Demand creation is the need of the hour: Ashish Jakhanwala

With the hotel industry fighting series of challenges during the pandemic, a rigorous analysis of them is essential to solve and get ahead. Ashish Jakhanwala, MD & CEO, SAMHI speaking at the recently held BW HOTELIER Breaking The Pandemic WebBlast – ‘Overcoming Challenges: Hotel Owners’ shared key strategies needed to be undertaken for hotels to survive the crisis.

“Before anything else there is solvency, and I think for a lot of hotel owners and investors a bigger challenge is solvency,” Jakhanwala stated. He elaborated further that this also calls for a solvency risk for working with financial institutions. He thinks that there is a lot of directional guidance coming from RBI (Reserve Bank of India), but transmissions to businesses is next to nil, at least for the hotels sector.

Further unpacking on the issue, Jakhanwala informed that the policy rates have been reduced but the risk exposure has gone up for the hotel industry. Arguably, there is no tangible reduction happening in the rates in the near terms.

The second issue he addressed was demand. Jakhanwala stated, “I do think that the biggest risk in the short term is hotel demand after Covid-19.” According to him, today as the hotels are shut, businesses are down; once this pandemic is over they are left on their own as everything evaporates and the government won’t be able to help. Digging even deeper into the issue, he informed that a large part of hotels that are dependent on business travellers and the areas in the new source markets will be displaced for a much longer period.

“I think that is when GST (Good & Service Tax) comes in, because if you don’t reduce GST over a period you can induce a high degree of denial from certain segments and even the domestic market,” Jakhanwala shared taking the discussion further.

Like many industry experts, he agrees that GST is not worth talking, but in today’s scenario, he felt that pushing demand creation is really very important. Ashish Jakhanwala brought to notice an obvious fact that industry players are going to fall short of what has been investedand ways of recovering the operating expenses. “Now, we will do what we need to do and I think that all of us have already taken steps, but we need to have eminent support from the authorities as well. We are talking about a two to three years recovery,” he concluded.