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Liquor Ban: Premium Hotel Segments To Bear The Brunt
In a report, Crisil said that it has studied 12 top cities to analyse the impact of the Supreme Court's ruling, and found that nearly 30 per cent of premium hotels will be affected.
The ban on alcohol sale within 500 metres of highways will impact up to 30 per cent of premium hotels, with Pune being the most affected city, domestic ratings agency Crisil has said.
"While the Supreme Court's judgement is undoubtedly for public interest, i.e., involved in dealing with road accidents caused due to drunken driving on the highways, the hotel industry will face sweeping changes to the way the sector functions.
Since April 1, 2017, the premium segment hotels, which fall within the 500 metre range of a national highway of state highway, have been directed to stop selling/serving liquor," Crisil said in a release.
"We have assessed 384 premium segment hotels across 12 cities, of which 102 hotels stand affected, which means nearly 27 per cent premium hotels of the top 12 cities will be compelled to stop liquor sale," the note said.
Hotels in Pune, Kolkata and Agra will be impacted the most, while those in the financial capital and Goa will be less affected.
Hotels within the city will now pose major competition to premium segment hotels on the highway, it said.
This competition will not be restricted only to the premium segment hotels but will trickle down to the 4- and 3-star category as well, it said.
The premium segment hotels are expected to face a severe lash in F&B revenues owing to the ban. Liquor sale alone accounts for about 10%-30% share of the total F&B revenue
Revenues from other segments like the meetings, incentives, conferences, exhibitions' (MICE) events, weddings will also be affected, it said, adding that there can also be a fall in room bookings.
"All these factors together will have a major impact on revenue for the hotels on the highways and will also result in decline in profitability for the players," it said.
GoodReturns.in
