High costs, low revenues: India’s hotel industry is stuck between a rock and a hard place

Road to recovery.
Road to recovery.
Image: Radisson hotel groups
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India’s hotel industry is reimagining hospitality to survive the Covid-19 pandemic. But how far can creative thinking go at a time when people are reluctant to even step out of their homes?

The coronavirus outbreak in India and the ensuing 70-day government-enforced lockdown has crippled the hospitality industry. Several restaurants and cafes have shut shop in the last two months, while large hotel chains are struggling to pay salaries, and in some cases, even laying off staff.

But not everyone has given up hope as yet.

“We are re-calibrating (and) localising supply chains, which will change the way we operate,” said Gurbaxish Singh Kohli, vice-president of the Federation of Hotel and Restaurant Associations of India (FHRAI). “Every fixed cost is being reviewed afresh. Each hotel will have its own review geared towards greater efficiency and making operations lighter.”

From touch-less lobbies to spread out banquets, and exhaustive pandemic protocols, everything is on the menu right now.

Adjusting with the new normal

With social distancing being the need of the hour, hotels have tweaked the regular processes and activities to ensure that least human contact is required.

“Check-in and check-out formalities will be processed digitally. We have altered the designs of our lobbies, restaurants, and banquets making fewer tables available and also suspended the self-serving buffets wherever possible,” said a spokesperson for Indian Hotels Company (IHCL), a Tata Group subsidiary that manages properties of brands such as Taj, Vivanta, and Ginger. The IHCL hotels have also made the thermal screening of guests and employees mandatory.

US-based multi-national hospitality group, Radisson Hotels has devised an exhaustive 20-step protocol. These steps range from packing TV remote controls in protective bags to regular monitoring of air filters:

The three-star budget hotel group, FabHotels has decided to sanitise all its properties every two hours. “We have installed signs on the floors to signify the importance of social distancing. Informational Covid-19 posters have also been put around the properties to encourage people to follow the new norms,” said Vaibhav Aggarwal, founder and CEO of FabHotels.

Hotel chain Oyo is training its partners on how to maintain sanitisation and hygiene, and which protective equipment must be stocked up. The company says it will conduct regular audit checks to ensure its guidelines are being followed. “We will be training 1,000 hotel partners over the next few days under this program,” a company spokesperson said.

While these measures could make guests feel safer, experts said, these will come at a cost for hotels at a time when they are not in a position to charge more from customers. “The hotels cannot pass the extra cost to customers considering that demand is all-time low and will continue to remain the same for few more quarters,” said Nishant Pitti, CEO and co-founder of air ticketing and hotel bookings portal

Safety comes at a cost

With international borders sealed and Indians staying indoors, the demand for hotels has been nearly nil in India for about three months now.

Additionally, the growing popularity of remote-working culture has made companies realise they can operate without making their employees travel, which will continue to hurt the lucrative business travel segment in the future, too.

“Business travel used to serve the major amount of revenues for hotels but now as companies across sectors are struggling with the pandemic-triggered slump, they will be forced to cut down on travel cost of their employees,” said Pitti of

In the absence of any concrete relief measures from the government, hotel aggregator firms like Oyo are coming up with their own initiatives to attract customers in order to revive the demand. “Customers will now look for both affordability and flexibility as uncertainty around the ability to travel will remain for some time. Oyo Wowcher, our recently launched customer-centric initiative, focuses on this and offers double its value for the customers and has flexibility on the duration of redemption,” an Oyo spokesperson of OYO told Quartz.

Along with lower revenue and the temporary increase in costs related to Covid-19, hotels will have to continue to bear fixed expenses like salaries and general upkeep, which is causing them to worry. Also, there’s no assurance that all the measures to make their facilities safe will ensure a revival in customer’s trust.

“Business continuity, cost optimisation, and return on investment for our owners are some of the top concerns as the sector resumes operations,” said Zubin Saxena, managing director and vice-president of operations in South Asia at Radisson Hotel Group.