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Aviation, hospitality and construction sectors could take longer to recover from Covid impact: Report

Thursday, December 3, 2020, 10:52 Hrs  [IST]

Even as most sectors could see first signs of buoyancy from September next year, aviation, hospitality and construction sectors could take longer to get out of shock caused by Covid pandemic, a research report by ICRA said.

Beginning April this year companies in construction, aviation and hospitality sector have seen huge impact on their profitability and revenues. Some of the companies are still seeing huge impact on their cash flows say industry trackers.

“Investment-related sectors like construction, the pace of recovery remains to be seen, given fiscal constraints, especially of state governments, due to allocation of funds towards pandemic-relief measures. However, healthy project awards during the second quarter, especially by NHAI and MoRTH are encouraging, though pickup in execution also remains critical,” the ICRA report said.

As per media reports about 30% of the hotels and restaurants across India were shut down due to the impact of Covid pandemic. Most consumers stayed away from the hospitality sector amidst fears of catching the virus.

For avaiation sector on the other hand the trouble may have started even before the Covid pandemic. Most aviation companies were struggling with their working capital and profitability, said industry experts.

“Sectors like aviation and hotels continue to face challenges, which are expected to persist over a prolonged period. Daily airline passenger traffic, while improving sequentially over the months, still continues to remain at around half of pre-covid levels, given continued restriction (especially on international travel) and risk aversion towards travel, albeit improving. Similarly, the hotel sector also continues to grapple with historic-low occupancy levels, despite some quarantine-related and healthcare staff traffic diverted to hotels. Accordingly, recovery in these sectors is likely to be a longer-term phenomenon, given the discretionary nature of spend, and customer wariness that is likely to continue till a vaccine is made available commercially,” the report said.
(Source : The Economic Times)

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