Covid-19 – Impact On The Hospitality Sector in India

hospiatlity industry in covid

The coronavirus pandemic has acted as a major blow to various businesses, affecting the hospitality industry in particular. A research by Mckinsey suggests that recovery to pre-Covid-19 levels could take until 2023 or even later. Just like a lot of industries around the country, hospitality is also expected to see substantial changes in the post-pandemic era, some of which are apparent even today.

This article offers some major highlights on the impact of the pandemic and answers some important questions – How is the hospitality industry dealing with it? What are some major changes they had to go through? What are the possible scenarios of the new normal?

The current situation:

Currently, Covid-19 cases in India have seen a major spike again and most metropolitan cities are under complete lockdowns; people are shut inside their houses with nowhere to go. Hotel bookings have been at a serious standstill since leisure travel is at a complete halt and business trips are made shorter to avoid a hotel stay. Hotels and restaurants have no crowds to cater to and are met with eerie silence all around. 

Local restaurants and eateries are at a complete loss since delivery revenues make up only 5% of the usual sales and even the hotel rooms have only 5% occupancy. It has become very difficult for the businesses to survive as they have a lot of overhead expenses in the form of space rent, maintenance, employee payments, etc.

While it has been comparatively easier for large and famous chains to adjust since they are backed by the necessary capital, not all restaurants have been able to transition smoothly into this new phase. The Hotel and Restaurant Association Western India (HRAWI) said over 20% of the hospitality establishments across the country have not opened fully even after the first lockdown was lifted and 30% of them have shut down permanently due to financial losses. The rest continue to operate in losses and revenues are below 50% of the pre-Covid level. The new guidelines introduced by the state government has forced almost 90% of restaurants to shut down completely, the association said. A restaurant in Jharkhand had to sell its branch and keep its restaurant closed due to employees and chefs testing positive.

The new normal:

Restaurants have had to undergo some major changes to accommodate the new normal. With various restrictions in place, companies are now depending on no contact services; restaurants have largely started outsourcing delivery to keep their businesses going. Some of them have curated special takeaway menus to attract orders. Some have resorted to influencer marketing campaigns, food blogger affiliations, online delivery systems, and third party collaborations. Even movie theatres have jumped on the bandwagon of home deliveries for their eatery sections to ensure some amount of revenue.

As much as these changes adversely affected the profits for hospitality brands, they proved to be of great advantage to popular delivery partners such as Zomato and Swiggy. These companies have been seeing a consistent growth in their revenues ever since the first lockdown. Gurugram-based Zomato saw a major soar in the numbers and had its operations revenue go to Rs. 2604 in 2020 as compared to Rs. 466 crore in 2018. That’s a 5.5x growth in merely three years!

The future:

The one thing hospitality and travel businesses are is banking upon is ‘revenge travel’ to make up for the huge losses. Past experiences suggest that it could work since we saw a glimpse of it during the end and beginning of 2020 and 2021 respectively. When the number of cases in India dipped significantly, people were scurrying out of their houses in large numbers. They trusted the safety measures followed by restaurants and hotels and did not shy away from outings or bookings. Restaurants and tourism saw a short flare in business. Companies started showing quarter by quarter growth and expected to reach pre-Covid-19 levels soon. In the current scenario, vaccines are also acting as a ray of hope. With more people getting vaccinated, more the spirit of positivity is growing, with the hope to return back to normalcy.

On a closing note, the future of the industry does look highly uncertain. The current statistics show very dull figures, leaving us with no clear picture for the future. But we can only hope for the best and expect a brighter future in the post-Covid period.

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