Weekend parties gone, weddings postponed, Maharashtra hotels prepare for the lockdown

restaurant, hotel, company, shopping center closed due to coronavirus or covid-19 pandemic outbreak lockdown. Picture: Shutterstock

Hotel operators across Maharashtra are staring at a near-total wipeout of revenue following strict orders to keep their properties shut on weekends. Hoteliers are staunchly protesting the move as weekends usually generate 60-70 percent of the week’s income.

Late on April 4, the Uddhav Thackeray-led government issued orders imposing a complete lockdown on Saturday and Sunday in a desperate attempt to arrest the wild spread of Covid-19 in the State. The weekend lockdown, which begins on April 9 at 8 pm, will last until 7 am on April 12, and could be in place till the end of the month.

Maharashtra has more than 10,500 branded and unbranded hotels, ranging from basic one-star properties to five-star business hotels and luxury resorts. The pandemic dealt a body blow to the hospitality sector resulting in an estimated revenue loss of around Rs 90,000 crore, according to research and consultancy company HVS.

Commenting on the situation, Vishal Kamat, Director, Kamat Hotels, said: “The impact of this lockdown on the hospitality industry is going to be huge. The weekends used to generate good business. The ratios will differ but it would be safe to say that the bulk of the sale would come on the weekends in socially-oriented food and beverage outlets. This 8 pm ban, where even the online food-delivery companies are barred, is greatly affecting the industry.”

Revenue impact

Hotels depend on food and beverage revenue to the extent of 40-50 percent, while rooms account for 25-30 percent of revenue and the balance comes from meetings, incentives conferences and exhibitions (MICE) and other events. Following the lockdown of 2020, MICE revenue dried up completely while F&B revenue was the first to gain momentum.

The lockdown orders issued by the government of Maharashtra state that guests who are not staying at the hotel will not be allowed to dine at the property on weekends. The lockdown takes away the bulk of hotel revenue, especially corporate business, as office parties and celebratory events are usually held on weekends.

“Corporate travel was just starting to gain strength again after being absent the last 8-9 months. Such travel will be affected because people travelling into Maharashtra from other States will look to avoid it,” said SP Jain, founder and Managing Director of Pride Hotels. “If our restaurants are serving only the 20-30 percent of guests staying with us then it will become a very costly affair.”

Marriages under pressure

The weekend lockdown and the curfew are making couples rethink their marriage dates as well. “Only 50 people are allowed for marriages now, which is far less than what was allowed a few weeks before. This cap on the number of guests and the 8 pm curfew is making people cancel their events. There have already been a number of marriage postponements and enquiries have completely dried up,” Jain added.

As per the Hotel and Restaurant Association of Western India (HRAWI), over 20 per cent of the hotel establishments are yet to fully start operations and 30 per cent of hotels and restaurants in the country have shut down permanently due to financial losses. HRAWI further stated that the Maharashtra Government’s latest ‘Break The Chain’ order is equivalent to another complete lockdown.

“Due to the work-from-home culture, earnings in the day are next to negligible and food delivery contributes only around 5-7 per cent of total revenue. Approximately 70 to 80 per cent of a restaurant’s weekly turnover is generated through weekend business and approximately 80 per cent of the revenue is generated in the evenings from dine-in customers,” said Pradeep Shetty, Senior Vice President, HRAWI.

“Restaurants are popular for dine-in services, for the ambience they offer and food-delivery is only a supplementary service. To keep an establishment open just for deliveries is not at all viable. Under such a scenario, shutting down the business entirely is the only choice,” Shetty added.

The hospitality sector directly employs around 90 million in India. The severity of the last lockdown could have led to the loss of half of this workforce, say hotel association members. As for the current lockdown, the association said workers have the option of migrating outside Maharashtra unlike the initial period of the last lockdown.