Around 2,000 hotels are up for sale in Bengaluru alone, and the owners have decided to shut down operations due to insurmountable losses.

With abysmal footfall Karnataka hotels face loss of Rs 3000 croreRepresentation photo
news Coronavirus Monday, August 17, 2020 - 16:39

It has been over two months since restaurants in Karnataka were allowed to open for dine in services but the industry continues to reel under massive loss. In Bengaluru alone, the losses incurred due to the pandemic in the last six months can be pegged to Rs 1700 crore. This amount is over Rs 3,000 crore in the entire state, according to various hotel owners’ associations. 

Hotels have started using disposable cups and glasses for dine in services. Hand sanitisers are made available at every table. A mandatory temperature check is being conducted across dine-in restaurants. However, the fear of infections is keeping people indoors, says Chandrashekar Hebbar, President of the Karnataka Pradesh Hotels and Restaurants Association (KPHRA). 

The myriad problems

“There are 21,000 hotels in Bengaluru and 3,500 lodging cum hotels. Of these, many have not opened for business as the maintenance costs are higher than the profits they will tend to make now,” says PC Rao, President of the Bruhat Bengaluru Hotel Association. 

He says that around 2,000 hotels are up for sale in Bengaluru alone, and the owners have decided to shut down operations due to insurmountable losses. According to the figures provided by the KPHRA, only 40% of the total number of hotels in the state were operational during the lockdown. This has now increased to 60% after restaurants were allowed to open for dine-in services  on June 8. 

“Close to 5,000 hotels in Bengaluru alone have not opened because the maintenance costs are high. One of the biggest concerns is rent. During the lockdown, business was at 10%. Since the dine-in services were open, business is at 30% of what we were making before the lockdown. Currently, hotels in Bengaluru, falling under our association have incurred a collective loss of around Rs 300 crore per month,” PC Rao adds. 

Chandrashekar Hebbar maintains that the biggest losses come from the lack of footfalls during the weekend (Friday, Saturday and Sunday). Hotel owners lament that families and groups of friends, who were regular customers on weekends, now choose to spend time at home, due to fear of getting infected. 

“Close to 500 restaurants in Koramangala and another 500 in Indiranagar are facing severe losses as the IT and BT employees are now working from home. Most of our customers were people who come from other states, the blue collar workers, who would eat their meals at smaller hotels. Since many people have started working from home, footfalls are drastically reduced. Now it is only 30% of what we used to have last year,” PC Rao says.

Another reason for the restaurant business to suffer losses is the lack of corporate outings, corporate meetings, large weddings and parties. “Caterers are suffering more than ever. Even restaurants had lots of business with parties. Many are under loss as they cannot serve alcohol,” Chandrashekar Hebbar adds. 

Demand for relief

The added cost of exorbitant rents, has also led to losses, hotel owners said. The minimum rent for a commercial space in core areas in Bengaluru is anywhere between Rs 1.5 lakh to 2 lakh per month. “This is for larger spaces. Many hotels have not even opened due to maintenance costs. They still have to pay huge amounts of rent and salaries for staff. The loss is at least Rs 3 to 4 lakh per restaurant per month. How can we sustain?” PC Rao questions. 

The hotel owners associations say that if the state government waives payment of property taxes, building owners can be persuaded to reduce the rent. In addition, restaurant owners want the government to stop collecting fees for liquor licenses per month. “Even though we cannot sell liquor, we have to pay for the license. This cost is around Rs 75,000 per outlet. How can we pay so much money when we are not even allowed to sell alcohol for dine-in services?” Chandrashekar Hebbar adds. 

The KPHRA has also requested that the state government waive the fixed electricity costs levied from them. “If this is waived, we can reduce our maintenance costs. We have sent so many representations and requests to the state government but they are not interested in helping us. We are hoping the central government will help this industry from collapsing altogether. Realistically, the industry is going to suffer until next March. Until then, we are asking for some relief,” PC Rao adds. 

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