Hyatt shuts down Hyatt Regency Mumbai temporarily, citing non-availability of funds from owner

American multinational hospitality chain Hyatt Hotels & Resorts has temporarily shut down its Hyatt Regency hotel in Mumbai, citing non-payment of dues from Indian owner Asian Hotels (West), in what could be the first visible, public acknowledgement of the stress being faced by established global hotel chains in India post the second Covid-19 wave.
“As a result of no funds forthcoming from Asian Hotels (West) Ltd, the owner of Hyatt Regency Mumbai, to sustain the operations of the hotel, a decision has been taken to temporarily suspend all operations for Hyatt Regency Mumbai. The hotel will remain closed until further notice,” Sunjae Sharma, country head, India at Hyatt told ET. “Future reservations through Hyatt booking channels will remain temporarily unavailable. At Hyatt, our guests and colleagues are a top priority, and we are working closely with the hotel’s owner to resolve this situation,” added Sharma, who is also the vice president.

In a notice issued to its on-roll staffers on Monday, general manager Hardip Marwah had also communicated the developments stating no funds are forthcoming from Asian Hotels (West) to enable payment of salaries or support operations of the hotel. While Sharma said all the other Hyatt hotels are operational in India, industry insiders said the move could be a precursor of things to come for the industry battered by the pandemic.

Multiple sources familiar with the matter said BSE listed Asian Hotels (West) has been facing a cash crunch since last year and has been looking at diluting its equity in both its owned properties Hyatt Regency Mumbai and the JW Marriott hotel in Aerocity, Delhi.

In disclosures filed to the BSE this year, Asian Hotels (West) stated its total amount of outstanding borrowings from banks and financial institutions was Rs 262.54 crore as of May 1 this year. A company executive cited on the official website did not respond to an email and calls seeking comments till the time of going to press. Marriott declined to comment on queries concerning the owner company and its JW Marriott hotel in Delhi.

In March this year, India Ratings and Research (Ind-Ra) downgraded Asian Hotels (West) Limited's ratings citing continued losses and the potential adverse impact of the Covid-19 pandemic on the company's FY22 financials, leading to weaker-than-expected credit metrics and a poor liquidity position.

“The company has been looking to dilute its stake in both the hotels since last year considering the high debt exposure. There has been a working capital crunch since last year. Both the hotels have sizable inventory and to build JW Marriott in Aerocity, they had taken on significant debt,” said a person familiar with the matter.

Mandeep Lamba, president, South Asia, at hospitality consultancy HVS Anarock said just when hotels were seeing occupancies exceed the 50% mark and a hope that the situation will gradually ease, the second wave crushed the recovery so severely that occupancies in most markets dropped to the teens and in some cases to single digits, forcing salary cuts just when these had begun to get restored to pre Covid levels, unpaid leaves and in several cases even a temporary shut down of all operations.

JW Marriott Mussoorie owner Raj Chopra said hotels in metro cities will not recover before about one and a half years considering the lack of business movement. “Hotels and resorts in leisure locations will come back faster. The tragedy is there is no help from the government. Banks will ask for installments and interest. The help has to come from the government..to convey that installment timelines should be extended. That no interest should be charged.”

Another industry insider said a full fledged recovery looks out of the picture for the sector for another two years. "Who knows there might be more such temporary closures. Given the fatality rates and fears of a third wave, things will be very unpredictable this year,” he said and added: “Business movement has taken a hit with lockdowns. Social functions such as weddings had come back last year. But considering how families have been impacted with deaths, such events will get postponed. The owners are under a lot of pressure because of the loans. The banks are not extending loans because recovery seems far out, the sector is already over leveraged and the owners are not considered credit worthy."