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  • FHRAI Seeks Centre’s Urgent Attention Towards Dismal State Of Hospitality Sector; Recommends Specific Fiscal Measures To Rescue The Distressed Industry

News Details

16 th May 2021

Hospitality Industry Demands: -

  • 3 Year Moratorium Extension On All Loans
  • Complete Waiver of Interest on Loans
  • Stimulus Package for Industry’s Working Capital requirements Waiver of All Statutory Charges

The apex Association of hotels and restaurants in the country - Federation of Hotel & Restaurant Associations of India (FHRAI) has submitted a representation to the Hon’ble Prime Minister – Shri Narendra Modi, Hon’ble Finance Minister - Smt. Nirmala Sitharaman, Hon’ble Minister of MSME – Shri Nitin Gadkari and Hon’ble Tourism Minister – Shri Prahlad Singh Patel requesting for urgent and immediate support to save the Hospitality sector from imminent collapse. The Association has stated that financial reliefs extended during the first pandemic wave were inadequate and improperly implemented and the unprecedented second wave is posing insurmountable challenges to the industry making any survival efforts appear bleak. The FHRAI has pleaded to the Government for immediate fiscal measures to save the Hospitality industry from its present deteriorating state.

 

“Since March 2020, the industry has been struggling to manage its statutory and capital expenditure obligations. Repayment of loans with interest is not just difficult but impossible under a more severe economic environment due to the present surge. Without a moratorium on EMIs and interest payments, the sector will completely crumble. Hospitality is one of the most affected sectors with stringent restrictions imposed on it. To expect our industry to continue paying off loans without any income or revenue generation is simply unfair. Our right to conduct business was taken away but the right to recover loans from us is being allowed. This is discrimination against our industry. We request the Government to offer a sector-specific policy which can mitigate all adverse financial impact including debt obligations accrued or to be accrued towards banks, financial institutions or any other entities, in view of the current circumstances and its long-term repercussions,” says Mr. Gurbaxish Singh Kohli, Vice President, FHRAI.

 

The FHRAI has pointed out that businesses are steadily closing and NPAs are rising. The Indian Hotel industry’s total revenue in FY 2019-20 stood at Rs.1.82 lakh Cr. As per our estimates, in FY 2020-21, approximately 75 per cent of the industry's revenues got wiped off. That is more than Rs.1.30 lakh Cr revenue hit. The total loan outstanding to the Hospitality industry is over Rs. 60,000 Cr.

 

“Due to financial losses, 30 per cent of hotels and restaurants in the country have shut down permanently and about 20 per cent haven’t opened fully since the first lockdown. The remaining 50 per cent continue to run in losses and revenues are below 30 per cent of the pre-COVID levels. The financial institutions have marked the industry in negative list. Lack of capital, dearth of the workforce, and mounting losses threaten this enormous Tourism and Hospitality industry which accounted for around 10 percent of the GDP, supported around 90 million jobs, and generated Foreign Exchange Earnings (FEE) to the tune of Rs.1,94,881 crores (US$ 29.96 billion) in 2019. Therefore, working capital support with a low rate of interest from the Government will help the hospitality establishments that are struggling to restart and sustain their operations due to negative cash flows. We also request the Govt. to compensate employees engaged in the industry and their families for the loss of income. The hotel industry is a key pillar of both domestic and international tourism but without adequate Government intervention, the situation will escalate further impacting lakhs of livelihoods along with large number of units pushed towards insolvencies and NPAs,” says Mr. Pradeep Shetty, Jt. Hon. Secretary, FHRAI.

 

“Along with moratorium extension of 3 years the industry will need a complete waiver of interest on the loans from March 2020 till the time that business is normalized. Being an employment intensive sector a concrete policy is required to support the hospitality industry. Banks cannot be burdened with bearing the interest on loans that are under stress due to the pandemic. We therefore request the Government to announce a special measure for one of the worst affected sectors and bear the interest for a fixed period of time. We urge the Government to direct to the RBI to charge the interest on loans at fixed deposit rates plus 2 per cent for all loans taken by the Hospitality sector. By doing this, banks will forgo only a fraction of profit which still can be sustained as there are other avenues that banks earn profit from,” adds Mr. Surendra Kumar Jaiswal, Vice President, FHRAI.

 

Over the last 13 months, the FHRAI has made several representations to various authorities and held multiple meetings with highest echelons in the Government requesting for sector specific relief for the hospitality sector. However, the Association has not received any meaningful response from the Government and all efforts have been blatantly ignored.

 

“While we understand that the Government has to prioritize, but ignoring the industry even now will push it to the point of no return. The industry’s concerns are legitimate and the Government knows it. Delaying a resolution for our industry will only burden the Government at a later stage when the problem will have snowballed out of control. Without wasting any more time, the Government should make necessary special provisions to waive off statutory charges for the Hospitality sector. The deplorable economic environment calls for a complete GST holiday for at least 6 months at both the Centre and the State. The industry should be allowed deferment on fiscal statutory compliance deadlines such as payment of direct and indirect taxes and professional tax. Most importantly, Hospitality industry should be offered a waiver of property tax, water charges, electricity charges and excise license fees for the lockdown period. We also request the Govt. to recognize Hospitality Industry’s staff as Covid Frontline warriors and prioritize their vaccinations devoid of age as this sector mostly employs people between the age group of 18-50, which forms 70 per cent of the population of the country,” concludes Mr. Kohli.

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ASSOCIATIONS OF INDIA

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B-82, 8th Floor, Himalaya House, 23,
K. G. Marg, New Delhi-110 001

Telephone: 011-40780780

E-mail: fhrai@fhrai.com

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