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Hospitality industry urges govt to extend loan moratorium by 3 months

The hotel industry has made no progress in terms of bookings even after several states unlocked and where hotels resumed operations, FHRAI said

twitter-logoPTI | August 27, 2020 | Updated 10:48 IST
Hospitality industry urges govt to extend loan moratorium by 3 months
Many of the association members, including both hotels and restaurants, are at a stage of bankruptcy and quite a few have already filed for it, said Pradeep Shetty, joint honorary secretary of FHRAI and vice-president of HRAWI

The Federation of Hotel and Restaurant Associations of India (FHRAI) on Wednesday said it has urged the government and the Reserve Bank of India to an extend moratorium for additional three months. The association have sent written representation to Finance Minister Nirmala Sitharaman, Minister of State for Finance Anurag Singh Thakur and RBI Governor Shaktikanta Das seeking an extension of moratorium, FHRAI said in a release.

The hotel industry has made no progress in terms of bookings even after several states unlocked and where hotels resumed operations, FHRAI said. It added that the industry has registered only average occupancy levels at 10-20 per cent. "For more than four months, hotels and restaurants have remained shut and have earned no revenue throughout the lockdown. Wherever hotels and restaurants have opened, the footfalls are negligible," Gurbaxish Singh Kohli, vice-president of FHRAI and president of the Hotel and Restaurant Association of Western India (HRAWI).

Also read: Govt working with RBI to extend moratorium, restructure loans, says FM Nirmala Sitharaman

He added that in addition to the monthly outgoings and the statutory levies, hotels and restaurants now have to spend more on employing hygiene and safety measures to follow the standard operating procedures and guidelines issued by central and state governments. He said that due to this, the debt restructuring plan announced by the RBI for the stressed MSMEs is not going to help the hospitality sector. Therefore, the industry has urged that the moratorium be extended by a further three months, Gurbaxish added.

Many of the association members, including both hotels and restaurants, are at a stage of bankruptcy and quite a few have already filed for it, said Pradeep Shetty, joint honorary secretary of FHRAI and vice-president of HRAWI. "Around 90 per cent of the hospitality sector will not be able to avail the debt restructuring plan due to insufficient time at their disposal and other varied reasons. These eventually will be declared NPAs (non-performing assets) post August 31," he said.

Also read: Bengaluru hotels worst hit by COVID-19, bearish on demand revival

Shetty added that the debt restructuring plan will provide a window for the banks to undertake coercive action against the borrowers whose repayments are pending. "With this and the future of the hospitality sector in mind, we urge the government to consider the extension of moratorium.

Also read: Hospitality sector faces double whammy of low consumer confidence, inconsistent policies

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