MP Bezbaruah, Secretary General, HAI, believes the government should provide sectoral, comprehensive packages.
With extensive experience in both Indian tourism and hospitality, Madan Prasad Bezbaruah has seen both these industry grow and evolve over the past few decades. A retired IAS Officer and a Former Secretary at the Ministry of Tourism, Bezbaruah now focuses on hospitality and getting the industry its due, especially given how traumatic the past one year has been for it. “Of course, the industry has learnt a lot over the last one year. That learning I presume will continue. Because while from the health point of view, it is a second wave, for the industry it is a continuing misery. It is devastating for our business and psychologically very frustrating,” he says. The industry has, of course, learned some lessons. “We have learned that winning the confidence and trust of the consumer is very important, and the industry must go out of its way now and pro-actively create that atmosphere of confidence to bring back guests. Most of the hotels that are well established have already gotten into AI and digitalisation, while ensuring that they don’t make people redundant, which could lead to a serious problem. But a very small section of the industry can do this; almost 80 per cent of the travel and tourism industry are SMEs so the main problem is with them,”Bezbaruah adds.
Level of impact
Unfortunately, no assessment has been made so far, he says, adding, “It is very important to make some sort of assessment, an estimate. In the initial months of the pandemic, a McKinsey survey revealed the hotel industry would be down by 70 per cent. At that time the hotel industry had estimated a revenue loss of `90,000 crore. HAI is guided by our charter and it is not a financing institution, unfortunately. In time though, if we do have sufficient funds, we would like to extend financial help to our members. Our primary role is to highlight problems, create advocacy and create a platform for PPPs.”
Liquidity – the biggest problem
The biggest problem of the industry right now, no matter what the size of the hotel, is liquidity. “Payments are due but they have no income. So we have been talking to the RBI, requesting them to restructure these loans, give moratorium, and provide liquidity support and credit support to these SMEs. The biggest problem for SMEs is payroll support for their people. Many have been retrenched because of this. We understand that government is thinking about the general economic recovery, benefits of which will come to tourism also. But it needs to think about this as well,” Bezbaruah adds.
“We strongly believe that it is time for some sectoral, strong, comprehensive package. Our members are also trying to do their best, they just need a little support like relief for electricity bills, etc. We have also asked for benefits of social infrastructure to allow more hotels to reopen. Sooner or later, domestic tourism will restart in a big way and when that happens we will have to go beyond the metros for which we will need ready infrastructure there,”the expert voices.
He clarifies, “Give what was due. For instance, the Service Export Incentive Scheme extended to the industry which we have not got as yet. We have also talked about the Credit Guarantee Scheme which is a very good scheme but it has a lot of lacuna for which it may not be totally beneficial to the industry.
Many of the things that we have asked for in the first wave like deferment of payment have not come to us. They relate to the state governments so we have requested the Centre to ensure states do this. We have created state chapters that have actively been in touch with their respective state governments.”
The bottom line is, Bezbaruah says, the problem is not the MOT.It is only a facilitating ministry. “It cannot give the financial benefits that we have asked for. So we understand that. We have tried to strengthen the hands of the ministry and have requested that it should go stronger than it has done now, to focus on those demands and try to get them from the FM. We do see small developments and we have been told that the export benefits will soon come to the industry, and social infrastructure status will be extended to us. What we are trying to say is that please do something comprehensive,don’t do things ad hoc,” he explains.
Strong PPP initiative
HAI has been emphasising on two things: the government must come out with a very strong PPP initiative. “We have to think seriously about the credit system for SMEs, build some sort of insurance or security cover for them. And we have to do destination development,” he says.
Submission to the FM Need for Emergency Credit Line Guarantee Scheme (ECLGS 3.0) customisation to include:
- State Financial Corporations
- Asset Reconstructions Companies (ARCs) and Debt Funds
- Extension of moratorium
- Capping of interest rate at 8%
- Increasing of delinquency period
- Hotels with no borrowings also be eligible for ECLGS 3.0
- Allow hotels to utilise credit line for any business purpose
- Complete or partial waiver of statutory expenses payable by hotels
- Introduction of plan/policy where hotels can renegotiate lease rentals/licence fee