From restaurants shrinking their menus to hotels accommodating offices on their premises, the hospitality sector is pulling as many rabbits out of the hat as possible to plan for a viable model when it reopens fully in the state.
As the battle for the COVID pandemic transitioned from conquering to containing to co-existing, one thing that has remained constant is the lock outside hotels and the missing fanfare outside restaurants. The sector is stuck between a rock and a hard place. While hotels are shut, restaurants are operating on start-stop-start mode and fine dining is all but shut. "We are operating at just 15% to 20% of our pre-COVID levels," said ‘Hotbreads’ Mahadevan.
For more than 120 days, hotels and restaurants are fully or partly shut. "There is so much nervousness. We believe we are in a long story of pain, which could last another 18 to 24 months," said Anil Chadha, COO of ITC Hotels.
Apart from following the safety protocols of sanitization, distancing, and minimal contact, the sector is trying to make the most of the low footfalls that are expected initially. Offering housekeeping services for households and redesigning some hotel places for accommodating offices, revenues are still a trickle and yet to catch the attention. Opening the laundry is an option, but there is a legal hitch as Laundromat comes under the Factories Act which requires a different set of compliances. Restaurants, shrinking the menu is a good bet. "We have shrunk our menu by more than 50% so that fewer people are needed to prepare them, and it helps in reducing wastage," said P Suresh, managing director of Sangeetha group of restaurants. Some others are getting aggressive into institutional sales. "We have signed up for some institutional sales, besides focusing on takeaways," Mahadevan said.
But with rising cases, it is not without a reason why people are wary of dining out. "Despite our best efforts to maintain hygiene, coronavirus is like a ticking time bomb for which only a vaccine or medicine is the remedy," said Suresh. So how long will this last? For hotels, until the business traveler starts moving freely with flight operations in full swing and for restaurants till families decide to come out. "Both these are not going to happen anytime soon," said T Nataraajan, honorary secretary, Federation of Hotels and Restaurants Association.
This is bad news as typically for a hotel, occupancy levels of 60% at agreed rates will mean breaking even. "All hotels are shut, other than those which have signed up as quarantine facilities," he said. It means a third of the year went by with zero billing. "Any hotel or restaurant that operated with high levels of debt will shut down and there are many of them here," he said. The only way out is to trim expenses. While senior employees have taken a pay-cut, restaurant chains are negotiating for rental reduction as part of this cost-cutting exercise. Chains are also pushing their own delivery service. "While we are on Swiggy and Zomato, they charge nearly 24%. We have bought a few bikes and are delivering more with our boys and in the process keep the employees engaged," Mahadevan said. Sangeetha too sees much of its deliveries through its own fleet. "Apart from the food apps, we have our own channels for food delivery. In some of our branches, we see more than 65% of deliveries through our channels," said Suresh.
The struggling economic condition is not a local problem. "We are present in 16 countries, barring our Auckland operations, everywhere else it’s a struggle," said Mahadevan. Some nations have helped the hospitality industry with fiscal support. But the government here is not looking in that direction yet. "If you can’t stand on your feet, it’s your problem. Don’t expect the government to support you," a senior government official said during an FHRA webinar on Monday. Still, restaurant owners hope the government will consider some tax waivers to help them tide over this phase till the cash registers begin to ring again.
This article first appeared in Economic Times.