Webinar On Hospitality Industry (1)

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Webinar On Hospitality Industry- The way forward Resurgent India Knowledge Series Presents Webinar On Hospitality Industry- The way forward Speakers- Mr. JB Singh CEO- InterGlobe Hotels Speakers- Mr. Ashish Kumar VP-Corporate Finance Treasury- InterGlobe Enterprises Speakers- Mr. Dilip Puri Founder and CEO- Indian School of Hospitality Moderated by- Mr Jyoti Prakash Gadia MD- Resurgent India Limited Key Takeaways Industry Overview ● Hospitality industry which comprises travel tourism and accommodation had created 4.2 crore jobs which accounted for 8 of the total employment of the nation. It also ranks third globally in terms of investment in travel tourism with national investment in it up to 6. ● The tourism related business activities are worth at over 28 billion. As per the reports around 70 of the total estimated workforce is likely to be unemployed. The profitability revenue will also plummet down to 20-25.

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Issues outlined by Industry experts ● The ability of the hoteliers to institutionalize massive changes in the organisation in multiple ways will serve as a barometer of how successful they will be going forward. They may also see significant improvements in the margins the way hotels operate once lenders/bankers can mitigate the risk to overcome the survival time. ● Even with SOPs of health and safety becoming more defined in big branded hotels the business of bed breakfast models will also pick up speed in India like west alongside. ● Repurpose hotels have different lenses attached to it and one has to think out of the box as to how existing hotels can be repurposed into different real estate models if their survival is at risk for another 3 years. ● The industry runners will have to probe distinct ways and means to preserve and conserve cash in all aspects while taking enough support from the regulators socializing the issues with stakeholders. It will look at things from quantitative and qualitative facets against issues faced by the industry because of the COVID 19 ● Businesses with presence of more than a decade will have some mechanism of cash element being diverted in the business equity support that has to be demonstrated. ● In the long run one has to keep an eye on the best practices happening globally. ● Support from the banks/financial institutions are legitimately huge in the international market for this industry. Separate funds have been created in the past. ●Reinventing of wheel in terms of cost management manning ratio cash management support from stakeholders like banks in form of short-term working facilities/OD EPCG scheme GST waiver from the property tax liquor taxes and many more ways which can give sufficient breathing time to the industry to jump back on its original level. ● The industry is currently averaging out close to 8-10 occupancy depending on which part of the country it is operating in. Webinar On Hospitality Industry- The way forward Cost-Cutting Compliances ● Hoteliers will have to be mindful of the capex they will incur in the process of making their hotels safe and hygienic. There is a possibility that these solutions are for short-term pre vaccine era which might become redundant in the future. One should not go overboard have a balanced approach for incurring capex.

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● The organized players because of scale enough intervention usually can recover 60-65 of the cost faster than unorganized players. They have structures and processes that unorganized players lack hence impact will be far reaching. ● As the customers will increasingly prefer compliance independent operators will have to ramp up to get them in order. India is going in a direction where the need for compliance transparency sustainability responsibility is growing. ● This crisis will force the unorganized sector to obtain a level of compliances in terms of hygiene safety in the near-term. Government regulators might enforce certain guidelines or we may even see certifications that will take care of safety issues. ● Social changes brought about because of this pandemic in lifestyle will also affect travellers and tourists while booking accommodation. Technology Communication ● Technology will remain a big differentiator and young professionals will have to be friendly with the fact that AI machine learning automation are not here to take their job but make them more distinctive unique. ● The re-skilling of staff and professionals will require them to embrace digital and online learning. Their mindset will have to be aligned with the new future that will prepare them for Covid -like environment of uncertainty. ● Payroll forms a tremendous part of PL for this industry and cost-cutting measures in this area is to reduce the room to staff ratio. This has to be done while enhancing the productivity of the staff so it does not affect the business. And this is by identifying ways to adopt technology in operations. ● For structured hotels health hygiene specifications were already in place except for few basic changes the change that may be forthcoming may be in plethora of other forms like sustainability energy saving staffing recruitment many other ways. ● There is a digital explosion which has opened up fresh opportunities amid uncertainties. It will be interesting to see how this will affect benefit the industry as a whole. India is in a unique place at the moment. It is demarcated as the one that will lead the future as the economic shifts happen. ● With the emphasis on bringing down the manning cost there is a need to re-skill the manpower. Re- skilling will be important because the time expectation will differ from what it was pre-covid era. This industry has also lagged in an adaptation to technology as compared to other sectors. ● Companies will have to learn to effectively communicate in this virtual environment and identify non- verbal cues in absence of physical nuances. Financial outlook

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● Only businesses with enough reserve will be able to weather this storm. Hotels who were doing well owners management would take out cash invest in either upgrades or capex expansion growth. So if they have not kept a pile of reserve or contingency aside they will be greatly challenged in upcoming times. ● As the numbers are quite terrifying because of the shutdown of business the government has offered respite by being considerate and proactive in their response. However this industry will need more aid by a combination of solutions because it is sitting on a close to 8 billion of loan book organized unorganized combined. ● Financial institutions and bankers need to back up this under penetrated industry which has an enormous amount of potential for growth and expansion by placing the right bets on a calculated class of assets. ● International capital markets are more flexible in decision making as they are not dependent on regulators for guidelines. Banks in Germany UK New Zealand are taking independent decisions based on the history of the borrower and providing all the essential support. ● Second international sovereigns are also providing support to corporates in form of reimbursing the payroll which is a key expense anywhere. Recommendations by industry ● we aspire for an extended moratorium of a year. As deferment of interest is announced till March 2021 industry recommends capitalization of it. ● Onetime restructuring of the accounts with details to be worked out about the qualification of account etc. ● Creation of an AIF similar to the fund for reviving real estate projects stuck for funding reasons ● Mid-scale operators cannot recover excise fees from the sale of liquor are paid through cross sales of FB hence deferment of the fees can help with the liquidity crisis. ►Watch the webinar here: https://www.youtube.com/watchvEEpB-6OQo68

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