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hospitality | IST

COVID-19 impact: Poor response forces restaurants, hotels to close again; 30% could shut permanently, warns industry

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Two weeks since restaurants and hotels were allowed to reopen across cities on June 8, the sector has seen a dismal response from customers, and some are looking to close down again. The industry says it is unviable to keep restaurants open with low customer footfall and high electricity costs, rents, and staff wages.

Two weeks since restaurants and hotels were allowed to reopen across cities on June 8, the sector has seen a dismal response from customers, and some are looking to close down again. The industry says it is unviable to keep restaurants open with low customer footfall and high electricity costs, rents, and staff wages.
What has really hurt the industry is the 9 pm curfew, which has hit the dinner segment that brings about 60-65 percent of revenues. Industry associations say that only 15-20 percent of restaurants and hotels had opened on June 8, and nearly 30 percent of those could be closing again.
The Federation of Hotel and Restaurants Association of India (FHRAI), which represents 10,000 hotels and restaurants across the country, said that 20 percent of its member restaurants and hotels had reopened, and 20-30 percent of those are closing again.
The National Restaurants Association of India (NRAI) said only 10-15 percent of restaurants had opened on June 8, and several are closing again.
“Restaurants are not finding it feasible to stay open. Some restaurants in Delhi and Gurgaon have already closed again,” said Anurag Katriar, President of NRAI and CEO at deGustibus Hospitality.
“Opening restaurants only for lunch, and not being allowed to serve alcohol, is not viable,” he added.
The association is now also writing to malls to allow a variable revenue-sharing model that will make it viable for restaurants to open up in malls again.
In Karnataka, the situation was better with nearly 40 percent of restaurants reopening on June 8, but the challenges remain, and some are looking to close again.
Madhukar Shetty, secretary, Karnataka State Hotels Association, which represents 1.25 lakh restaurants and hotels in the state, said 35-40 percent of restaurants opened on June 8, but most are seeing only 15-20 percent business compared to usual.
“5 percent of those who had have closed again,” Shetty said.
Shetty himself had not reopened his restaurants, including several fine dining outlets such as the Banjara Melting Pot at Cunningham Road, mainly due to the curfew and the restrictions on serving alcohol.
“We expect more relaxations from the government and plan to reopen our restaurants from July 1,” he added.
CNBC-TV18 also reached out to Swiggy and Zomato on how their restaurant partners are being impacted, but they did not give official responses. However, sources say that the number of restaurants listed on these platforms stands at 50 percent of pre-COVID numbers.
Hotels are also facing the brunt as travel remains restricted and people are only taking flights for essential purposes.
“Hotels are only seeing 15-20 percent occupancy,” said Gurbaxis Singh Kohli, president of FHRAI.
Oyo, however, said they are seeing a positive response from customers since Unlock 1, and that majority of the bookings coming from corporates and SMES.
“We’ve seen a positive response from customers to our hotels reopening as part of Unlock 1.0. Travellers continue to book OYO for their current and future accommodation needs. A significant part of this demand is driven by metro cities, including Gurugram, Noida, Bengaluru, Kolkata and Hyderabad, with a majority of bookings being made by corporates and SMEs. With most people opting for personal means of transport, bookings trends so far show guests’ preference towards same-city travel,” the company said in a statement.
However, the prolonged impact of the COVID-19 crisis, even after the lockdown has been relaxed, is likely to have a long-term impact on the sector. There are 53,000 hotels and about 5 lakh restaurants in the organised sector, as per industry estimates, and associations say nearly one in three could shut down permanently.
“30 percent of the industry could shut down permanently if the situation doesn’t improve,” said Kohli.
“The losses for the hospitality sector has reached Rs 90,000 crore in the past few months during the lockdown,” he added.
Katriar, who runs 27 restaurants, mainly in Mumbai, is shutting four of them down.
“We had to identify those that had not reached break-even and decided to close them,” Katriar said.
Shetty said 20-25 percent of the Karnataka association’s 1.2 lakh members are likely to shut permanently.
The industry is hoping for more relief and relaxations from the government, but more importantly for customers to be comfortable to come back to hotels and restaurants once again.