Farhat Jamal, Chairman – Travel, Tourism and Hospitality Committee, IMC Chamber of Commerce & Industry, shares the business trends of the hotel sector and the focuses on the need to stay resilient

The impact of Covid19 on the hospitality business is unparalleled. It was painful to see deserted hotels and dining outlets across the country for several months. The Covid19 hit us from March 2020 onwards and wreaked havoc in our lives, leaving hardly any family unaffected and decimating livelihoods for millions across the country. The industry has slowly limped back to some sense of normalcy over the past two quarters of 2021 and the prospects of recovery seem to be encouraging.

BUSINESS TRENDS

The industry is upbeat watching the exponential growth in leisure travel all through the less virulent aka quiet periods of the pandemic during the past 18 months or so. This is encouraging news indeed. The rates and occupancies have shot through the roof. One would hate to say this but the greatest upside of the pandemic on tourism has been the big bang return of domestic leisure traveller who have taken to the skies and the roads like never before. Approximately 25 million Indians travelled overseas for leisure which includes some for business too each year. With very limited cross-border travel available and travel restrictions still in place for many countries, India’s favourite leisure destinations like Goa and Kerala, hills stations in Uttarakhand, Himachal Pradesh and Kashmir, palaces and forts in Rajasthan and the wildlife reserves in Central and South India are surpassing pre-Covid-19 business levels, both in terms of occupancies and ADRs.

The heartening trend that one is witnessing lately is the growth in business in city hotels. This is largely coming through small to large wedding groups, social events, sprinkling of business meets and huge staycation business. ADRs, occupancies, catering and events bookings, restaurant footfalls are all rapidly on the mend and look quite promising which is, of course, a healthy trend. Other focus area that many hotel brands have undertaken is usage of all space available more effectively ie renting out to offices and retail brands, getting best yields from service apartment properties which are in high demand, doorstep delivery and hamper gifting during the festive season. Providing reasonable flexibility in contracts has become an important consideration for closing business deals.

DELIVERING MORE WITH LESS

With huge drop in business, particularly during the first wave in 2020 and the second wave this year, hotels ran some serious cost management measures such as rationalising staff strength and the salaries and freeze on increments, bonusses and new hirings. As a consequence, substantial workforce has moved away from the industry to food delivery app companies, cloud kitchens and quite a few to fulfill their own entrepreneurial ambitions. They upskilled themselves particularly with digital and technology. A sudden spurt has happened as hotel workers are once again headed to the Middle East as business in the region witnesses a revival in the past couple of months. The pressure is on the brands and owners to bring back manpower to pre-Covid19 levels as the demand picks up during the busy holiday season. But many hoteliers have learnt to focus on productivity and adjusting to the gig economy reality.

My hunch is that hotels will not hire in a hurry or add to permanent staff numbers. They will have to learn to manange with temporary, seasonal or demand-based manpower. And like in some other parts of the world, valuing and respect for temporary workforce will become the new order. An extensive use of technology to bring in efficiency and cost-effectiveness will be non-negotiable. As an EHL report has pointed out that ‘apps’, in particular, are increasingly important in the way hoteliers manage the services they provide to their customers and can now control many aspects of the guest cycle and experience. Needless to say, the trend towards digital and contactless services has gained new momentum in 2020. Traditionally customer-facing services are being given an overhaul, thanks to the more widespread use of technology-assisted options, such as mobile check-in, contactless payments, voice control and biometrics.

RISING INPUT COSTS

The cost of doing business has risen exponentially over the past two years. This includes HLP costs, raw material costs for F&B and the cost of maintaining acceptable hygiene and safety standards to name a few. In such a scenario, hotels are under stress to attract customers and maintain the sales prices at pre-Covid-19 levels as also keep working on volumes to meet their ever-changing targets for revenue and bottom line. For many, the savings have come through reduction in internal travel costs and use of technology to conduct business all through the pandemic period. It will be absolutely essential to keep all costs under close watch like never before, knowing the emergence of variants of the virus and reoccurring waves that have occurred in many parts of the world impacting business. Europe is a dreadful eye-opener for the industry with its encounter with many waves of the virus that it has been dealing with since early-2020.

REFERENCE POINT IS PRE-COVID19

I have noticed lately that the reference point for business results’ comparison has moved from 2007 boom year to pre-Covid19 performance. Over half-a-decade or more, the hospitality leadership was made to compare profitability and business results that hotels delivered in 2007-08 while comparing it to any year in the decade before 2019. Never has industry seen a time when the budgets were almost hard to prepare and business performance remained a continued measure month-on-month, quarter-on-quarter for evaluating results. I sincerely hope hotels and travel industry will be able to put up a budget coming fiscal year that would remain relevant through March of 2023.

DON’T DROP GUARD

I went to Alibagh recently on the Ro Ro service from Mumbai. I’m not sure if people realise that the pandemic is not over yet. Around 80-85 per cent passengers were without masks and social distancing was hardly visible. This is not just in Mumbai. I was in Delhi for a wedding and the impression I came back was exactly the same as was on my trip to Alibagh. It is horrible to think how short human memory is. Just a few months ago the second wave of Covid19 caused huge devastation, our health infrastructure crumbled, yet all this seem to be forgotten. Despite more vaccinations now, the experts continue to warn us of possible dangers if we are lax with Covid protocols. To stay safe, we need to continue with all precautions for at least 18-24 months.

The emergence of Omicron does not bode well for the industry and economies at large. The markets in the USA dipped and other nations are hurriedly drawing new travel rules and ready to tighten cross border travel restrictions once again. If the world continues to reel with variants that haven’t stopped from being detected every few months, we have little choice but to get fully vaccinated or get booster jabs whenever possible for a safer world for tourism to have any hope of bouncing back in the immediate future.

This article was published in BW hotelier issue dated '' with cover story titled 'INVESTMENT SPECIAL ISSUE VOL 7, ISSUE 6'