With the pandemic resulting in huge losses for even the biggest of hotels, #KhabarLive talks to hoteliers on how they’ve been innovating to ensure both, minimal loss and customer safety and satisfaction, at the same time.
The Federation of Hotel & Restaurant Associations (FHRA) expects 50% of restaurants across segments of the industry to remain closed after restrictions ease.
For the restaurant industry across India, the last 20 months have been an unending roller coaster ride. After eateries were forced to suddenly close during the early months of lockdown, many saw a glimmer of recovery towards the end of the year when patrons started to dine out in droves once again. But come April, those hopes quickly faded as the second wave forced the country indoors. And some industry experts say the prognosis may be alarming: a lack of business over the last several months, along with the predictions of a third wave, could permanently shutter a significant percentage of food & beverage establishments across the country.
The ruthless Covid-19 has brought throughout the globe a human tragedy — a tragedy that’s having a growing impact on the global economy. The World Travel and Tourism Council warned that the pandemic could lead to a cut of fifty million jobs worldwide in the industry and the fear came true.
“2020 was a challenging year indeed. Covid’s impact has been devastating and unprecedented for the hospitality and tourism industry. The first lockdown was announced in March 2020 and that was followed by a flood of cancelations of events planned, not just during the lockdown but for the entire year, and no hotel was prepared for this.
However, F&B offerings came to the rescue as this was the only source of revenue and cash flow for many hotels, and a lot of innovation was seen here to engage with the guests for those wanting to enjoy the comfort and safety of their homes and for many who wanted to come and experience at the hotels. We had to quickly adapt to the social distancing norms, contactless menus, payment options, quick check-in and check out options and put in place some of the best practices the hospitality industry has ever seen, to ensure the safety of everyone,” shares Manish Dayya, General Manager Novotel Hyderabad Convention Centre and Hyderabad International Convention Centre.
There is an evolution at the societal level! Shifted values in the aftermath of the pandemic and increased consumer awareness of all things sustainable and purposeful has set new benchmarks for hospitality enterprises. Say, for example, staycations has become a booming tourism part because the surging online content promising to create a balcony haven or a garden oasis to be proud of is a sign of the times.
“As with every crisis, new opportunities surface and we focused on innovative revenue-generating ideas. Allot of promotions have been activated to attract individual travellers and families with a host of recreational activities being introduced to engage the guests of all ages to promote staycations and workations at the property once things open up and that’s how the industry plan to tide the market. Introduction of technological advancements is also an embracing factor.
To tide this pandemic, we started with the initiative ‘Missed Celebration’ which gave the opportunity to the guests who missed celebrating their important occasions due to the lockdowns followed by ‘For the Love of Travel’ which gave the opportunity to the domestic travellers to break away from the monotony of work from home and stay with us,” he adds.
The industry only recently began its journey of recovery from the long bout of lockdowns but has once again been forced to shut down. They’re seeking ways to fit into the current scenario and attempting to settle a fraction of their mounting losses! For instance, Zostel, a country-wide hostel chain has converted some of its properties into quarantine and isolation centres even as they launched the Zostel Bubble to offer long-stay travellers and digital nomads a safe environment. The general manager from the popular chain of hotels in Hyderabad also believes traveller behaviour showed a positive trend late last year and in the early part of 2021, particularly with staycation and locals coming out for food and leisure activities!
The lockdown ate up one of the famous five-star hotels at Hyatt Regency in Mumbai and now most of its employees are unemployed at the moment. But with the industry being a competitive one, experts feel, they aren’t going to give up! They are still keeping up with the latest hospitality trends of contactless payment and robots in hotels.
Though there is no official number of restaurant closures as yet since the lockdown is still underway, according to Pradeep Shetty, the joint honorary secretary of the Federation of Hotel & Restaurant Associations of India (FHRAI), they expect 50% of restaurants across segments of the industry to remain closed after restrictions ease. Earlier, the association had stated that 30% would remain closed after last year’s lockdown. The National Restaurants Association of India has estimated that between 30% to 32% of restaurants will shut down permanently.
According to Chalapati Rao, president of the Hyderabad Hotel Association, out of the roughly 24,500 hotels in the city, 6,000 have closed down. While larger hotels have struggled due to a lack of events and meetings, smaller eateries with a handful of employees have also found it difficult to stay afloat, particularly if they are not connected to e-commerce platforms and food apps, he said.
After September last year, when restrictions were lifted and diners were allowed to eat out in limited numbers, it was a slow but steady climb to a semblance of recovery. As #KhabarLive reported earlier this year, many restaurants in Hyderabad saw close to 70% of pre-COVID revenue in December, and even higher in some cases as the city moved into 2021 with a low number of coronavirus cases. Higher recovery tended to favour open-air restaurants and those in commercial areas, while localities like Whitefield and Sarjapur, with its high demographic of transient IT workers, saw smaller gains.
But even for those who appeared successful, the task of reopening a restaurant after several months of closure was not only an uphill challenge but a huge financial burden, according to Zaheeruddin Mallick, the proprietor of Salt and Pepper catering. Crucially, that involves having a significant working capital to get the establishment up and running again, from reaching out to vendors to rehiring the workforce, many of whom had left cities due to the lockdown.
There was still significant potential for the industry to mend itself soon enough. However, the second wave pushed the country into crisis, as thousands contracted and succumbed to the virus. The restrictions on dining across the country were swift. “People were still losing [last year] with the hope that good days were about to come,” Mallick said. “With this disruption [of the second wave], it’s a snakes and ladders board game where you’re back to square one.”
As lockdowns continue, many restaurants are back to a delivery-only model though Anurag Katriar, president of the National Restaurants Association of India, noted that within the gamut of F&B businesses, very few can sustain in this way. Fine dining restaurants, catering companies, nightclubs, bars, pubs and restaurants require an in-person dining experience to manage expenses. An additional problem will be a lack of private equity being pumped into the system due to the uncertainties currently being piled on to an already-risky venture. “The proportion of fixed operating expense in our business is fairly high. Which means you need more cash to fund losses than you would in say, some other line of business,” he said. “So resource crunch has emerged as the single biggest reason for maximum closures.”
And while the period after the first wave allowed businesses to recover some of their losses (though according to Mallick, recovery was closer to 30% of pre-COVID numbers nationally, but was higher in bigger cities) according to Katriar, that may not be enough. A potential third wave will likely also shorten any recovery period after the second wave.
“You can perhaps survive and not fund losses but you will never be able to keep some resources aside for a rainy day,” he said.
One of the biggest indicators of restaurant closures has been posts in Facebook groups like ‘Secret Sauce Behind a Successful Restaurant,’ where newer restaurant spaces and equipment have been put up for sale after only six months to two years in business. “It takes a lot to get up twice and fix the situation,” Mallick said.
Last week, the Reserve Bank of India announced a liquidity window of Rs 15,000 crore for the hospitality and tourism sector, as well as aviation ancillary services, providing desperately-needed support to hospitality businesses impacted by the pandemic. The window is open till March 31, 2022 with tenors of up to three years at the repo rate. While the move was welcome, associations saw it may not be enough in the long run and urged the RBI to consider extending the tenure.
Weddings also provided significant growth in business. At present, the focus is on long stay guests and social event segment as weddings are the only events allowed as per the latest government directives. If digitised guest experience was on the hot list last year, today, contactless services have gained new momentum in the form of mobile check-in, contactless payments, voice control, and biometrics. Now, the fine dining experience is being emulated at home including extra atmospheric candles, QR-code playlists, and unexpected freebies. Also, having knowing guests have an affinity towards snapping pictures to post on social media, hospitality is again stepping up their game. With a view to leveraging this free publicity, owners are paying greater attention to photogenic table settings and decor backdrops! Entire meals are served as irresistibly beautiful vignettes that demand to be shared.
The pandemic has triggered the rise of cloud kitchens! Why is this? Changes in technology and in consumer habits, of course, led to this. With hotels’ footfall at an all-time low and sales down as much as 90%, according to CRISIL research — takeaway has become a vital source of revenue for many hotels. CRISIL estimates that the recovery of the 1.5 trillion rupee sector will take at least a year after lockdown is lifted. According to Swiggy, a cloud kitchen initiative eliminates large costs associated with real estate and serving staff from a conventional hotel thereby enabling a hotel to focus on cooking great quality food alone.
This model enables easier expansion for hotel partners across geographies both within the city and to newer cities at a fraction of the cost-reducing the risk and commitment normally required for them to begin operating in a new location. “The future trends in the hospitality industry show that the guests’ expectations for special care and customised experiences will be increasing with time! Hotels have to focus on planning and creating a genuinely compelling and differentiated offering, especially in our industry segment wherein we have seen a growing trend of people opting for home deliveries over coming out to drink and dine, and to satiate that demand we have started home deliveries of the same delicacies served at our restaurants,” Manish concludes.
“Infusing liquidity will provide the much-needed liquidity support to cash-strapped hospitality businesses without which the industry couldn’t have survived. However, we request the RBI to extend the tenure for at least 5 years. A duration of 3 years is just not sufficient to recover from the financial turbulence that the industry is going through,” Gurbaxish Singh Kohli, vice-president of the Federation of Hotel & Restaurant Associations of India (FHRAI) said in a statement.
Some states have also started to include restaurant workers within the frontline category to prioritise vaccinations against COVID-19, something that many in the F&B industry had been actively requesting.
And not all see the situation as completely untenable. According to Walid Ali Khan, Proprietor of Andhra Group, signs that the industry bounced back quickly following last year’s lockdown is important in considering the coming year. While some categories of restaurants,such as those without open-air spaces and ones that rely on large-sized events, “strong brands with better emotional connection with their customers, good food.. Health centric meals [and] organised players who are funded well” will succeed.
“I am positive that we should be seeing a bounce back time of 1.5 to 2 months when things will be 80% back to normal,” he said.
The most notable lesson learned from the last year is the importance of preparedness. The pandemic has accelerated several trends which were already being experienced in the hospitality sector! Therefore, it is more important than ever for hoteliers to invest in the best practices, adopt the necessary changes to bounce back stronger post the pandemic. #KhabarLive #hydnews