Breaking the glass ceiling: How CFO’s manage financing and capital efficiency during crisis in Hospitality Industry

The hospitality industry is one of the top sector’s contributing to the GDP of India. The travel and tourism sector has seen a formidable rise in its numbers in the last decade with online travel portals, booking apps, brand offerings and experiential stays laying the foundation for this growth. ‘The sector was thrusting into Mach-3, only to realize heavy turbulence damage its engine – COVID 19’.

Having its foot majorly set into the Tertiary (Luxury) service segment, the industry got impacted the most. At a time when people feared stepping out for necessities, the industry witnessed severe rattles. The highlights of the last three months being implementation of Force Majeure, termination of contractual agreements and firing of employees.

This industry was the last to open up, so to say in the phase – Unlock 2. This too hasn’t helped the cause to a great extent due to the discrepancies in passing down of rulings and adaptations of SOP’s between the Centre, State & District authorities. And belonging to the Homestay subsector has its own share of troubles for not having a Unified Representative Body.

We at Eko stay (A Homestay Brand) are a self-funded start-up with our financial framework being our top most priority right since the start. We have been following an Objective based Financing strategy that has helped us streamline financial operations. It is the efficiency and result of these financial operations that make or break a start-up. This in turn has helped us in building reserves to survive a couple of months over an average start-up, operational for two years. This Financial framework coupled with a mutual consent of our valued property partners has seen us fulfil all our financial commitments. We have been able to retain 95 per cent of our properties along with 90 per cent of our staff, which we consider a great yard stick to measure our capital efficiency in this period. 

The last three months has been a revolution for us with much-needed capital being diverted towards staff training, automated equipment’s and strategic enhancements. Our properties have also gone through a series of upliftment’s to ensure a safe and hassle-free stay for the customers. State of the art properties with private amenities and a well-trained staff adhering to all the SOPs, guarantee the best homestay experience one can have. It stands true to the definition of home away from home with all the perks of a luxurious stay. These lay the foundation of our ‘Eko stay safe’ initiative that ensure customer safety and satisfaction in the times of COVID. A period marked with no revenues is not the best time to check one’s ROCE (Return on Capital Employed), but we at Eko stay would like to tick that box with satisfied Property partners, competent employees and COVID ready properties that put us in the perfect balance to open our doors once again just as tourism is restarting.

The homestay subsector has been an underdog in the Hospitality Industry. With domestic tourism being the major hope in times to come along with ever-growing need for safer stays, the homestay subsector is yet to see its peek as it moves from a fairly unorganised to a semi-organised sector with some top-notch brands laying the path. There is also a fair increase in the number of enquiries in the past few weeks showing the intent of potential tourists. The entire sector has also got the time it needed to re-align priorities and adopt the SOPs laid down to entertain tourists. All of the above parameters, followed by us entering into ‘Unlock 3’ giving flashes of a more liberal governance, only hints towards better days and a much brighter future for Domestic tourism.