India: Highway liquor ban huge blow to hotels
A RECENT Supreme Court order that banned the sale of alcohol at highway hotels and retail outlets in India has resulted in a sharp drop in revenues, with some businesses reporting losses of up to 60 percent.
The ban was implemented on all hotels within 500m of state and national highways, which covers about half of all hotels in the country.
According to The Hindu, some businesses are in situations so dire they may be forced to close unless “measures are taken soon”.
The report said the Tamil Nadu State Marketing Corporation had lost substantial revenues up to INR197 crore (US$30.55 million) following the alcohol ban and closure of retail vending shops.
Nataraj Group of Hotels director Sudesh Poddar told TTG Asia half of a hotel’s revenue comes through sales of food and beverage.
“We expect 60 to 70 percent of the banqueting business of hotels close to the highways will be gone.” – Sudesh
Ratings agency Crisil revealed in a note liquor sales account for about 10 to 30 percent share of the total food and beverage revenue.
The Crisil note said: “Not only will revenue from beverages be impacted, but the food segment will also witness a decline as customers will prefer dining at other restaurants that serve liquor.”
Some 100,000 hotels and retail establishments are expected to close shop around the country following the ban. The closures will culminate in losses up to of INR20,000 crore (US$3.2 billion), a hefty price to pay for the country’s hospitality and tourism sector.
A separate report on The Times of India said western Indian state of Pune was the most affected.
The report said: “Hotels in Pune, Kolkata and Agra will be impacted the most compared to those in the financial capital and Goa.”