Hotels and Restaurants have been struggling without business due to the impact of the coronavirus.

The impact of COVID-19 on India’s hospitality sector has been terribly disruptive, with the hotel industry reporting a loss of Rs 1.30 lakh crore in revenue for the fiscal year 2020-21. The apex association of hotels and restaurants in the country – Federation of Hotel & Restaurant Associations of India (FHRAI) has requested the government for immediate fiscal aid to help save the hospitality sector from imminent collapse.

The association has observed that businesses are steadily closing and NPAs are rising. The total revenue of the Indian hotel industry in FY 2019-20 stood at Rs 1.82 lakh crore. While in FY 2020-21, nearly 75 percent of the industry’s revenues were wiped off. The total loan outstanding to the hospitality industry is over Rs 60,000 crore.

FHRAI stated that financial reliefs extended during the first wave of the pandemic were insufficient and improperly implemented. Now, the overwhelming second wave is posing insurmountable challenges to the industry making any hopes of survival appear bleak. The Association has pleaded with the government to step in and provide urgent fiscal support to save the hospitality industry from its present deteriorating state.

Gurbaxish Singh Kohli, vice president, FHRAI, commented that since March 2020 the industry has been struggling to manage its statutory and capital expenditure obligations. Having to repay loans with interest is unfeasible due to the current surge. The industry will completely crumble without a suspension on EMIs and interest payments. “Hospitality is one of the most affected sectors with stringent restrictions imposed on it. To expect our industry to continue paying off loans without any income or revenue generation is simply unfair,” said Kohli.

He added, “Our right to conduct business was taken away but the right to recover loans from us is being allowed. This is discrimination against our industry. We request the Government to offer a sector-specific policy which can mitigate all adverse financial impact including debt obligations accrued or to be accrued towards banks, financial institutions or any other entities, in view of the current circumstances and its long-term repercussions.”  

Pradeep Shetty, joint secretary, FHRAI, commented that working capital support with a low rate of interest from the Government will help the hospitality establishments that are struggling to restart and sustain their operations due to negative cash flows. He said, “We also request the Government to compensate employees engaged in the industry and their families for the loss of income.”

Surendra Kumar Jaiswal, vice president, FHRAI, said, “Along with moratorium extension of 3 years the industry will need a complete waiver of interest on the loans from March 2020 till the time that business is normalised.”

The FHRAI has made multiple representations to various authorities over the last 13 months and has held several meetings with top Government officials requesting for sector specific relief for the hospitality industry. However, the association still awaits a positive response from the Government.


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