MP Bezbaruah, Secretary General, the Hotel Association of India spoke to TW on the recent challenges of the Hospitality industry, the story of survival and fight-back and the road to recovery.
- How is the recovery of the Hospitality industry so far in the post covid scenario? How optimistic would the design be to match the earlier parameters?
According to the latest report by Jones Lang LaSalle Incorporated ( JLL), the revenue grew by 89.6% YoY, Q3 2022, over 2021. It is an indication that the hospitality industry is back to normal. The growth pattern is assisted by strong demand in corporate, MICE and domestic travel. various available reports show that weekend getaways, experiential and leisure travel are the prominent consumer preferences influencing the demand side.
The report also indicates that the supply side is also picking up ., 54 hotels, with 4,282 rooms were added during the year. As per the report While domestic operators signed 34 hotels, international firms were involved in 20 deals. It is essential that in order to match, the demand and supply of accommodation, consistent with the growth projection and targets of the government the focus should be on future planning. Many member hotels are working on extensive expansion plans — looking at increasing accommodation in non-metro cities and developing budget categories to meet future projections. All these are indicative of optimism in the industry about the future.
- If you can share the nature of the challenges in the present scenario?
There is general agreement that the nature of travel and tourism post covid has changed. Various surveys have shown that consumers demand compliance with sustainable practices in operations. It was stated that confidence is the new currency in this sector. The industry has to gear up to meet consumer expectations on the safety, hygiene, and health of associates and guests. The deeper penetration of technology also has many implications. It provides the industry with more productivity, enabling competitive advantage, enabling greater interaction with the consumers, reducing cost, and so on. But technology also empowers consumers who have greater access to choose and can demand services. For example, it has led to more flexibility in bookings and cancellations. The hotels also have to invest in skilling the manpower in technology and keeping them up to date with fast changes.
The industry has grown rapidly in recent decades, directly employing close to 8 % of the country’s workforce in 2019. However, after Covid, the global hospitality industry has faced daunting problems of labour shortages and demand-supply equations. According to a Ministry Of Tourism study, the manpower shortage in the hospitality sector in 2018 was 2.6 million, and the sector is staring at a deficit of 1.1 million in 2025, posing a significant concern to the sector’s recovery post-COVID. But now the industry is gearing up for the challenge.
- Domestic vs International tourism in the Post Covid scenario – how are they impacting the Hospitality sector?
Globally the ratio of international to domestic tourists has been around 1: 10. In India it is huge—before covid domestic visits were more than 2000 m against 15m international tourists. After Covid, also domestic tourism has fast picked up already reaching 677 m visits. The revival of tourism after Covid has been almost entirely driven by this phenomenon. The long-term policy of the government relating to the development of accommodation, creating new destinations, and connecting unexplored areas– must be based on this reality.
At the same time, all government statements, draft Tourism Policies etc project manifold growth of international tourist arrivals. The vision @47 is to make India one of the top five destinations in the world. That will require a lot of attention to air capacity into and inside India, accommodation expansion rapidly, ease of travel to the country like visa etc.
According to RateGain report September – November 2022, has seen over 25.26 lakh inbound travellers through Delhi and Mumbai airports. The government has taken a number of initiatives to attract foreign tourists including the Introduction of the scheme to boost the tourism sector by providing a one-month free tourist visa to 5,00,000 tourists until March 31, 2022. The e-Visa facility has been extended to 156 countries to date. Inda’s G20 presidentship which will involve a large number of events throughout the year, attended by leaders of many countries is a great opportunity for India, for branding and marketing. Indian civil aviation has reportedly reached the 4-lakh mark after 5 months in October 2022. By 2024, the centre hopes to build 100 airports under the UDAN Scheme in order to accommodate India’s expanding passenger demand. By 2037, 520 million people are expected to travel to, from, or within India, according to statistics from Invest India.
The latest UNWTO Confidence Index survey indicates that 81% of tourism professionals see better prospects for 2022 and that a higher number of experts (48%) now see a potential return of international arrivals to 2019 levels in 2023. It is now time for the country and the hospitality sector to gear up for this pent-up demand.
Average occupancy in the hotels as well as average revenue per room are sowing favourable trends. In brief, industry analysts have considered that the recovery of the hotel sector is back on course with all the parameters like occupancy, ADR, RevPar matching, or at times even higher than the pre-pandemic levels. There are, however, regional variations, seasonal variations, local conditions, etc.
- Regarding support from the Government – existing vs expectation:
During Covid, HAI had consistently focused on measures for the survival of the industry. The measures included liquidity support like a moratorium on loan and interest payments, long-term restructuring of interest rates, wage support to prevent job loss, deferment of statutory dues, and taxes, like electricity charges. These were logical and much-needed support. We cited examples of measures taken by different countries. We had also asked for policy formulation to provide social security to vulnerable sections in the future. Ministry of Tourism, Parliamentary Standing Committee etc were supportive. Some scattered measures were taken, by some states and RBI. But overall, we were disappointed that no comprehensive intervention came for the industry which was totally brought to a standstill. We are however proud that the industry as one stood behind the government in fighting the impact of Covid.
For the future, we have concentrated on providing the benefits of the industry to the sector. We have also asked for the infrastructure status of the hospitality sector. These are incentives that will give returns to the government many times more than what it costs. For example, the mismatch between accommodation and demand projected by the government can be met by investments from the sector itself if such incentives are available. We have asked for a robust mechanism for strong PPP on a systemic and continuous basis. In that connection, we are happy that our suggestion for a National Tourism Board is receiving the attention of the government.
- The ‘new way of travel’ as they say about the travel behaviours among tourists all over the world in the post-Covid period, – how Indian hospitality sector is coping with these changes?
Covid has changed the perspective of and for the industry. The new way of travel has manifested in many ways—clear consumer preferences for sustainable norms in operations, more use of digital technology for booking cancellations etc, staycation, nature and recreation vacations etc. All the members of HAI are attuning and equipping themselves to these emerging trends taking initiatives towards environmental stewardship by phasing out single-use plastic, exploring renewable energy and strengthening water security, avoiding wastages and so on.. Many of them have received international recognition for outstanding contributions toward best sustainable business practices. In fact, HAI has collaborated with WTTC to promote Sustainability Basics among the members which provides a global benchmark for the industry.
- Opportunities in near future and the scope of ‘Employment bouncing back in the hospitality sector?
There is full confidence that the hospitality sector will continue to be the biggest employment generator. The industry is aware of drain of skilled manpower and the need in this competitive world to match expectations of the job seekers and make service conditions attractive and comparable enough to retain brand loyalty.
A lot of attention is being paid as an industry for human resource development and training. Reportedly, the hospitality industry in India could be facing a shortage of around 350,000 workers as the business has boomed post the third wave of Covid-19, But it is expected to be temporary and the growth in the sector will ensure that employment will bounce back.
- HAI’s overall efforts for the industry
HAI, as an apex body for the industry, is making all possible efforts for the industry. The overall efforts can be briefly summed up as follows—(1) Being the mouthpiece for the industry. We join hands with other industry organizations to bring the attention of all stakeholders to the industry. (2) Advocacy of the industry interests and problems with the government through letters, memoranda, and meetings. We carry on dialogues with the central government and with the states through our state chapters. In fact, through such efforts, HAI could help in getting Industry status for hospitality in some states like Maharashtra, Rajasthan, Punjab and Karnataka. (3) Awareness creation—we feel that there is a lack of understanding of the role of the industry and also a misconception. Through media releases, articles in newspapers, interviews with media as well as through our widely circulated magazine The Engage. We also constantly focus on happenings through our Newsletter. HAI has a very high percentage of media share both print and electronic. (4) Dialogue with the government, Parliament bodies and other decision-makers on important issues.(5) Partnership with the government, and international bodies –we believe in PPP and played a very important role in the government’s covid relief efforts. HAI actively participates in various government committees and thus plays a key role in policy formulation. Recently, the Hotel Association of India has joined hands with Impact4Nutrition which is a commitment-based platform for the public and private sectors in India to collectively contribute to improving the nutritional status of every Indian as a pledged Association partner.
( Mr. Madan Prasad Bezbaruah, retired as the Secretary, the Ministry of Tourism, Government of India and was recently a Member of, the North Eastern Council(in the rank of Minister of State). He is also honorary Permanent Representative of UN-WTO.)