Five-star hotels lay off staff as business plunges

Room occupancy shrinks to near zero in wake of coronavirus pandemic

Salman Siddiqui March 24, 2020
KARACHI: Pakistan has faced the first known economic casualty of the COVID-19 as the five-star hotel industry has reported notable job cuts following the plunge in room occupancy to near zero and fears of shutdown for the time being.

Furthermore, sales of petroleum products at filling stations have declined drastically due to a complete lockdown in Sindh for 15 days beginning March 23 and partial shutdown in Islamabad and other provinces in an effort to prevent the spread of the infectious coronavirus. Top textile exporters have temporarily closed factories, though many of them are located in Faisalabad, Gujranwala and other parts of the country where orders for complete lockdown have not yet been issued. “Staff has been sent on annual paid leave,” an official in the management of Beach Luxury and Avari Hotels said.

“We have cut jobs by around 20%,” an official in higher management of the international hotel chain run by the Hashoo Group (Pearl Continental and Marriott hotels) confirmed to The Express Tribune.

“The room occupancy rate has fallen to just 3%,” he said. “We are passing through the worst financial crisis these days. This is happening for the first time in history that we don’t have enough finances to pay monthly salaries. It has never happened throughout our history.”

“They (staffers) are not being sent home temporary, but on a permanent basis,” he clarified. “We fear we may have to shut down the hotels.” Market players point out the high-end hospitality industry, which mostly relies on international visitors, is in a worse situation and layoffs have been made on a wide scale.

The official said the layoffs had been made in almost all the departments, including the high-paid employees in higher management as well as housekeeping, food and beverages. and room services staff.

“We were already facing a tough situation before the coronavirus pandemic. The outbreak has badly hit the hospitality industry,” he added. The official from the Beach Luxury and Avari Hotels added that staff members had been sent on leave as their annual leaves had accumulated over the years since they had been working there for decades.

“We have no history of layoffs. The management paid salaries to the staff even at the time when one of the hotels had been closed for around three years,” he pointed out.

Top textile exporters, including Masood Textile and listed company Interloop Limited, which manufactures socks for leading international brand Adidas, have closed their factories, according to a private TV channel.

A source in the textile industry, who spoke on condition of anonymity, said, “Leading textile exporters have closed factories in line with the international lockdown. Adidas has asked Interloop to stop production in order to protect workers from the coronavirus.”

International buyers have delayed taking delivery of textile orders from Pakistan. “They will take the deliveries when their markets reopen,” he said. “It is very difficult to anticipate how much time the world will take to control and eliminate the virus.” All Pakistan Textile Mills Association (Aptma) former vice-chairman Asif Inam said a majority of international buyers had not cancelled the export orders given to Pakistan but had just delayed them in an effort to cope with the situation caused by the lockdown in many countries.

“About 99% of textile export orders (given to Pakistan) will be delivered once the situation normalises in the US and Europe,” he said. “China, the second-largest economy where the virus first emerged, has resumed production at around 90% factories.”

Pakistan is not in a bad situation as that in Europe. “The (partial or complete) lockdown will help to deal with the situation in the country,” he voiced hope.

An official at a top oil marketing company said the sale of petroleum products had dropped drastically, especially in Sindh, where the government imposed a complete lockdown for 15 days to control the spread of the virus.

However, he said, “I cannot quantify the drop in sales since I do not have the actual numbers.”

The Punjab government was also considering a complete lockdown in a day or two, the official stated. “Punjab and Sindh are the two largest provinces where oil is sold in large quantities.” 

Published in The Express Tribune, March 24th, 2020.

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