Coronavirus can slash $1.5 billion from India's hotel industry

20 March 2020 2 min. read

The hospitality sector is one of sectors worst hit by the Covid-19 disruption across the globe, and hospitality consultancy Hotelivate has now put this damage into numbers in the Indian context. India's hotel scene could take a hit of up to $1.5 billion in the best-case scenario.

This best case scenario estimates the current level of economic lockdown to persist for the next two or three months, although more worrying time frames are also doing the rounds among experts. The lockdown includes policies such as ‘work from home’ and a ban on non-essential travel.

If these persist for the next two to three months, Hotelivate anticipates that the blended occupancy across all of India will take a hit of anywhere between 18% and 20%. At present, there are approximately 140,000 hotel rooms registered in India’s organised sector, which represent a mere 5% of all lodging facilities in the country.

For just this five percent, however, the loss in revenue from the lack of travel and tourism could amount to $1.5 billion, if not more, over the course of this year. Such a slash would mark a 30% dip from last year’s revenues, unleashing a dark period on a sector that has largely been on the rise in recent times.

Coronavirus can slash $1.5 billion from India's hotel industry

Moving beyond the 5% of registered and organised guest rooms, the broader lodging sector in India – including bed & breakfasts, guest houses and other inns – stands to lose nearly $5 billion in revenue. “Should this situation extend for a longer period, hotels in India are then likely to bear losses that simply cannot be quantified,” stated Hotelivate. 

The firm also highlights how these figures refer primarily to direct losses in revenue, and leave out a hole host of indirect damages to the sector. “None of these estimations even begin to address the plight of a long list of connected and ancillary service providers such as tour & travel operators, wedding & conference planners, vendors and suppliers, etc,” said the firm.

Putting the loss in context, the firm said, “It has often been stated that the larger tourism industry in India contributes to about 10% of the GDP (approximately US$275 billion). It may not be an overstatement to assert that almost all of this revenue may dwindle to a painfully negligible amount if Covid-19 does not come to a halt this year.”

Hotelivate, which is a hospitality consultancy conceptualised as an advisory firm for the modern market, has also offered some potential solutions. This includes monetary support from the government for crew and staff in the travel sector and a “deferment of debt payments,” among others.