Earlier this week, Asian Hotels (West) announced the temporary closure of Hyatt Regency, Mumbai. This was due to its lender, Yes Bank, not releasing payments after it defaulted on loans because of the COVID impact.
The company defaulted its payment in April for the first time due to the impact of the COVID pandemic. As a result, Yes Bank has held all funds, and the hotel cannot make any payments, including taxes, vendors’ payments, or the salaries for over 300 hotel and corporate employees. Yes Bank also made payments towards the hotel’s electricity, water and gas charges.
The company is among many big hospitality firms facing serious challenges in procuring credit from banks as they continually view hospitality’s future negatively. However, complaints about the lack of cooperation from banks have led to them providing funds from other sources. This development exposes the setbacks challenging the hospitality industry.
Big hotels are operating with barely five percent occupancy. Profitability depends on inbound tourism, which has been nonexistent for more than half a year. With the pandemic crashing hospitality revenue by eighty percent, costs like electricity, water, taxes, salaries and maintenance have chewed through many cash reserves.
The hospitality industry desperately needs stimuli to generate money for hotel owners. Hopefully, something will come out of the discussion between the Federation of Hotel and Restaurant Associations of India and tourism ministry officials.