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SPECIAL REPORTS

How the hotel industry will survive post-Covid-19 pandemic lockdown
Thursday, 02 July, 2020, 08 : 00 AM [IST]
Subhadeep Datta
We, in the hotel industry, are sailing into unchartered waters in the face of a global pandemic & economic meltdown. Our industry in Mumbai had come back very strong even after 26/11, when travellers were afraid of terrorism, but this time it feels totally different.

“Without government intervention and assistance, there will be no hotel or restaurant industry whatsoever. There’s so many people that work for us, whom we are incredibly concerned about. Where are they going to get their next meal? Do they have health care coverage? How are they going to pay their bills?”- said a friend of mine while we were having a chat about our industry.

There is one good thing that might have happened out of this pandemic. We have come together and collaborated with each other as a species, like never before, putting aside our differences, to fight this deadly virus.

The bad news is never before in our lifetime has the economic condition come to such a screeching halt, and we all pray that it never happens again.

Most hotel businesses maintain around 2x payroll as working capital (cash to run their day to day operations).  As hotels get closer to the 60-day mark we’ll see more and more layoffs because they simply can’t foot the staffing bills. The only way to help these hotels is through government bailouts and improved payment terms on loans. 

We, as hoteliers, like to look forward to technology to help us improve our business performance, but sadly during these times, revenue management systems do not add much value when you are at 10-20% occupancy.

We would be lying if we say “we’re all going to get through this together.” We’re not all going to get through this. Poorly capitalised hotels will go under even with government intervention. We are a strong and resilient industry like many have pointed out. The Darwinian reality is that these crises make all industries strong. The bad ones die out (along with many good ones) and only the fittest survive. 

It’s just the truth – I don’t say the above in a good or bad way. The ones who’ll survive will be more entrepreneurial in aggregate and the ones who’ll adapt and diversify faster.

Technology is going to be one of the key factors to how you anticipate, react and recover from a recession.  It’ll make you better at acquiring guests, running an efficient operation and maximising every rupees.

The only thing hoteliers can really do now is negotiate with lenders, stay current on local bailout opportunities, make prudent layoffs, focus on helping their employees as much as they can and pray that this ends soon. Once we’ve sorted out all of those issues and have some downtime while our businesses are still down, the best thing we can do is prepare for the next downturn and improve our operational capabilities. Never again will we have this much time to evaluate our processes, manpower requirements, business opportunities and so on. So use this time productively.

(The author is GM, Goldfinch Hotel Mumbai)
 
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