New Delhi: The recent Supreme Court (SC) order banning sale of alcohol within 500 metres of national or state highways is expected to severely impact the revenues of the hospitality sector in 12 major cities, according to a report by Crisil.
Apart from hurting the food and beverages segment, the SC order will also impact room demand of premium hotels across the country.
Revenues of premium hotels are likely to be impacted in the range of 25 per cent-30 per cent because of the liquor ban on highways.
Liquor sales contribute up to 15% to the hotels’ overall revenue; but the impact is expected to be higher, as the restriction will also impact revenue from the meetings, incentives, conferences and exhibitions segment and the room demand segment
Over 100 (or 27 per cent) of the 384 premium hotels assessed by Crisil in the National Capital Region (NCR), Mumbai, Kolkata, Chennai, Hyderabad, Goa, Pune, Agra, Jaipur, Ahmedabad, Bengaluru and Kerala would be compelled to stop liquor sales.
Pune is the worst-hit, as 71 per cent of hotels are along the highways that cross the city. These hotels are expected to see severe dip in demand in the near-term as customers would shift towards other hotels located away from highways.
With most premium hotels in Kolkata located along the NH-12 near the airport, the ban impacts almost 69 per cent of hotels. Agra also witnesses a major impact, as 67 per cent of hotels are located along SH-62. The hotels on the outskirts of Chennai are mostly located along highways. As a result, 48 per cent premium hotels will be hurt by the SC order. In Jaipur, most premium hotels are situated inside the city. As a result, just 26 per cent of the city’s premium hotels will be affected.
The NCR market covers premium hotels in Delhi, Gurugram and Noida. Delhi constitutes 69 per cent of the premium segment rooms in the NCR region, followed by Gurugram (25 per cent) and Noida (6 per cent). The hotels lying on NH-8 have been majorly impacted due to the ban. Around 25 per cent premium hotels in NCR have been impacted by the March 31 judgment.
“In key locations like Cyber Hub, the footfalls have dropped 50-60 per cent. People will go where they get to drink as well. In our hotels, we have seen 15 cancellations. Our bookings have slowed down. We can bear it for 2-3 months, but beyond a point, we will have to find a solution,” said Arjun Sharma, chairman of Select Group.
Mumbai and Goa seem to have escaped the ban largely as no major state or national highway pass through the areas where most premium segment hotels are located.