IHCL has also started discussion with all its lessors for waiver or deferment of lease rentals during the lockdown period
With uncertainties over resumption of normal business activities, India’s second largest hotel company Indian Hotels Company (IHCL) is bracing to for a hit on its revenue and profitability in the first half of the year.
Most of the 88 hotels of the Taj Group, comprising four hotel brands that were operational in India during the December quarter, have remained shut due to the lockdown while some have housed quarantined guests and medical staff since the start of Q1FY21.
“Since the situation is exceptional and is changing dynamically, the company is not in a position to gauge with certainty, the future impact on its operations. We believe there will be impact in sales volumes, revenue, and profitability for Q1 and Q2 FY21 as our operations are presently shut in most geographies and will gradually ramp up only after the resolution of the pandemic”, IHCL said in a statement.
Hoteliers were challenged with massive cancellations soon after the national lockdown was announced in March. Corporate travel and events which had become a main component in revenue generation is expected to remain muted at least till December this year, believe market watchers and hoteliers. Leisure travel and events will be first to mark a return but not before the festive season kicks off.
But struggling to pay salaries and other fixed costs expenses hotel companies are rushing to raise funds for working capital needs while cutting back on capital expenditure (capex) for the year. Last week IHCL raised Rs 300 crore by way of issuance of non-convertible debentures to ICICI Bank. IHCL has also started discussion with all its lessors for waiver or deferment of lease rentals during the lockdown period.
“Cash conservation measures have also included deferral of capex and renovations unless absolutely required. The company is taking all necessary measures to contain costs, rationalise resources taking initiatives to uplift revenue. The company has put in place a series of short term and long-term measures to optimise cost across all the lines namely raw material, manpower, power and fuel, corporate overheads and other costs”, IHCL further added.
From June 8 the Centre has allowed reopening of hotels, restaurants and hospitality services under ‘Unlock 1.0’ except for those properties that are still inside containment zones.
“With the lifting of the partial lockdown restrictions, the company has started re-opening a few hotels in the non-containment zones, after establishing thorough and well-rehearsed safety protocols. The company expects all the hotels to become operational in a phased manner after the lockdown is lifted and the confidence of travelers is restored”, IHCL added.
Eleven IHCL hotels across the country are offering rooms to the medical fraternity. Additionally, thirty eight other IHCL branded hotels are being used for quarantine purposes for guests which includes the repatriation flights.
