Surviving and growing in the post-Covid world: the case of Indian hotels

Abstract

PurposeAs the world tries to come to terms with the exact economic and human cost of the Covid-19 pandemic, businesses are trying to discern and act on the implications of the “new normal” in order to survive and grow. Amongst all the industries impacted by the Covid-19 pandemic, travel and tourism has been the hardest hit. Operators across the value chain are trying to innovate and improvise in order to mitigate the impact of the pandemic on cash flows and working capital. The primary purpose of this paper then is to take a closer look at the measures adopted by the Indian hotel industry to restore revenues, conserve resources and attain greater operational and cost efficiencies in the midst of the Covid-19 crisis. The article also brings to the fore the growth-enhancing measures adopted by the industry in anticipation of a “new normal” in the post-Covid world.Design/methodology/approachThis study is based on primary data collected via a survey, followed by a series of interviews with a select group of senior finance managers from a wide spectrum of hotels based in India.FindingsOur findings suggest that Indian hotels have adopted several measures to enhance cash flows/revenues, reduce operating costs and cash outflows and conserve resources in order to tide themselves over during the crisis. Prominent cash flow–enhancing measures include price drops on special offers and reductions on list prices. Cost-cutting measures include economizing on energy consumption, reductions in labour costs and the postponement of maintenance expenses and discretionary spending. Resource conservation measures that have been adopted focus on postponement of capital expenditure and an increasing shift to localizing supply chains. Growth-enhancing measures adopted by the industry in anticipation of the long-term “new normal” include restructuring of the workforce and measures aimed at attracting domestic tourists and increasing product diversity.Originality/valueThis study attempts to understand the short-term and long-term financial management strategies adopted by Indian hotels in the face of unprecedented disruption caused by the Covid-19 pandemic. To the best of our knowledge, this paper is the first of its kind in the Indian context.