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Hotels lay off employees as occupancy falls to 20%

Growing fears of coronavirus and visa suspension for travel to India have dwelt a heavy blow to the hotel industry, which is witnessing dramatic fall in occupancies. With businesses coming to a standstill, some hotels have started laying off staff.

 

Many hoteliers TOI spoke to said that occupancies that stood at 65-70% on March 1, have come down to 22-30%. Baring a few weddings that had been booked much earlier, all other events including corporate meetings, conferences, and exhibitions have been cancelled.

 

They said that the domestic visitors, who account for a large pie of the total business, have also stopped travelling, resulting in a sharp decline in hotel occupancies.


“The worst fears are coming true. The situation is not far from being panic. The dramatic decline in occupancies shows that. Even people are increasingly avoiding to dine out. The industry is in pretty bad shape now,” said a hotelier, preferring anonymity.


With demand drying up, some standalone hotels have started laying off employees, while some leading hotel chains said there is no retrenchment of staff who are on pay roll as of now.


“It’s difficult for standalone hotels to manage the situation if they do not bring down operating costs. That includes letting some people go till the situation improves. While big chain hotels have not gone for job cuts as yet, they are not hiring temporary staff,” said a general manager of the hotel.


Manpower expenses as percentage of total operating costs have been rising in the past few years. He said, “It used to be around 18% of the total operating cost but now the expenses have gone up to 24%. So, it is natural that hotels will reduce manpower count to manage their finances.”


Tour operators and travel agents in Jaipur said that their business has come to a standstill and now it would be difficult to manage unless they undertake deep cost cutting measures.


“So far, the tour operators and travel agents have not sacked any people. But in coming weeks that will happen. If there is no income, how can they pay their staff,” said Sanjay Kaushik of Rajputana Holidaymakers Pvt Ltd.


Great Indian Travel Bazaar (GITB), one of the last events that was not cancelled or postponed till now, is likely to follow suit. GITB, a leading business networking platform for inbound tourism, is attended by large number of foreign buyers and the event was scheduled to be held from April 19-21. But with visa suspension in place, this will also fall prey to the spread of Covid-19.

Source: TOI