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Hospitality Sector Worst Hit With Novel Coronavirus (COVID-19) Contingency

19/03/2020
FHRAI Makes Representation To The PMO For Stimulus Package; Seeks Meeting With The Hon’ PM

Mumbai, March 19 2020: In the ensuing outbreak of the Novel Coronavirus (COVID-19), the Federation of Hotel & Restaurant Associations of India (FHRAI) has written to the Honorable Prime Minister requesting Government intervention and cushion the blow which the hospitality sector is facing on account of the Novel Coronavirus (COVID-19) pandemic. In a representation submitted to the Prime Minister’s Office, the Federation has outlined the challenges posed by the crises, its impact to the industry and the support hoped from the Government. The submission includes pleading for: –

–          Complete GST holiday for 6 months from both State and Central Govt.

–          Deferment for fiscal statutory compliance deadlines such as payment of direct and indirect taxes

–          Deferment for repayment of loans, bank EMIs, etc. for a period of 6 months

–          Reduction of bank interest rate by almost 200 basis points with immediate full transmission for working capital

–          Relief in electricity bills in the form of waiver or subsidy of FAC charges, and electricity duty

“Almost all tourism verticals have been severely impacted by the crises, however, it is hospitality industry that has been hit the most. Our members have reported cancellations reaching a critical stage of 90 per cent. Forward bookings, which may have helped buffer the impact, too is negligible because of the uncertainty in containing the disease spread globally. The Meetings, Incentives, Conferences and Events (MICE), wedding tourism, and other kinds of celebrations have been negatively impacted. Hotels and restaurants are facing a catastrophic situation with revenues plunging drastically,” says Mr. Gurbaxish Singh Kohli, Vice President, FHRAI.

The hospitality industry is highly labor-intensive and is the biggest employment generator of both direct and indirect jobs. It is also one of the few industries that is capital intensive requiring a big chunk of it reserved as working capital.

“The industry employs the largest workforce and hoteliers have a responsibility towards taking care of their employees. This includes ensuring that they are paid on time as well as their well-being, especially now in the face of the pandemic. In addition to this, the working capital is draining rapidly which is hit by almost 90 per cent for both larger establishments and budget hotels and restaurants. Paying taxes including advance tax and GST is now straining the liquidity and is making it extremely difficult to manage day to day operations,” says Mr. Pradeep Shetty, Jt. Honorary Secretary, FHRAI.

The FHRAI has expressed that under such circumstances adhering to timely payment of EMIs or the re-payment of loans is an onerous task. In order to survive these trying times and to give the industry the chance to get back on its feet, the Federation has requested that the Government intervenes and offers the sector a stimulus.

“Our goal is to extend support to the Government and the hospitality industry in leveraging tourism’s intrinsic potential and, act as a catalyst for inclusive, equitable and sustainable economic growth for both the public and private sectors. We are looking forward to meeting the Hon’ PM to brief him about the issues and challenges faced by the industry over the last two months and hope that he will provide the industry with the much needed support,” concludes Mr. Kohli.

About Federation of Hotel & Restaurant Associations of India (FHRAI):

The Federation of Hotel & Restaurant Associations of India (FHRAI) is the apex body of the Indian Hospitality industry. Founded in 1955, the association has diligently built on its rich legacy and is today privileged to serve as the leading voice of our industry and plays a seminal role in supporting the growth trajectory of India’s hospitality and tourism sector. FHRAI provides a vibrant interface between the industry, government, regulatory bodies, academia, international organizations, civil society and the media.

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