Friday, May 29, 2020

With rooms, flights going empty, here’s how airlines and hotels are making money

Two of the worst hit sectors due to coronavirus — aviation and hotel industries — are eyeing alternate revenue streams as lockdown dries up revenues. India’s domestic carrier SpiceJet has taken to flying cargo and airlines have also issued credit shells to those whose flights were cancelled. On the other hand, hotels are now offering discounts on bookings made for the future and have also started to deliver food to tide over the issue of short-term working capital deficit. Aviation and hotel industries typically have a high fixed-cost and have made almost zero revenue in almost a quarter as coronavirus lockdown put restrictions on movement.

While the government put restrictions on flights, some airlines have now taken to flying cargo and SpiceJet recently called it an “opportunity in crisis” as it expanded its cargo operations by converting passenger planes. Hotels have taken to giving discounts via gift vouchers to get some respite from the cash crunch as the sector continues to employ staff. However, small and mid sized hotels are more likely to give higher discounting as compared to those which are luxury hotels. Further to these, “drastic cost control…preliminary reopening plans and a sharp reduction in future supply addition” are also on the anvil, The Indian Express reported. “Globally, airlines and hotels have acknowledged the depth of this decline with recovery stated two to three years from now,” Pavethra Ponniah, vice president and sector head, ICRA, said, the newspaper reported.
29/05/20 Financial Express
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