COVID-19: Hotels across the board undertake pay cuts, give unpaid leave options to staff

New Delhi: Ravaged by the worsening COVID-19 pandemic, major hotel chains across the board are announcing pay cuts, or unpaid leave options for some staff members.

While chains like Lemon Tree and Treebo Hotels announced pay cuts for their leadership teams this week, people familiar with the matter said Marriott International has asked its corporate staff to take a 20% pay cut while a 50% pay cut has been proposed for general managers and a 30% cut for heads of departments.

" As the business at our hotels is at a virtual standstill, we are encouraging leave without pay for associates at our corporate offices and management teams at hotels which will mean a reduction in salary between 50% and 20% based on seniority of the role. These will be effective for April, May and June," a Marriott spokesperson said in a response to ET's queries.

Royal Orchid Hotels has undertaken a 10% salary cut for employees with monthly salaries between Rs 50 lakh to 1 lakh and a 15% salary cut for employees with salaries between Rs 1 lakh to 2 lakh. Royal Orchid has undertaken a 20% salary cut for those with salaries above Rs 2 lakh.

Amit Jaiswal, the CFO of Royal Orchid Hotels said pay cuts could go up if things don’t improve by May.

“If the prime minister and MPs are taking pay cuts, then what can we do. Right now there is no inflow of funds. It is zero. I have debtors in the market who owe me Rs 18 crore and nobody is paying me. Although we have reduced our other costs also, money is still scarce. This has been decided after consulting the employees,” he added.

Sources familiar with the matter said an iconic American hotel chain had asked some of its corporate staff members in India to go on furloughs for three months but that plan for India is on hold for now.

ET reported on Wednesday that Lemon Tree Hotels was undertaking pay cuts of 50-66% for its leadership teams for the three months of April May and June for now while chairman Patu Keswani was taking a 100% pay cut.

Anxious employees are reaching out to headhunters and staffing firms and want to move out to other sectors.

"There is heightened anxiety in the hospitality sector as the industry is at the forefront of the impact. The anxiousness is across cadres to safeguard their current employment and pay checks and have an alternative back up at hand,” said Neha Garg, founder director of executive search and leadership hiring firm Red Kite Consulting. Red Kite’s clients include chains like IHCL, the Oberoi Group, Hyatt, Shangri-La and Marriott besides others.

“There is an upswing in people considering cross sector movements especially in finance which is not sector specific and there is a sharp rise in the number of candidate applications pouring in daily. There need to be strong policy measures for the hospitality sector as it is impacted for the long haul,” she said.