern Hotel, Jaipur, about the challenges that hospitality industry faces as it attempts to resume operations, and how can government support the sector in its recovery
Travel Newsy: – What are the immediate challenges that you are facing in resuming business?
Rahul Jagiasi: – Due to the pandemic, the hotel industry has already seen more than 1 million job layoffs and loss of income in just two months, and this the situation does not seem to come to normal for at least over the coming year, As per the safety guidelines and norms, the hotel’s management and investors are not left with any other option to lay off people to save their fixed costs for the survival of their business.
There are hotels that have not paid salaries since March’2020 and hotels who have paid salaries are merely 20% of their gross which is below survival cost that too in an industry that is already underpaid.
There are several immediate challenges that the industry faces like, limited availability of manpower since migrants have moved back to their base and finding it difficult to return, low demand and extreme competition, and high cost of operations due to COVD guidelines which are far above from the breakeven. Profit-making looks extremely challenging
Travel Newsy: – What changes in demand are you getting from clients and business partners
Rahul Jagiasi: – Post lockdown, one the biggest expectation that our clients have is of superior hygiene standards, and low prices. The pandemic has led the corporate clients to cancel their ‘Yearly Off-Site’ and cut on travel expenses. There is a sense of depression in the market.
Travel Newsy: – Do you plan any major strategic changes in how you operate?
Rahul Jagiasi: – We are having to operate on reduced daily manpower, with many employees working on alternative days/weeks. According to current demand, our inventory has been reduced to about 50%.
Intense Hygiene and sanitisation audits are our main focus to ensure ‘zero’ contamination points.
Travel Newsy: – What changes do you expect in the marketing strategy of the hospitality sector
Rahul Jagiasi: – The marketing strategy would focus on creating awareness regarding the hygiene initiatives taken by the industry
Travel Newsy: – Do you think the Indian government should intervene? What can they do to help the sector?
Rahul Jagiasi: The hotel Industry was expecting tax benefits and other reliefs from the government’s relief fund:
An average 100 room hotel gives the opportunity to about 120 employees and creates an equal amount of jobs through vendors and outsourced ‘works’ like travel desk, travel agents, online platform, digital marketing, etc. which results in creating around four jobs per operational room directly & indirectly.
Also over the past few years, since the government had rolled out many schemes for hotel investors, there are many hotels which have come up however not many schemes have been rolled out to boost tourism which has lead to extreme competition in the market due to which the profitability has dropped drastically and PAT (Profit after taxes & fees) is just a hope for most of the investors
Following are the areas where the government can support the hospitality sector
• Reliefs in electricity charges (minimum demand charges to be waived off), also electricity to be made cheaper by 30 – 40 % for 1 fiscal year for the hotels
• Relaxation on excise fees by 50% or waive off for 1 fiscal year
• Flexibility towards minimum wage act and remove the PF CAP & subsidise ESIC 100%
• Further reduction on taxes on room and food for Indian (Domestic) traveller
• Tax rebate on all utility bills
• All licenses related to the hotels should be either waived off for this fiscal year or should be discounted up to 70%
• Ease out labour laws and encourage non-technical jobs and invest in schemes like Hunar Se Rozgaar etc to create more jobs
• Tax-free income to people working in the hotel industry for 2 years to sail through this hard time and survive
• Stringent laws for hotel owners to ensure payments of salary on time & stop arm twisting by making employment terms & conditions difficult to work for
• Schemes to promote domestic tourism and also introduce tax benefits for domestic travel so that people can avail of LTA benefits for tax savings and thus boost the travel economy.