Implementation to be key, say hotel execs
The K V Kamath Committee’s recommendations on loan restructuring are likely to offer some relief to the hospitality sector that is now staring at a debt pile, say hotel executives. They are, however, sceptical of whether the lenders would exercise the restructuring option and pass on the benefits.
The cumulative debt of the hospitality sector is close to Rs 45,000 crore. At least a third of this is likely to be restructured, say analysts.
Manav Thadani, co-founder and chairman at Hotelivate, a hospitality consulting firm, says, “It’s not a one-size-fits-all situation.” Hoteliers said the very fact that the sector has found mention is creditable. But how it gets off the ground is critical. “We are happy with the recommendations. At least they give hotels an opportunity to restructure their debt and increase their moratorium period,” says Suhail Kannampilly, chief operating officer at The Fern Hotels & Resorts, adding, “The key lies in implementation.”
The banking sector views the hospitality sector as ‘non-essential’. The recommendations leave it to banks to take a call on restructuring on a case-by-case basis, adds Kannampilly.
The general guidelines suggested by the committee include extension of residual tenure of loan by a maximum of two years (with or without payment of moratorium). The moratorium period, if granted, will come into force immediately upon implementation of the resolution plan. In order to implement the resolution plan, it’s important that asset classification is maintained as standard, or upgraded to standard.