As the effect of coronavirus is rising up cascading its devastating effects on various industries, one of the major sectors to take the hit is tourism and hospitality.
Resorts and hotels that were booked by excited vacationers and corporate conference-goers are receiving calls to postpone plans or cancel entirely. This is hitting them in a big way.
What is the situation in India?
It is estimated that hotel chains are starting at losses over ₹130-155 crore, whereas the alternate accommodation segment is likely to make losses of over ₹420-470 crore.
In India, it is reported the hospitality market is about to hit hard with domestic hotel companies that follow the fiscal year regime, this amounts to a weak Q4 FY20 and a weaker Q1 FY21.
The report further stated, “Unfortunately, business for the second half of March seems to have dropped off a cliff, pretty much across the board,”
Due to the epidemic, all the borders have been closed till April 15th in the country which will affect the country’s business at a massive rate.
It is reported that the business is expected to drop 18-20 percent which is a huge number.
In India itself, the standalone and chain hotel segment has over 1.4 lakh rooms.
So overall loss of around 140,000 branded or organized hotel rooms across the country will be anywhere between ₹130-155 crore.
India contributes around 10% of the GDP from the tourism industry thanks to its vast topography.
What is the situation in the rest of the world?
Well, it is not a pretty picture across the other parts of the globe as well.
The health crisis is costing the U.S. hotel industry a reported $1.4 billion a week in what’s shaping up to be an unprecedented sector hit, as occupancy rates plummet.
Due to this, on March 17, the hospitality industry has asked Trump Administration for $150 billion in aid due to the virus, just as Marriott set plans to furlough thousands of hotel workers.
In New York, simple bar and restaurant workers are scared, expecting to see cuts in operations and expendable operating costs soon.
The east coast area, mostly Seattle, New Jersey, and New York experienced an earlier COVID-19 than most of the U.S, and thus the effects have already started showing.
Numerous smaller restaurants and eateries have already shut down permanently due to this heavy loss.
In New York City, top-tier restaurants like Daniel and Le Bernardin announced they would close indefinitely, as did all 19 of the Union Square Hospital Group’s restaurant.
In France, the country’s daily hotel occupancy plummeted to as low as 3.3% on 17 March.
As the country got more and more confirmed cases, occupancy got below 30%.
During the last week of February, reports stated a large decline in Italy, Milan, Greece and other parts of Europe.
Switzerland canceled all meetings and events of 1,000 plus people. That resulted in the Geneva Motor show being canceled and a 12.5% decline in occupancy.
What to do in this situation?
Honestly, the world is in a very critical situation right now. Anything can happen and nothing can be told unless we recover from the situation.
However, for short term resort owners and operators should consider the need for a line of credit to help finance potential inadequate cash flow as a result of the downturn in business.
They also need to prioritize their expenditures at first, cutting down on non-essential costs while trying to jump back through a much collaborative effect with their wholesalers.
Next, strategic cost-effective planning is required to get back their customers. Like offering drive backs to their airports, discount for parking.
Honestly, as the flights and travel routes are changing, many people will be complied with to stay at the resort, thus extending their staying time. Use that time to make a genuinely good impression.
Another very important point to consider is that many travel insurance companies are doing to decline this pandemic as a coverable event, so before making any deals, the hotel staffs should have a detailed communication regarding that.
Honestly speaking, the only way things you ought to think about as a business owner is the need to sustain.
There are many programs already being set up to help out small hotels or restaurants. Take their assistance if needed.
Of course, the situation will remain unstable for a few time but it worked properly you can win the battle. The basic need right now is thinking about short term goals.
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