The announcement that Hyatt Regency would be suspending operations was met with shock and awe by many. The marquee property close to the international airport in Mumbai had to suspend operations because of a lack of funds.
The company that runs it, Asian Hotels West in a filing with stock exchanges put down the decision to Covid 19 induced hit to funds causing an inability to make payments to their lender Yes Bank. They say all revenues were being held by Yes Bank in escrow and they no longer had funds for operations. P
radeep Shetty of FHRAI (Federation of Hotels and Restaurants Association of India) says the Hyatt closure is not a one off. He says many have downed their shutters earlier and Hyatt has made the headlines because of its size and brand name. Shetty claims at least 30% of smaller hotels that shut after the first lockdown in 2020 never opened again.
“The second wave is going to hit even more than the first wave because there is no avenue anymore for mopping up working capital”, rues Shetty who says there is no environment for the sector to survive. The Association has asked the Central government for aid with waivers and easier credit flows to help them tide ove.r
The Hyatt case is a curious one too. Two directors on the board resigned a day after the company’s notice to exchanges citing the management’s refusal to call meetings to discuss financial obstacles. While the finer details of the case are yet to emerge, the company has cited the pandemic for the reason behind their operations shutting for now.
Ajay Atawney, Founder of LiveFromALounge has a more optimistic view though. He believes widespread vaccination will turn the tide for the beleaguered hospitality sector. “”Loo at places where a lot of people have been vaccinated like Europe and USA where the industry has picked up and people are moving about a lot”, says Atawney who believes the same will happen in India when free movement is allowed again.
The biggest challenge facing the sector though is whether they can survive until that upturn in demand returns. Several schemes promising emergency credit lines, restructuring, and special funds for contact intensive industries have been announced but they don’t seem to be reaching the entities in need. “Banks are hesitant and wary to lend more money due to the uncertainty in this sector as compared to other sectors like manufacturing and construction”, explains ET Now Consulting Editor Mythili Bhusnurmath who points out that business travel may not return to pre covid levels for a while even if we do see a spurt in leisure ‘revenge’ travel
