Raj Sehgal, owner of the three-star Wet ‘n’ Wild Hotels & Resorts in Gurgaon, India’s first water resort that he claims helped shape the short weekend trip culture in the National Capital Region, now wants to shut shop after the Covid-19 outbreak-induced slowdown hit business hard.
“We want to close the hotel and use it for some other business now. We don’t see survival in hospitality,” said Sehgal, who wants to change his land-use agreement. “We have 13 acres of land and the resort is spread over 5.5 acres. No one wants to invest in hotels, so we are hoping the government allows us to do some other business in the hotel premises like serviced apartments.”
Hotel owners across India, facing bleak prospects or weighed down by debt, are considering shutting down their hotels and getting the land-use arrangements changed so that they can switch to other businesses like residential services, office spaces or even retail.
Consulting and advisory firms said talks are ongoing with owners and interested parties looking at converting their assets. The list of stressed assets not meeting debt obligations will swell as some big hotels across key cities face the prospect of going belly up following the Covid-19 outbreak and the ensuing lockdown.
“Some of the marquee assets in Delhi and Mumbai are in trouble. A five-star hotel in one of the best locations in Delhi, a fantastic product, may have to shut due to debt exposure,” said Nandivardhan Jain, CEO of hospitality advisory firm Noesis Capital Advisors. “Because of Covid-19, things are pretty terrible for them. If the banks do not consider restructuring their debt, the owners have no other option but to exit or dilute stake.”
Assets that are overleveraged or even moderately leveraged will face a tough time, he said.
June 11, 2020