‘None for the road’ - The catastrophic impact on bars and restaurants!

By:B2B Desk 2017-05-08

The announcement that liquor vends within 500 meters of national and state highways will have to shut down from April 1 as per the directions of the Supreme Court has created a pandemonium in the hospitality industry. While a lot of hoteliers say it is sudden, but it has been in the pipeline for quite sometime now. This means that everyone did have time to plan for it! So who is to be blamed for it? 

A hotelier in an interview shared that, “In December 2106, there was a ‘Reach Home Safe’ petition which was filed and that was for the sale of liquor on highways i.e. for buying it from a wine shop. Nowhere was the word restaurant, bar or a café mentioned. So it was clearly understood that it is for sale of liquor and not restaurants.” He adds, “The reason is that restaurants were not added was that from a restaurant you do not take a bottle out. You just sit there and enjoy! What we understand is that the message here is drunk driving. At the end of the day it is drink and drive, so you an go to a hotel or restaurant, drink and enjoy there and then drive. Hoteliers feel that the agenda is right, but the approach is wrong. Say for some reason 500 mt. is an appropriate figure, but what happens to the ones affected by the distance of more than 500 mt.? What I feel is that the government will have to enforce the laws more strictly. We have so many laws for drink and drive, but they are not enforced properly. In fact a lot of road accidents happen because contractors leave the road construction incomplete… How do we cover that?”

As a result of the ban most of the companies are seeing a big setback. The hospitality industry is finding it very hard as it will lead to an estimated loss of 10 to 15 thousand crore rupees. In addition to this the ruling will also put up to 1 million jobs in the tourism sector at risk. It is bound to have a ripple effect across the country. The multiplier effect which will be first seen over the weekend as the weekend is mostly the highest traction for FnB, tourism and hospitality sector at large. A lot of people have also tweeted that why kill tourism and 1 million jobs. A lot of people are running to the court for curative petitions. Various hotel and tourist associations, customer associations have been meeting the state government as liquor is a state subject. They are looking for solutions. States like UP and Rajasthan have come out and rebranded some of their state highways which fall within the Municipal limits of the cities.

Kerela as an example is one of the highest consuming states when it comes to alcohol. The reason is that it is a tourist hub and the ban will impact its revenues a lot. Another example is Delhi. The beautifully built Delhi Airport with world class facilities and has Aerocity in its surrounding. The hotels there have gone dry. We have The Grand Hyatt, Pullman, Ibis Hotel, etc. and they all have gone dry. Two Oberoi hotels in Gurugram on the National Highway have gone dry, Cyber Hub, which is another fantastic recreational hub has also gone dry.

A hospitality official in a media statement shared, “There will be losses in excise revenue. When people consume food and beverages in hotels, there is a tax on it and that will go away. Hundreds of hotels have been impacted, 1000 of bars have been impacted.” “Apart from the impact on jobs, there will be restaurants whose 50% of the revenue was coming from the liquor space. They will slowly have to change their business model or move on. Clearly the chances for this are low as we believe that the way in which government is working will find a solution for it,” adds another expert. Another restaurant owner from Bombay shared, “In Mumbai there are around 470-500 outlets which are shut down and in Maharastra it is an accumulative figure of 9,000-10,000 bars that will close down. If you go with the revenue part, around INR 50,000 per outlet will be a loss and if we look at the manpower i.e. the people going unemployed it will be 30% per outlet.”

“INR 5,700 crore is the estimated excise hit in FY18 due to the ban. A lot of restaurants are likely to relocate,” says the Haryana FM.   

In conclusion, we feel that it is a time to act courageously and you will not lose financially. We have an example of Gujarat, which is a live example of being a dry state. Women are much more secure there, no terrorism or mafia. There are people who drink there, but they are also aware of the consequences so things are under control. We are hopeful that the liquor ban will be a win-win situation for all!

Comments