I am always a bit fascinated by the ease with which politicians discuss the fate of the hospitality industry. When an industry appears in their minds, it is almost always in a security context. This is a legitimate concern (we’ll come back to this later), but it’s curious that hospitality is rarely discussed in terms of the jobs at stake or the potential damage to the economy.
This attitude is symptomatic of the fact that while civil aviation receives brilliant ministers (Jayant Sinha and Hardeep Puri are two recent examples), tourism in general remains dull (with a few notable exceptions, such as KJ Alphons in the last government). In a way, we think the Ministry of Tourism doesn’t really matter.
But of course it is.
According to some estimates, the hotel sector accounts for around 10% of our GDP. This includes travel (including airlines), restaurants, tourism, hotels, etc.
This estimate is based on the number of ten million tourists per year. It sounds like a lot, but 85 million people come to Spain every year. Even Singapore (which is only one city) is visited by 19.1 million people. Last year Bangkok was visited by 22.7 million people.
Ten million tourists are peanuts. And yet it accounts for ten percent of our GDP.
It is clear that if Bangkok can host 22.7 million tourists in addition to our 10 million tourists, there is an enormous growth potential. And although we are lucky to have excellent officials who understand this (Amitabh Kant is a clear example), the political establishment didn’t really care.
I don’t understand why it has to be like this.
Tourism brings us income. It’s a process that takes time, so it gives people work. Unlike production, where more and more jobs will be lost through mechanisation and robotics, tourism will continue to be an engine of employment. And it is an example of India’s soft power – a means of spreading goodwill.
Imagine that tourism/ hospitality has increased, even slightly, say by two million. Think of the impact this will have on GDP, on the jobs it will create and on the overall complementarity of national prosperity.
Unfortunately, no government thinks so. This is one of the reasons why nobody bothered to help the hospitality industry.
Unlike the aviation industry, which wants financial support and official sanctions for stealing passengers by refusing them refunds, hotels do not seem to want much. All the motions I’ve seen are about things like letting go of the GST, a moratorium on interest payments, et cetera.
It’s not necessarily cheap (for the government in terms of revenue), but it’s not a requirement for financial support, and as far as I can see, most hotel chains don’t tear their customers down like the airlines do. (For the record: I think even airlines should be released on bail, but after guaranteeing a salary and a refund and pledging their shares in exchange for financial support).
Worse, many people think that the hospitality industry should discourage tourists from coming to India.
This is just a stupid point of view.
Yeah, if you force hotels to close their airports, everyone’s in trouble. But as soon as you start the gradual opening up of the economy (in the case of the hotel sector from June to July, I think), things will quickly improve.
The first big mistake we make when looking at the hotel and restaurant sector is to assume that the world remains static. It’s not that. It’s gonna be okay.
All pandemics are over. China seemed to be at the end of its rope after SARS, but half a year later it recovered. Even the Spanish flu pandemic of 1918, which killed five percent of the Indian population, eventually came to an end. And today it’s not even mentioned in many history books. Did you even read it at school?
Covid will end sooner than we thought. The drug that cures the disease should be available by the end of the year. (At the time of writing, Remdesivir, a drug developed by Galaad, was successfully tested).
The vaccine developed by Oxford University has worked well in monkeys and is currently being tested in humans. The most optimistic predictions indicate that it will be available in September. (Pharmaceutical companies are so safe that they are already producing and storing the vaccine).
Another vaccine developed by Pfizer looks promising – it could be ready in the fall. And at least six other vaccines are under development.
The development of the vaccine is notorious for its difficulty. But you have to be super pessimistic to believe that all these projects will fail and that no vaccine will be developed.
The likely scenario is that guests who want to travel will be vaccinated against spring. (Think of a yellow fever vaccine we had to take when we went to Africa). And given the amount of vaccine to be produced, its availability is not a problem.
After that we will be as afraid of Covidus as we are of polio, tuberculosis, smallpox, mumps, typhoid, chickenpox or God knows what else. The disease can’t go away. But it won’t be an urgent problem either.
As soon as this happens, hotels, planes and restaurants will be operational again. The logical worst case scenario is the financial crisis in the hotel and restaurant sector from July (when the branches reopen) to April next year.
It’s no good. But I don’t think it’s the end of the world.
In reality, however, the hospitality industry has about eight months (or less) to worry about. And the hotels are preparing to address the situation in this scenario in the short to medium term before a vaccine or new drugs are developed.
I asked Nakul Anand of the ITC, who is now the dojo of the hospitality industry (after Biki Oberoi of course), how bad he felt about it. Anand believes that in the pre-vaccination phase the healing will take place in several phases.
In particular, people may be reluctant to stay at busy airports or take long flights. At this stage, customers may prefer destinations to which they can drive or destinations within a short flight distance. If you live in Delhi, you can drive to Jaipur, Agra, or if you are satisfied with the longer routes, to Shimla or Musuri. From Bombay, the mountainous areas of West Gats are the obvious choice. And if you don’t mind a short flight, then Goa (where Covid’s prices are surprisingly low). From Bangalore you can drive to Kurg. And so on and so on.
Nakul Anand, Managing Director, ITC Ltd.
Secondly, Anand explains, we know that millions of Indians go abroad. (According to some estimates, we have 26 to 30 million outbound passengers). Many of these travellers will now be reluctant to travel abroad for various reasons: Fear, rising airfares, etc. And yet, many of these people will want to rest in the coming months. (Don’t you think you deserve a break after this traumatic confinement?)
The Indian hotel industry (at all price levels) will focus on these customers. Yeah, we’re gonna lose most of the ten million tourists that came to India from abroad. But there are at least 26 million (maybe more) Indians who can make up for that.
Anand’s analysis divides most of the hotel business. I spoke with Niraj Goville, senior vice president and director of Marriott International in India and South Asia. According to him, the domestic market and related business opportunities in the local rooms and F&Bs will first recover, followed by international travel.
As long as no vaccine or medication is found, all hotel guests will be obsessed with hygiene. Travellers are likely to prefer hotels that have improved sanitary protocols and can transfer efficiently, Govil adds.
The Marriott has drawn up new standard operating procedures for reopening hotels that deviate significantly from existing practices. All rooms will remain empty one day after departure so that they can be properly disinfected, the tables in the restaurant will be at a good distance, guests will be able to enter and leave without physical contact with the staff, and if demand is not great (which will not happen in the coming months), the rooms next to those occupied by guests will remain empty, etc.
Nirai Govil. Director of Mariotta in India
Anand and ITC have an advantage because the belt has always been the most environmentally friendly and hygienic chain (the symbol since the 70’s is Namaste, not a handshake or something more personal), so new hygiene regulations come easily to Kovid.
In addition to Neraj Govil and Nakul Anand, I also talked to other hotel chain managers. Everyone’s written off for the next two months. But they’re all ready to end the lockdown. And no one seriously doubts that some kind of normality will return next spring.
This is a crisis, not Armageddon.
To learn more about taste with the virus, click here.
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