HRAWI flags sharp LPG price hike impact on hospitality sector

Association warns of rising operational costs and pressure on margins across the hospitality sector.

The hospitality industry is facing mounting cost pressures following consecutive hikes in commercial LPG prices. Industry bodies warn that rising fuel costs are significantly impacting operations, margins and overall sustainability.

Industry response

“The latest increase of Rs.993/- per 19-kg commercial LPG cylinder, coming immediately after hikes of Rs.195.50/- in April and Rs.144/- in March, has dealt a severe blow to the hospitality industry. With commercial LPG prices now having risen by a staggering Rs.1,332.50/- within just three revisions, the sector is facing an unprecedented escalation in operating costs at a time when businesses are already struggling with supply disruptions, reduced operational capacity and weakened cash flows. For an industry where energy costs form a major chunk of operational expenditure, this is nothing short of catastrophic. Hotels and restaurants are among the largest consumers of commercial LPG and this sharp increase will disproportionately impact the hospitality sector, particularly small and medium establishments, caterers and businesses dependent on large scale food production. Many establishments are already operating with curtailed hours, limited menus and alternative cooking arrangements due to inconsistent supply and rising fuel costs. This latest revision will further strain margins and make operations increasingly unsustainable. Many have already shut down temporarily; this latest hike will accelerate closures and job losses. The impact extends beyond individual businesses. Rising fuel costs inevitably affect employment, food pricing, events and banqueting operations, tourism linked services and the broader supply chain connected to hospitality. Due to the recent rise in LPG prices, a 10 to15 per cent hike in menu prices is imminent. But even that may not be enough to absorb the impact. We urge the Government to urgently intervene, roll back this hike and stabilise LPG prices to give the sector some breathing space. Without immediate relief, the hospitality industry, a key employment generator, faces an existential crisis,” says Pradeep Shetty, Spokesperson, Hotel And Restaurant Association (Western India) (HRAWI) & VP, Federation of Hotel & Restaurant Associations of India.