Business Communication

Report on How Startup are Coping Up during Covid 19

Submitted by:
Kajol Pradhan
Chandan Jha
Vidit Bansal
Prajwal CL
Shubham Sneh
Dilkush Ranasariya

GRAPE ENTERPRISES
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Table of Contents
1. Introduction
2. Impact of Covid-19
3. Impact on Start-up industry in India
4. Analysis of hospitality and travel Industry
5. Our Performance
6. What options do we have?
Introduction
 We are a new age budget hotels brand start-up with an annual turnover of INR
2,00,00,000.
 We started off in 2015 with a strongly committed team of 60 and now we are 5 year
older with an expanded team of 105.
 With technology at center of Customer experience and backend operations, we are
building a budget hospitality brand that is missing for so long in India
 Until Covid-19, we were the one of the fastest growing startups in India. Surge in
Covid 19 cases and unplanned Lockdown in various parts of India has severely
affected the hospitality sector and brought the tourism industry to a standstill.
 We have 40% of our workforce working in the design and customer support, 40% in
sales and operation, 10% in Finance and rest in the R&D area.

Impact of Covid-19

We have seen Covid 19 disrupt our lives as well as businesses. As on September 12, the
impact of the global pandemic to the economy could be around $8.8 tn 3. The world output is
expected to decline by 5% as per various institutions around the world as compared to only 1
% of decline in the 2008 global financial crisis.
Talking about India, the GDP estimate2 of first quarter for this fiscal year is out and there has
been decline of 23.9 % as compared to last year. It is further estimated to decline by at least
10-12% in the next quarter which means we are in a deep recession. With loss of economic
activity, almost every business is affected by the pandemic & unplanned lockdown
adversely.
Coming to start-ups in India, the story is no different. Startups are the worst hit in terms of
magnitude by the pandemic. Travel and Hospitality industry is at its lowest ebb.

Impact on Startup Industry in India

As per the survey conducted by FICCI on 250 startups in India
 70 per cent of start-ups stated that their businesses have been impacted by COVID19.
 12 per cent of the start-ups have shut operations and
 60 per cent are operating with disruptions

As per NASSCOM’s Startup Pulse Report1 based on survey of 250 startups (diverse
sectors) in India, conducted in April 2020
1) Startups Facing a Decline in Revenue
Covid-19 is the single largest challenge India’s nascent startups have faced with 92 percent
of those surveyed reporting a decline
 Nine out of every ten startups have seen a decline in revenue,
 62% of all startups have reported a revenue decline of 40% while 34% startups have
reported a revenue decline of more than 80%
 Two-thirds of travel startups have seen a revenue decline while half of the logistics
and fintech startups have seen the same.

2) Threat of Business Closure -

 40% of all startups are facing the threat of closure while the number increases within
B2C startups
 Three-fourth B2C startups are likely to run out of money in three months
3) Sectoral Breakup
 Two third of Travel Startups have seen a Revenue Decline while half of Logistics and
Fintech Startups have seen the same.

4) Run Out of Cash

 ¾th of B2C Start-ups are likely to Run Out of Cash within 3 Months
 Most Start-up's see new projects pipeline and scale as struggle in the future
5) Disruption Impact
 These are the leading areas of disruption reported by the 250+ startups surveyed
 Two Third Startups are likely to survive up to 3 months based on their Current Capital
6) Green Shoots
 Green Shoots
o There are, however, some green shoots. Around 14 percent of EdTech, Fintech
and Healthtech start-ups expect a growth in revenue. Also, business-to-business
start-ups are faring better than others. For Example, Upgrad , Udemy, Hike, No
Broker not only retaining but also hiring additional staff
 Smell Opportunity
o On the other hand, 54 percent of the startups are looking to pivot into new areas.
o Half of all startups surveyed see a big opportunity in the AI sector

7) Lasting Impact
 2 /3rd of Startups believe that Covid 19 Impact will last up to 12 months
Analysis of Hospitality and Travel Industry

To understand better what strategy as a start-up we should opt at these testing times, we
should know about the industry that we operate in.

1) Introduction to Hospitality and travel industry:4

 The Indian tourism and hospitality industry emerged as one of the key drivers of
growth among the services sector in India. Tourism is also a potentially large
employment generator besides being a significant source of foreign exchange for the
country
 As of 2019, 4.2 crore jobs were created in the tourism sector in India, which was 8.1
per cent of the total employment in the country. The number is expected to rise by two
per cent annum to 52.3 million jobs by 2028.
 According to WTTC, India ranked third among 185 countries in terms of travel and
tourism’s total contribution to GDP in 2018. India ranked 34 in the Travel and
Tourism Competitiveness Report 2019 published by the World Economic Forum.
2) Market Structure:4
 India is the most digitally advanced traveler nation in terms of digital tools being used
for planning, booking, and experiencing a journey.
 International hotel chains are increasing their presence in the country, and it will
account for around 47 per cent share in the tourism and hospitality sector of India by
2020 and 50 per cent by 2022.
 India was globally the third largest in terms of investment in travel and tourism with
an inflow of US$ 45.7 billion in 2018, accounting for 5.9 per cent of the total
investment in the country.
 Hotel and Tourism sector received cumulative FDI inflow of US$ 15.28 billion
between April 2000 and March 2020.
3) Government Expenditure:4
 During 2019-20, an additional fund Rs 1,854.67 crore (US$ 269.22 million) was
sanctioned for new projects under the Swadesh Darshan scheme.
 Ministry of Tourism sanctioned 18 projects covering all the North Eastern States for
Rs 1,456 crore (US$ 211.35 million) to develop and promote of tourism in the region
under Swadesh Darshan and PRASHAD schemes.
 Statue of Sardar Vallabhbhai Patel, also known as ‘State of Unity’, was inaugurated in
October 2018 and the total revenue generated till November 2019 stood at Rs 82.51
crore (US$ 11.81 million).
Figure: Tourism and Hospitality Sector Snapshot
4) Impact of Covid: 5
 The unanticipated pandemic has sort of halted this entire industry. It has disrupted the
whole environment in which the industry was operating. It is highly likely that the
situations will remain grim in the near future.
 In the figure below, an analysis of the industry specific companies is shown which was
conducted to derive company specific layoffs/furloughs-

Country Company Industry Laid off % Laid off Fund

Raised($mm)
India Oyo Travel 2400 21% 3200
India Fare portal Travel 200 5% 60
India Make My Trip Travel 350 10% 548
India BookMyshow Consumer 270 18% 224
India Fabhotels Travel 80 20% 48
India PickYourTrail Travel 70 35% 3
India TravelTrangle Travel 250 50% 47
Average % 22.7%
layoff

Sectoral Analysis of Travel & Hospital Startup Industry by considering – top performing 7
Start-ups in segment we can infer
 Layoff has become new normal in Travel & Hospital Start-up Industry
 Average layoff percentage stood out to be 22.7% which is worrisome.
 Oyo, one of the leading start-up in hospitality industry, laid off 2400 employee. When
considered in the numbers, it's the highest in the industry.
 While Travel Trangle laid off 50% of its employee, which is industries highest as
percentage of its employment. Fare portal which laid off 200 employees accounts to
just 5 % of its strength and it's the least percentage in industry. 6
5) IMPLICTIONS:7
 Undoubtedly, the hardest hit industry is aviation, hospitality and tourism which are
interdependent on each other. According to WTTC, 100 ml jobs are at risk globally
with an anticipated loss of USD 2.7 trillion dollars.
 In India, the next one year is going to be the most difficult for the travel and tourism
industry with estimated revenue and job losses at $17 billion and 40 million (both
direct and indirect) respectively.
 In India’s hospitality sector, May 2020 experienced an occupancy decline of 77% over
the same time last year. As per estimates, occupancy for branded hotels in 2020 is set
to decline by about 20% over 2019 and average daily rate (ADR) by more than 8%.
 As per Federation of Associations in Indian Tourism and Hospitality (FAITH), around
70 per cent out of a total estimated workforce of 5.5 crore (direct and indirect) could
get unemployed (around 3.8 crore).
Hotel Development and Offerings: Deferring of New Opening

Time Hotels will take to return to 2019 levels

6) Road Ahead
India's travel and tourism industry has huge growth potential. The industry is also looking
forward to the expansion of e-Visa scheme, which is expected to double the tourist inflow in
India. India's travel and tourism industry has the potential to expand by 2.5 per cent on the
back of higher budgetary allocation and low-cost healthcare facility according to a joint
study conducted by Assoc ham and Yes Bank.
7) Future Aspects
 Tourism and Hospitality sector developed as one of the main sources of growth with
significant potential among the services sector which also turned out to be large
employment generator in India.
 As per 2019 report, 4.2 crore jobs were created in tourism sector in India, which is
considered as 8.1% of the total employment in the country and which expected to rise
2% annum by 2028.
 According to WTTC, India ranked 3rd among 185 countries in term of travel and
tourism’s total contribution of GDP in 2018 and India has also ranked as 34th in
Travel and Tourism competitiveness report of 2019.

Our Performance:
 With imposition of Lockdown due to surge in Covid cases, our operation gradually
came to standstill as Travel and Hospitality industry being the worst affected.
 As a result of which, there is
 Decline in Revenue - We have seen a decline in our revenue by over 60%.
Though we have picked up after the unlock was announced, but still it will take
a lot of time to return to pre- pandemic level.
 Financial Stress - Our finances now are highly compromised, and it is becoming
very difficult to run the business with 105 people on the board.
 Depleting Cash Reserve - At the pace we are moving now, we wouldn’t last
even 6 months from now. The cash reserves are only so much to sustain.
 Unsettled Expenses - Problem is that revenue is obviously down for anyone in
tourism and of course, we experience huge amounts of cancellations and huge
amounts of returns which we need to process.
 Cutting down cost is imperative currently to recoil, reboot ourselves. Conserve Cash
and Manage Our Finance appropriately
 With Human Capital is one of resource which comes at cost. Efficient utilization of it
is need of the hour.
 Our Talent Pool of 105 is spread into 4 domains
 Technology
 Design
 Sales
 Agent Manager
 Corporate Sales
 Customer & Franchise Support
 Revenue and Pricing
 Business Analyst
What Options do we have?
 Though layoff of at least 50% of employees seems to be the only option. We should
restrain from doing so because
1. talent we have are highly experienced, skilled and committed.
2. Any attempt to lay off without considering these facts will result in advantage
for competitors – as most of peers in the industry are into hiring, expanding.
Cost of Retaining Employees is more than Laying off
3. Future is near, with ease of lockdown industry is returning to normal in phased
manner, travel & hospitability industry is bound to bounce back, and confined
citizens will look to explore & travel more. Increase in demand, to meet pent up
demand we need to have suitable capacity & talent. Recoiling is true & will
happen
Hence, we can avoid arbitrary decision.

Our Moto should be - care for the present and think about the future.
 What can be done - Cost Take Out Measures to address Immediate and Longer-Term
Needs
1. Give Our Employees options to choose what works best for their situation
 Longer Term, Higher Value
 Monetise your Workforce without losing them - In some ways, this
present situation might provide some opportunities. Like in Russia,
some tour agency companies have offered their call center
capabilities to other companies. So basically, we know ecommerce
needs more call center agents and this company has free call center
workers, so why not give this opportunity to someone who needs it.
 More Immediate, Higher Value -
 Unpaid Sabbatical / Furloughs,
 Compressed Work Schedule / 4-day workweeks,
 Reduced Work Hour / shift works
 Shift full-time to part-time, incl. job sharing
 Upskill / E Learn / Re Learn
o Multi Skilled Talent Pool - Increase Efficiency by training
them to have multiple skills and responsibilities
2. Employee Performance Review (EPR) Data from Employee Management Portal

 Data taken from both above two options & decision should be taken what suits best for
us
 By this method, we will be
1. able to retain best of our employees
2. reskill willing employee
3. Turn some into contractual employee
4. Let go off underperforming ones
QUOTES
 A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity
in every difficulty.
 The true guide of life is to do what is right.
 You must look at facts, because they look at you.
 To improve is to change, so to be perfect is to have changed often.
 Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the
end of the beginning
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