Labor shortage is a major challenge for the hospitality industry: Sarovar Hotels MD
Although the hospitality industry has returned to pre-Covid levels in terms of revenue and occupancy, the shortage of human resources is a major challenge at present, as hotels continue to seek quality talent, a said Ajay Bakaya, Managing Director of Sarovar Hotels & Resorts. .
Due to Covid-19, 40-50% of direct employees in India’s organized hospitality sector lost their jobs in the year 2020, while a similar number were hit by pay cuts, according to the firm hotel consultancy HVS Anarock. Amid several closures, hoteliers have resorted to layoffs to cut costs.
“The biggest challenge is the lack of human resources. At the worst possible time, we had to ask a number of our employees to leave, up to 50% in some hotels,” Bakaya said, adding that a large proportion had not returned even as business returned. .
“It’s not just Sarovar’s problem. It’s an industry-wide problem. Everyone in the industry, without exception, is in the same boat,” Bakaya said. However, to deal with the problem, the industry is selecting raw talent and training them, he pointed out.
Sarovar had a total of more than 6,000 employees at its hotels and resorts before the pandemic. “Since the pre-Coid days, we are now 15% cheaper from hotel to hotel. We are desperately looking. We just can’t find the right people,” Bakaya said.
Experts estimate that the hospitality industry is still struggling with an overall shortage of 20-25% of quality labor.
However, with 98 properties in total – 97 in India and one in Lusaka, Zambia – Sarovar has not only surpassed CY2019 levels in revenue and occupancy, but is also eyeing a pretty strong performance for the rest of the market. the year. Most of the Company’s hotels and resorts belong to the three- and four-star segments of the Sarovar Premiere, Sarovar Portico, Hometel, Park Inn, Park Plaza, Radisson and Golden Tulip brands.
We are now above CY2019 levels in terms of occupancy, Bakaya said. “In some cases, rates are even lower, but in terms of overall revenue and RevPAR (revenue per available room), we are ahead of CY2019,” he added. MICE events (meetings, incentives, conferences and exhibitions) and banquets contribute approximately 30% to Sarovar’s revenue.
Industry-wide occupancy in hotels in CY2019 was 66.2%, while RevPAR stood at Rs 3,967, according to HVS Anarock. Due to Covid, industry-wide occupancy and RevPAR dropped to 33-36% and Rs 1,500-1,800 in CY2020, respectively. India’s hospitality sector ended CY2021 with nationwide occupancy of 42-45% and RevPAR of Rs 1,800-2,100 due to a strong recovery in domestic leisure travel and a partial recovery in business trips, as well as weddings and social events. .
Regarding the company’s expansion plans, Bakaya said that Sarovar had opened five new hotels in CY2022 and there were plans to open five more before the end of the year. “We will open 10 more in CY2023. We will very comfortably maintain the growth rate of at least 10-12 hotels per year for the next five years and will likely increase it,” he added.
Outside India, Sarovar has a property in Kampala, Uganda, and another in Hargeisa, Somaliland. He recently signed an agreement with KTM Hospitality, a subsidiary of the Nepalese group KTM Group Holdings, to open a Royal Tulip hotel in the neighboring country.
Bakaya said that although there is currently a huge increase in the number of domestic travellers, inbound tourism is almost negligible. Typically, domestic demand contributes 70% of Sarovar’s revenue, but it has jumped to 95% now.
Better infrastructure in the country allowing people to use their own transport and explore new destinations, visa applications taking longer than usual to process, as well as more expensive international travel, are among some of the reasons that have given domestic flights a boost. trip, according to Bakaya.