Lockdown extension pushes hospitality to brink of collapse

‘This industry employs about 4-5 lakh people in Hyderabad and will be impacted in a big way’

The hospitality industry is one of the biggest employers in the service sector.

When Fauzan Khan and his aides responded to a call for help with food, they were in for a surprise.

“The young men who turned up near a restaurant in Aramghar area were workers of the hotel. The owner had stopped paying them wages and they ran out of rations. They didn’t want to work any more but had nowhere to go,” says Mr. Khan, a businessman distributing food during lockdown.

In Nallakunta, five men were lounging about near an ATM, when asked what they were doing at 11 p.m. One of them responded: “We used to work in Raghavendra Tiffins. We have been asked to go. We are deciding how to make the journey home.”

The hospitality industry, which is one of the biggest employers in the service sector, has taken a body blow following the COVID-19 lockdown. As the lockdown moves into the third month (it started on March 25), the hospitality industry stares at a bleak future with no clear roadmap to reopening of restaurants. “We have zero business. Third party deliveries also have stopped. This industry employs about 4-5 lakh people in Hyderabad. It will be impacted in a big way,” says Bosco Malapatti of Ofen Bakery in Banjara Hills. “What after the lockdown is lifted? Will people come to restaurants to have food? How many will sit at a table? Nothing is certain any more,” he says.

“Initially, they said it will be for a month. But after they extended the lockdown, I told my staff that they will have the job. I will pay for their rent and rations but cannot pay salaries. Once we are allowed to operate, I will think about the salary structure,” said the owner of another upscale café in Banjara Hills.

A vast chunk of migrant workforce keeps the hospitality industry functioning. A majority of this workforce from Odisha, Bihar and West Bengal has left the city after easing down of lockdown norms. It is not just the exit of the workforce that is worrying the hospitality industry. The norm of social distancing will lead to reduction in pax (the number of people who can sit at a time).

“A reduction in number of tables would mean decline in the money we make. It will make many restaurants unprofitable. I will have to rethink the seating and price as well. Many of us have taken loans to run these places,” said a restaurant owner unwilling to be named. “The rent, electricity charges and taxes have to be paid by us. Forget profits, if we survive that will be good enough,” said the restaurant owner, who moved to a new place six months ago.