Alternative Revenue Channels Tapped by Hotel Chains in India during COVID Period and Suggestive Measures for Post-COVID Period

Abstract

It’s common knowledge that the hospitality industry is one of the worst affected industry due to the pandemic and will be the last to recover.

Hospitality as a business is very capital intensive and has huge fixed and semi-fixed costs in the form of payroll, HLP (heat, light, and power), statutory payments (like property tax), etc to run the day-to-day operations.

Since March 2020 the international commercial travel to and from India coming to a halt, inbound tourism (which is approximately 1.1 Mn annually) is also lost as a consequence which means a significant loss in terms of revenue. On the other hand, domestic tourism remained dull due to the safety concerns among the masses. The businesses are affected across the industries due to the precautionary restrictions. The traditional revenue streams are not generating the required revenue to meet the expenses.

As per the estimates, the overall revenue of the industry is down by 50 %- 70 % and as a result, the industry has seen significant layoffs over the last year. The primary reasons for this are that the industry is largely dependent on business and leisure revenue and both remain subdued.

As the traditional revenue streams turning temporarily dry the hotels have tried to create new revenue streams to keep the hotel afloat. For example, the food delivery business was never considered to be the arena of top-end hotel brands until mid-2020 but now we have Taj hotels which have started “Qmin”, Marriott started “Marriott on Wheels” as few examples.

In the same way, there are other non-conventional sources of revenue like sanitization services for homes and facilities, using the hotel rooms as COVID care centers, so on and so forth.

This paper tries to outline the innovative approach adopted by hotel chains in India by exploring the alternative non-conventional revenue streams to tide over the onslaught of the pandemic.

The ability to adapt itself to the changing times is the hallmark of resilience and the hospitality industry has proved this with its display of exemplary resilience in these difficult times.