The closure of Hyatt Regency may bring the plight of hospitality industry forcefully before the government, say hoteliers.
The hotel, located close to the Mumbai airport, is owned by Asian Hotels (West) Ltd.
According to Moneycontrol, as per filings made to the stock exchanges, Asian Hotels (West) failed to repay the principal and interest of Rs 4.32 crore taken from Yes Bank as term loans. The defaults included a car loan EMI of Rs 400,000. Asian Hotels has a total debt of Rs 262.54 crore, the report said.
Hyatt has come under spotlight and people are talking about it because it is a five star property. Almost 30 percent of hotels in the country are shut and of the 90 million employed by the sector, 30 percent have lost their livelihoods, according to hoteliers. A staggering Rs 1.50 lakh crore revenue has been lost. But has it caught anyone’s attention, asked hoteliers.
“The situation is very grim. You may hear a few more hotels shutting down temporarily or for long,” said Dilip Datwani, a hotelier who termed himself ‘hotelier in distress’ . He shared that the industry had no business for the past year-and-a-half, ever since the pandemic struck and tourism, flights were impacted.
However, the situation would have been ‘tolerable’, he said, if the taxes being collected on idle properties (‘that were not functional due to pandemic orders from the government’) were waived off, Datwani said.
The taxes are collected on property, water, electricity and renewal of licenses. “Hoteliers had staff that was sitting idle and had to pay them. For a few months most of them could pay but with no revenues, they could not continue and were asked to go home,” said Gurbaxish Singh Kohli, Vice President, Federation of Hotel and Restaurants Association of India.
Around 30 percent of hotels and restaurants that have shut pan India will not restart as they do not have the funds and no money to pay interest on bank loans taken. A restaurant starts making revenues after being in business for five years. The ones who have shut down are a decade old and some less than five. They are holding on to the properties as distress sales will do them in. But how long can they hold on, Kohli said.
Ever since the pandemic struck, the hotel industry has been teetering and has still helped the government by giving food and shelter to the COVID-affected. But what has the government done in return, a few hoteliers, who did not want to be named asked.
The Reserve Bank of India could have mandated that the banks should give the hospitality sector a waiver till the pandemic restrictions are off and the hotels could become functional, said Kohli. “But instead, they sent out an advisory. Who listens to advice, anyways,” he said.
On Monday (June 7) the Gujarat announced property tax waiver for one year for hotels, resorts, restaurants and water parks due to the coronavirus pandemic, officials said.
The decision was taken in a core committee meeting chaired by Chief Minister Vijay Rupani, they added.
'Now hotels, resorts, restaurants and water parks will not be required to pay property tax for the period from April 1, 2021 to March 31 next year. In addition, they are exempted from paying fixed electricity charges for a period of one year. They will be charged only for actual electricity consumption,' an official said.
Can the state governments follow the Gujarat model, Kohli asked. The ball is in the state government and central government’s courts now.