Hyatt Regency to shut down in Mumbai 'until further notice', says no money to pay salaries

American multinational hospitality chain Hyatt Hotels & Resorts has temporarily shut down its Hyatt Regency hotel in Mumbai, citing non-payment of dues from Indian owner Asian Hotels  (West), in what could be the first visible, public acknowledgement of the stress being faced by established global hotel chains in India post the second Covid-19 wave.

"As a result of no funds forthcoming from Asian Hotels (West) Ltd, the owner of Hyatt Regency Mumbai, to sustain the operations of the hotel, a decision has been taken to temporarily suspend all operations for Hyatt Regency Mumbai, the hotel will remain closed until further notice," Sunjae Sharma, country head ofHyatt India said, reports the Economic Times of India.

"Future reservations through Hyatt booking channels will remain temporarily unavailable. At Hyatt, our guests and colleagues are a top priority, and we are working closely with the hotel's owner to resolve this situation," added Sharma, who is also the vice president.

In a notice issued to its on-roll staffers on Monday, general manager Hardip Marwah had also communicated the developments stating no funds are forthcoming from Asian Hotels (West) to enable payment of salaries or support operations of the hotel. While Sharma said all the other Hyatt hotels are operational in India, industry insiders said the move could be a precursor of things to come for the industry battered by the pandemic.

Multiple sources familiar with the matter said BSE listed Asian Hotels (West) has been facing a cash crunch since last year and has been looking at diluting its equity in both its owned properties Hyatt Regency Mumbai and the JW Marriott hotel in Aerocity, Delhi.

In disclosures filed to the BSE this year, Asian Hotels (West) stated its total amount of outstanding borrowings from banks and financial institutions was Rs 262.54 crore as of 1 May this year. A company executive cited on the official website did not respond to an email and calls seeking comments till the time of going to press. Marriott declined to comment on queries concerning the owner company and its JW Marriott hotel in Delhi.

In March this year, India Ratings and Research (Ind-Ra) downgraded Asian Hotels (West) Limited's ratings citing continued losses and the potential adverse impact of the Covid-19 pandemic on the company's FY22 financials, leading to weaker-than-expected credit metrics and a poor liquidity position.

"The company has been looking to dilute its stake in both the hotels since last year considering the high debt exposure. There has been a working capital crunch since last year. Both the hotels have sizable inventory and to build JW Marriott in Aerocity, they had taken on significant debt," said a person familiar with the matter.