The hospitality sector still hungry a year after Covid-19

Bangalore Business Capstone COVID-19 Food Pandemic

With the second wave of Covid-19 looming over the heads of everybody, the hospitality sector in Karnataka looks at the long road ahead of the revival.

Bengaluru: When the lockdown was imposed in March 2020, Anil Kumar, the owner of Udupi Taaja Tindi, a small restaurant in Bengaluru did not know that he would have to close it down permanently. This is a similar story about many hotel and restaurant owners in the state, big or small.

The Swathi Group of Hotels in Bengaluru is a massive chain that employed at least 1500 labourers in the city. Most of the workers were gig and contractual workers from Bihar and Uttar Pradesh. After the lockdown was imposed, over 40 per cent of them have not returned. Madhukar Shetty, the owner, said, “We have not opened rooms in the hotel, it’s just the restaurant that is running, this has set us at least two to three years back. Only two floors are running, over 500 people who worked for us have not come back.”

The Bruhat Bangalore Hotels Association (BBHA) has around 2000 hotels and restaurants in Bengaluru under its purview. Triveni R, the manager of the association said, “Almost 50 per cent of the hotels and restaurants are still affected. Some of them are permanently closed.”

“I incurred too many losses to keep the business floating, it was not easy, but I had to,” Anil Kumar said. Anil Kumar is one of the many in the business that has permanently closed down because of extreme losses. “I do odd jobs now and then,” he added.

The problems associated with Covid-19 are manifold. Many of the owners and those working in the industry are also dealing with the uncertainty of what is going to happen. The fleeting government guidelines have pushed many to the edge. 

Serviced apartments, resorts and homestays at risk too

Furnished apartments for long-term and short-term stays provide a range of services for people who rent them. Nidhi Poonja, owner, Tranquill Apartments in Bommanahalli and HSR Layout said, “We were shut down for a few months after the pandemic hit, and bookings were low. It was picking up in between but again the second wave has hit us badly,” she lamented.

Ritesh Agarwal, CEO and founder, OYO, on the website, says that there has been a 50-60 per cent reduction in revenue and occupancies because of Covid-19. 

Aparna, Development Executive, Guhantara Resorts in the outskirts of Bengaluru has a similar story to narrate. Before they had 500 people on average vising their resort every week, and it has come down to less than 100. There was a 40 per cent pick up during January and February, but now the rates have come down, and so are the customers,” she said.

Darshan Ganapathy, owner of Chilipili Estate Stay in Hosakeri, Kodagu district has still not recuperated from the lockdown. “It was better in November, you know when the cases came down but now the sales are low, and I incurred losses up to 80 per cent, the income is nil,” she said.

Make My Trip, the online travel company recorded a 62.1 per cent decrease in air ticket bookings, a 66.6 per cent decrease in hotel bookings for the third quarter (Q3) ended in December 2020.

Restaurants and their stories

PC Rao, the president of BBHA in Bengaluru said that 25-30 per cent of the hotels have permanently closed down. It’s not just Bengaluru, the entire state has been severely affected.

“The second wave is a major blow to us, and because of the night curfew, 50 per cent reduction in the seating capacity, and second-wave all businesses have collapsed,” said Rao. After the 50 percent seating capacity order, the government has ordered closing down of all hotels and restaurants, allowing only take-away services.

There are hardly any customers in Apoorva, a restaurant in Mysuru. The anxiety of the pandemic was palpable. Suresh, the owner has incurred losses up to 80 percent. “I had closed down after the government imposed the lockdown two weeks ago, and opened only a day back,” he said. The staff strength that was 60 before has come down to 10 now. “I shut down the Café Good Vibes, and I only run the restaurant,” he added.

After the pandemic, one of the first sectors that adapted to online is the IT sector. There are 12,000 IT companies in Bengaluru. The food courts dependent on these companies are closed indefinitely.

Rao, also the owner of Ideal Solutions, the food catering services to IT companies, said that the Work from Home culture has hit the catering business in the city. “With all companies working from home, we have been badly affected,” he added.

Arun Adiga, the owner, Vidyarthi Bhavan, the iconic Masala Dose outlet spoke at length about how Covid-19 has affected the hospitality sector. “The intensity of the effect is different. But hospitality sector is a chain. Agriculture suffered, the consumption came down to 50 per cent, farmers incurred losses, catering outlets closed down, the dairy industry suffered, and it indirectly affected every person in the city. Food is essential and the inter-connectivity is huge,” Adiga said. “In Vidyarthi Bhavan itself, the revenue is down by 20-30 per cent.”

Credits: Author Many cooks employed in the hotels and restaurants are migrants. Since they cannot afford to pay the rent , they have left the city, and that has hurt the hotel business prospects of the city.

Tourism and business travel affected too

There are 24 Mayura Hotels in Karnataka. Mayura hotels are government-owned, they belong to the Karnataka State Tourism Development Corporation (KSTDC). Their profit margin has seen a drastic reduction. “People book online, but in the end, they cancel bookings, sales are not picking up despite all the measures we take,” said S Shankarappa, Deputy Director, KSTDC. “We have many tourism packages, but the industry has been hit badly,” he added.

Tourism is one of the major players in bringing revenue to hotels, restaurants and resorts. With travel and tourism affected, the hotel industry is further pushed down the ladder. “Pandemic has hit the travel industry very hard. It’s the first one to come to a halt, and the last one to revive. Even though the lockdown was lifted, and domestic tourism started picking up, 60-70 per cent of people cancelled their bookings because of the second wave,” said Sanjar Imam, President, Karnataka Tourism Forum, an NGO that works under the patronage of the government.

He continued, “Many people in the industry lost jobs and the ones who have them, are working on a reduced salary. Leisure and corporate hotels have come to a halt. There has been a 90 per cent reduction in the city hotels, occupancies have gone down by 20 per cent.”

Corporate hotels have suffered a major blow too. With business travel down, boutique hotels are barely managing to stay afloat. Imran, front office manager at Magaji Orchid, a business boutique hotel in Sheshadripuram in Bengaluru said that their business has come down to a mere 20 per cent from 80-90 per cent from pre-Covid-19 days.

Government’s role

The hotels and restaurants did not receive any kind of compensation from the government. In a letter to the government, the BBHA,  The Federation of Hotel and Restaurants Associations of India (FHRAI) and the Hotels Association of India wrote to the state and central governments respectively asking for relaxations in Covid-19 guidelines and vaccine for all staff working in the hospitality sector, and to consider hotel staff as frontline workers, but to no avail.

CP Yogeshwar, the Karnataka State Tourism Minister, announced industry status to the hospitality sector in the state. However, they will only apply to those hotels that are registered under the central tourism ministry, and they will be provided tax concessions for five years. K Syama Raju, President, South India Hotels and Restaurants Association said, “This is a huge benefit for hoteliers who are already having classified hotels. Any hotel classified by the Government of India will get the benefit.  We are very happy with this announcement and we want more hotels to come under classification so that they may benefit from the same,” in an interview. The Hotels Association of India, Karnataka chapter had appealed for the industry status to the entire sector, but the state’s move is limited to big hotels and not small ones.  

Even though many hotels and restaurants closed down, new ones have come up too bringing in hope.

Karthik Hebbar, a software engineer started a new restaurant, Café Bengalore in Jayanagar, Bengaluru, despite all the apprehensions involving Covid-19.  “Food is essential to everybody, that’s why we started. We follow all safety precautions and hope the cases will subside soon,” Karthik said.

“To be honest, we did not anticipate the cases and the growing concerns of the second wave when we started. We have delivery and takeaway services even if the situation deteriorates. Around Jayanagar, there are a lot of people who have breakfast during early mornings and we cater to a niche set of people. We know there will be footfalls, we will do everything we can to stay afloat,” he added.

Many people who dined out regularly in the pre-Covid-19 days do not want to go back to restaurants and hotels anymore. Nayana Murthy, a regular restaurant goer complained how much she missed going out to have food. “I was scared even when the restaurants were opened briefly in between the first and the second wave. I’m not sure how long it will take before I can go out and have fun, it’s not the same experience of ordering food and eating at home,” she said.

The humongous impact on the hospitality sector is because of multiple reasons, explained experts.

Niranjan Khatri, former general manager, ITC group of hotels said, “Humans have been using resources in a way which is not sustainable. The magnitude of the impact is so severe that it has never been imagined before. One report says, the industry has suffered a loss of Rs 1.12 lakh crore during the pandemic,” he said. “Many state governments are giving concessions on power tariff, but it is a balancing act considering the inequity that exists in the country,” added Niranjan.

“Big hotels are affected, people have lost jobs, it’s a chain effect. Business travel and tourism are nil, discretionary spending is limited, even though tourism will get back on the track, corporates will function remotely,” said Kshitija Joshi, an economist.  It is very difficult in India, and the government’s hands are full, the experts said. “Subsidies, tax credit and workers’ salaries could help the situation, but the government does not have money,” added Kshitija.

The second wave of the ongoing pandemic has rendered a strong blow to the sector, setting off a domino effect. Experts feel that it will be long before the sector recuperates, thus indicating Covid-19’s permanent exit.


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