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, the report said.
Impact across cities
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.
Business hit across segments
Prime Minister Shinzo Abe’s statements on North Korea took on a sharper edge this week, indicating the government’s level of preoccupation with the issue and possibly reflecting the seriousness of U.S. President Donald Trump.
After the U.S. fired missiles on a Syrian airbase late last week, Abe responded cautiously, saying Japan “supports” Washington’s determination and “we understand” the U.S. acted to keep the situation from deteriorating. On Sunday, after a phone conversation with Trump, Abe appeared to relax at a concert, not showing any particular strain.
But this week, he turned up the heat. On Wednesday, Abe said that should “various unforeseen circumstances” arise, Japan would ask the U.S. to help rescue Japanese whom North Korea abducted in decades past. He warned on Thursday that the North may have the capability to deliver missiles tipped with chemical weapons, including sarin nerve gas.
The switch came after Trump’s Tuesday tweet saying that if China does not decide to help with North Korea, the U.S. “will solve the problem without them!” Abe’s sudden change in tone caused foreign diplomats in Tokyo to wonder if the prime minister, the only world leader to have played a round of golf with Trump, knew something nobody else did.
Gorbachev says the current situation on the international arena is showing all signs of a new Cold War and an ongoing arms race.
“The language of politicians and the top-level military personnel is becoming increasingly militant. Military doctrines are formulated increasingly harshly. The mass media pick up on all of this and add fuel to the fire. The relationship between the big powers continues to worsen. This creates the impression that the world is preparing for a war. So all the indications of a Cold War are there,” Gorbachev told the German Bild newspaper on Friday.
He pointed out that while in the second half of the 1980s, the USSR and the United States reached a number of important agreements and started reducing their nuclear arsenals, the situation changed after the dissolution of the Soviet Union, with Russia’s once devoted allies now standing in opposition to Moscow, and imposing anti-Russia sanctions.
Gorbachev stressed that an arms race is already underway.
“It is not merely imminent. In some places, it is already in full swing. Troops are being moved into Europe, including heavy equipment such as tanks and armoured cars. It was not so long ago that NATO troops and Russian troops were stationed quite far away from each other. They now stand nose-to-nose,” the former Soviet leader told Bild.
Last week, Gorbachev said at a meeting with lawmakers of Germany’s Social Democratic Party (SPD) in Moscow that there was a need to return to the idea of a “common European home.”