Hospitality sector needs to keep tight control on costs: UDS CEO Raja Gopaal Iyer

Dr Raja Gopal Iyer

The hospitality sector has been ravaged by the corona virus pandemic, with booking cancellations at a record high. In an interview while detailing the impact that the outbreak is having on the sector, UDS Hotels CEO Dr.Raja Gopaal Iyer says it’s important for hotels to control the costs going forward. Iyer says the strategy should be to depend more on technology and reduce manpower costs. Excerpts:

Q: The hospitality industry is going through probably its worst ever phase in history. Did you think that the crisis would end up having such a devastating effect on the industry?

A: I am sure it is going to take 3-4 months for things to come back to normal. What is lost is lost and entrepreneurs may find it difficult to pay back loans and other expenses. But I am sure India is going to make a come back just the way it has done in the past. Better days are surely ahead.

Q: What kind of losses do you think the industry will end up with, for the year? A research consultancy has said that the hospitality industry may incur a loss of Rs 600 crore. And probably, that’s just a conservative estimate.

A: I am sure the consultancy company has done its research but what was the formula that they had used I don’t know. I feel as a whole the hospitality industry will see losses of more than 1,300 crores. We need to work out the losses of the coming months also. From February to July we will see drastic losses. And it’s not like we can increase the prices this season. We may have to still work on the last year prices.

Q: What do you think are the steps that the industry can take to minimise the damage caused?

A: The damage has done been already. Now we have to be very careful in how we work in future and get sufficient profit. We will have to bring the cost down in all areas, including manpower. We will need to depend more on technology systems and keep minimal staff. The rates we charge are going to remain the same, hence we need to bring the costs down by 30% to survive. Big hotels like us need to really plan better on the overall costs.

Q: What kind of support do you expect from the central and state governments?

A: They have to help us with the taxes. Maybe a tax break for the next six months, probably. An EMI holiday for loans for six next months is another step they should take – at least the interest part. Subsidies on electricity is the most important. We also need some support to pay our employees as we look to retain our lower level staff.

Q: Can you please talk us through the threat of job losses in the sector? How do you plan to address this issue?

A: I feel that outbound travel from India this year is likely to reduce and could get substituted by Indians traveling in domestic leisure markets. Demand from weddings could continue to fill hotels. Business related conferences and meetings are likely to suffer. We are expecting around 40-50% occupancy from the month of May onwards till October and then it may pick up. Surely, we need to have our staff, accordingly. It surely will be a heart breaking decision but then there is no other option for promoters. UDS will be trying its best to retain all old staff members and will motivate the new guys. We may have to restructure the team.

Q: How long do you think it will take for the industry to revive the interest of the tourists? In what way can the industry win back the confidence of the guests?

A: Customers will surely bounce back after a few months. Not just better offers, we also need to show them that the hotels and staff have taken extraordinary precautions. We must be careful on not over charging them and make them feel good and give outstanding hospitality.

Q: Will the industry recalibrate the rooms rates and other charges, once the COVID-19 scare disappears? What changes do you expect to see?

A: Yes to some extent. We have to surely attract business. Large inventories like us need to really work hard on the same and come up with innovative packages. But if the airlines do not support, then destinations like Trivandrum will become expensive. South Kerala as a whole will take a beating in that case. Airlines and hotels can work together in this regard.

Q: What new offerings can guests expect from the hospitality sector, once normal services resume? Will the industry be the same again?

A: As I said earlier, the industry may need to change its attitude of high pricing. Maybe we have to extend a different pricing from October onwards though. Now we should be able to offer a price that’s not too high or too low. The overall package cost of 10-12 nights in Kerala may come down by 30% compared to last year. This will surely attract tourists and agents can then be aggressive to see that all promotions are done well and sell packages in advance. The tourism department can also play a very vital role. They need to get into all the regional papers and give ads and also send out attractive messages. Kerala can be the first state to bounce back and go into the hearts of people again.

Q: The virus has put the spotlight on health and hygiene. From that perspective, the hospitality industry needs to gear up for the new standards. Please comment.

A: I am sure the industry needs to adopt stricter standards of hygiene. It starts from the staff grooming, staff quarters, canteen, training , production, service and also housekeeping. Let’s maintain the same standards and discipline in the customer care department along with better hygiene standards.