Hospitality sector faced with stormy days in peak season

Industry bodies have revealed that the hospitality sector in Tamil Nadu had just begun showing signs of recovery following the floods last year, when they were once again put on the back-foot by the November 8 demonetisation move. Restaurants and hotels in various districts of Tamil Nadu have been hit hard by the cash crunch, and that too in this peak tourist season. 

Giving us an overview of the business losses faced by the restaurant business in the state, R Srinivasan, the Secretary of Tamil Nadu Hotels Association (TNHA) explains, “Following the demonetisation, the restaurant business has come down to the extent of 50 per cent across all districts in Tamil Nadu. In Chennai itself, the business of food service providers, namely restaurants and small hotels has been affected in the range of 25 to 40 per cent. In the wake of cyclone Vardah, since the past three days, power supply and network connectivity had been affected badly due to which a majority of the small hotels were unable to use the PoS machines. Managers at various restaurants were seen at the end of their wits as customers walked in with Rs 2,000 notes and got into arguments due to unavailability of change.” 

The scenario isn’t too different when it comes to star properties in Chennai as well. 

The management teams of many such hotels are grappling with reduced occupancy rates and lower footfalls in restaurants. When contacted, R Srinivasan, Promoter and MD, Radha Group of Hotels, Chennai, and Executive Committee Members, South Indian Hotels and Restaurants Association (SIHRA) says, “There certainly has been a dip in the occupancy rates in hotels across the city to an extent of 10 to 15 per cent. Most of the big hotels have been struggling to cope in the aftermath of the demonetisation. The Average Room Rates (ARRs) of hotels have also been affected marginally. While the flow of corporate customers (business travellers) more or less remains unchanged, the F&B business has taken a major hit.” 

Even basic day to day requirements were getting affected, as per insiders in the industry. 

A senior official of Asiana Hotels and Resorts said though transactions were largely digitised, the demonetisation impact was severe when it came to payments. It was difficult to pay suppliers of essentials such as vegetables and groceries. Added to this was the withdrawal limits that were making it more troublesome to release weekly payments. M Venkadasubbu, the president of TNHA and MD, of Darling Residency, Vellore informs us that occupancy rates of non-star hotels have come down by 40 per cent as well.