New Delhi: The Indian hotel industry’s recovery to pre-Covid levels profits is at least three years away, ratings agency ICRA has said.
The ratings agency said that road ahead for the industry is rough as revenues and margins are expected to post record decline in FY21 with losses mounting over the next two years.
The hotel industry has witnessed one of the worst revenue declines, in Q1FY21, with revenues for the industry sample declining by 85 per cent.
“Given the high operating and financial leverage in the industry, the revenue decline led to huge operating and net losses in Q1 FY2021 despite the extensive cost-cutting measures adopted by most entities in the industry,” ICRA said in a statement.
“Despite sharp weakening in interest coverage, recourse to the RBI provided moratorium on debt servicing as part of its Covid relief package announced in March 2020 supported the industry.”
As per the statement, about 66 per cent of ICRA’s hospitality portfolio applied for moratorium under this scheme and several of these will apply for restructuring under the K.V. Kamath committee too.
