Restaurants, hotels gasp for survival with only 30% pre-Covid level recovery; plead govt for soft loans

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Updated: Nov 02, 2020 7:23 PM

Credit and Finance for MSMEs: The body had said in its recent representation to the government that the sector is finding it difficult to mobilize loans and financial institutions have marked the industry on the negative list.

He said good footfalls have been reported at bars and restaurants in Kolkata since reopening, particularly during weekends.The credit support is likely to help particularly small restaurants and hotels with the required working capital to sustain the hard times.

Credit and Finance for MSMEs: Possibly among the last-ditch efforts for survival, hotels and restaurants have pleaded the Modi government for soft loans even as the hospitality sector has failed to scale back beyond 30 per cent of the pre-Covid level so far. “Restaurants and hotels have seen only 20-30 per cent of average pre-Covid level recovery. Spending power has reduced and hence people are spending less on traveling and eating out while consumer confidence has also been impacted. While hotels would still take 12-14 months to recover when travel is fully open, restaurants could recover faster but we need more help from the government,” Gurbaxish Singh Kohli, Vice President of industry body FHRAI told Financial Express Online.

The association is seeking loans at a lesser interest rate and without any constraints or restructuring of existing loans for repayment to become easier. While November usually marked the beginning of the festival season and holidays for domestic and foreign travelers, however, “with no international tourists, and domestic tourism being at an all-time low,” said FHRAI, recovery may not pick up pace ahead due to Covid.

The industry body FHRAI has 8,000 associations of restaurants and hotels under its head. These associations have over 20,000 members. “Almost 70 per cent of the sector comprises of MSME units. There are 26 million outbound tourists every year from India but they are not going anywhere because foreign travel is shut. We are asking the government to incentivise them with domestic travel for which it would have to reduce GST,” said Kohli.

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The credit support is likely to help particularly small restaurants and hotels with the required working capital to sustain the hard times. The body had said in its recent representation to the government that the sector is finding it difficult to mobilize loans and financial institutions have marked the industry on the negative list. The hospitality sector is among few markets that have faced the maximum Covid brunt as it was perhaps the first to witness impact as customers restricted or stopped traveling and eating out and is likely to be the last sector to revive.

“So, when we ask the government for support, it is because the government asked us to not conduct business for the longest duration,” said Surendra Kumar Jaiswal, Vice President, FHRAI. The work-from-home scenario, zero foreign travel, low guest indulgence, etc., according to Jaiswal, have also contributed to the challenges faced by restaurants and hotels.

Meanwhile, online hotel booking company OYO and food delivery companies like Swiggy and Zomato have claimed recovery. OYO Founder and CEO Ritesh Agarwal had said at an event hosted by All India Management Association in September that the company has managed to recover to around 40-42 per cent of its pre-pandemic occupancy levels in India. Zomato CEO Deepinder Goyal had in October said that food delivery volumes have reached the pre-Covid level while the sector is likely to grow at around 15-25 per cent month-on-month for the foreseeable future. Also, Zomato’s rival Swiggy had said last month that the company is gradually nearing pre-Covid business with its pan India food delivery being recovered to around 80-85 per cent of pre-Covid order value.

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