May 22, 2022

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Experienced In Leisure

As lockdown drags on in Delhi, budget hotels continue to struggle

4 min read

The Covid-19 pandemic hit India at a time last year when the country’s economy was already in the doldrums. The second wave of Covid-19 pandemic crippled it further. Most of the states have been under lockdown for a few weeks, with some attempting reopening in a phased manner.

Malls, shops, hotels, restaurants and other services are suspended in major states as Sars-2 coronavirus spread fast to impact life and livelihood of a huge number of people adversely. The Covid-induced lockdown has taken a toll on businesses.

The hospitality sector is among the worst-hit by Covid-19. After the early lockdown shock of 2020, the sector took fledgling steps towards recovery, particularly after September 2020, when cases started to drop significantly. But since March-end, the sector is shell-shocked again. Budget hotels, in particular, are teetering on the edge of closing down.

In Delhi, areas such as Karol Bagh and Paharganj are dotted with scores of budget hotels and guest houses. During peak season, these hotels are flooded with domestic as well as international tourists. However, during Covid-19, their shutters are lowered.

“The lockdown has killed our business. Though our owner didn’t lay off many employees, but there have been huge losses,” said Viren Kataria, the manager of the City Hotel in Delhi.

Karol Bagh is dotted with scores of budget hotels that are usually brimming with tourists. Now, it lies deserted. (PTI photo)

DOUBLE WHAMMY

Delhi Hotels and Restaurant Owners Association (DHROA) chairman Sandip Khandelwal told India Today, “The lockdown has not only killed our business, but it has also resulted in the loss of more than 35,000 jobs. Indirect unemployment is also high. Every month, the hospitality industry in Delhi alone suffers a loss of Rs 500 crore.”

Data collated by the DHROA show there are 2,500 budget hotels and guest houses all across Delhi, together offering around 60,000 rooms. The per night rate of these rooms are in the range of Rs 2,000-3,000.

The industry’s average monthly business comes in at Rs 375 crore to Rs 400 crore. Subsequently, the sector also contributes Rs 50 crore every month as GST (Goods and Services Tax) to the government.

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Loss of business has led to massive job loss. Data show that before the onset of Covid-19 pandemic, 40,000 to 50,000 people were employed in the hospitality sector in Delhi. Post-Covid, there are barely 15,000 people holding on to their jobs.

Take into account those who are indirectly employed in this sector — electricians, cleaners, maintenance and others, around 50,000 families in Delhi have been affected due to Covid-triggered crisis in the hospitality sector, Khandelwal said.

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RIPPLE EFFECT

With restrictions on movement and the fear of catching Covid-19 in place, several other businesses such as transport — auto and taxi, shopping malls, local markets, restaurants, and tours and travel operators have also been adversely impacted. The overall losses from these allied businesses are estimated to be around Rs 500 crores a month.

Businesses of cafes, various types of clubs and bars, and dining establishments — the F&B (food and beverage) services — have grinded to a halt. Restaurants in Delhi are wearing a deserted look as only take away is permitted. Their income and employment have hit rock bottom.

People are conspicuous by their absence at a restaurant inside a five-star hotel in Delhi (PTI photo)

Samir Arora, vice president and general secretary of Delhi Banquet Federation, runs a restaurant in Delhi’s Model Town with one-third of the usual workforce. Operational costs which include rental and salaries have become a burden as there is no income, he said.

“This has been a really challenging time for us. If our business is not allowed to function soon, one-third of such units will shut down,” said Arora.

WILL GOVERNMENT EXTEND AN AID?

India’s hospitality industry is valued at Rs 10,000 crore and employs around 3.5 crore people. Since the outbreak of the Covid-19 pandemic, the sector has already borne a loss of Rs 1.5 lakh crore, which led to about 50 lakh employees being laid off, said Brijesh Goyal, chairman of the Chamber of Trade and Industry (CTI).

“Delhi accounts for Rs 1,500 crore annually in this sector, which has now reduced to five per cent due to pandemic,” he said.

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The CTI has called on Union Finance Minister Nirmala Sitharaman to bail out the industry with aide of Rs 50,000 crore, and relax licensing process to ensure ease of doing business.

As India gears up for a gradual and phased unlock to bring lives back on track, the hospitality sector, which is one of the biggest employers, is hoping to get immediate attention from the policymakers before it is too late to recover.

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