Say Cheers: A close look at the nightlife economy of the country

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Presently, the nightlife industry is the most heavily taxed industry paying the highest tax bracket of 25 percent.
  • Sakshi Singh
Nightlife

Not even a month before when Delhi Finance Minister Manish Sisodia presented a budget of INR 75,800 cr for the year 2022-23, uplifting Delhi’s nightlife economy was on his major cards. Praising the nightlife of Mumbai, Sisodia said that in the capital today if anybody wants to put a food truck then he does it through 'setting' because of which both quality and nightlife is compromised. People eat at these outlets because of helplessness. “We want Delhi to have a nightlife just like Mumbai, that's why we are creating such policies,” he said at a conference.  In a move to stimulate the night-time economy of the city, the Delhi government is moving towards liberal policy interventions to allow relaxed functioning of the food and the hospitality sectors. 

The city government also had plans to boost the hospitality sector, including allowing bars in hotels, clubs and restaurants to remain open till late in the night, under the new excise policy. The draft plan said that while preparing plans for tourism and visitation, the states can support the growth of the night-time economy by enhancing amenities, vibrancy and safety at the centres and by improving public facilities.

The policy initiatives for ease of doing business also recommend that the bars in hotels, restaurants and clubs be allowed to operate till 3 am. On their part to boost the night-time economy, the three civic bodies recently approved a scheme to provide health trade licences for setting up e-food carts or food vans in their respective jurisdictions. This news although came from a single state, but was a big reliever for the whole industry. That is because India, for a very long time has been ignoring and often looking down on its night-time economy.

Sunrise moment

Currently, bars, pubs and nightclubs are reporting a sharp rebound in footfall, with improving walk-ins and resumption of live events. While a few establishments said sales and footfall have been the highest since the onset of the pandemic, for others, business transactions matched December 2021 levels, with a rise in the number of dinners visiting bars and pubs.

The pandemic severely impacted nightlife in India’s top cities. As offices mandated work-from-home, and strict curbs were imposed, bars struggled to survive. This led to a churn with many bars shuttering operations. However, things are starting to look up since late last year.

“With government’s proposition to increase the bar timings till 3 am and various other measures to ease doing business, we have already opened one of the Cannes most popular outpost ‘Cosy Box’ in Delhi. And already in touch to bring some international concepts to the city to enhance the nightlife experience for the city,” Akshay Anand, owner of brands like Toy Room and Cosy Box commented while hailing the Delhi government’s proposal.

Overlooked potential 

Before the pandemic hit, nightlife in Indian cities saw a significant change owing to the emergence of bars and venues curating new and diverse offerings for their discerning consumers. The stakeholders however have been in a constant debate with the authorities claiming that they are into serious business and are big contributors to the economy as well as employment. The ask has always been from the government to understand the scope of the nightlife industry and able to see the potential of what the nightlife sector can contribute to; the GDP, employment, tourism, vibrancy as well as making Indian cities amongst the most livable in the world. According to many veterans, there is almost 70 to 80 percent growth potential which is lying untapped. If tapped into, it’s a two lakh thousand crore business.

How industry is bouncing back

“The biggest issue the hospitality industry had to go through in the last two years was the imposition of the night curfew. The entire industry came to a standstill amidst the lockdown. Now though with the restrictions being relaxed, and the government providing support for the revival of the economy around the nightlife, it gives us great hope of gaining back the lost revenue,” Abhay Kanwar, director of sales and marketing at Sheraton Grand Bangalore Hotel, Brigade Gateway commented further informing that the property is looking at innovative offers and campaigns to attract people from nearby residences and the corporates who have finally joined back work at the World Trade Centre in the vicinity.

The past two years were the most tragic of times for pubs, bars and nightclubs. The pandemic had put a halt to nightlife and there was almost no business for months at a stretch forcing many to shut operations forever. However, the last few months have seen a sharp rebound in footfalls with the resurrection of live events and the young migrant crowd returning to offices. “We see a lot of them coming for after-work drinking sessions with their colleagues. Group bookings have also become a thing these days,” Abhay Kewadkar, managing director at Fox in the Field stated.

In Bengaluru, with the relaxation of the Covid protocols, the nightlife in the city is back to pre-covid levels and, in some cases, the numbers look even better than the 2019 days. “We at Fox in the Field, have put in place a calendar of events and entertainment to ensure there is something every weekend for the audience who have been waiting to attend such programs. Also, we are glad that the government is also favouring and supporting us to revive the nightlife economy; it will surely benefit the pubs and bars to make up the lost revenue at a faster rate” Kewadkar further added.

Bengaluru lost all its fizz and charm in these two years with strict curbs and most of the IT crowd going back to their home towns.  With businesses now opening up, Hotel Royal Orchid Bangalore is hosting live events and giving offers on food and beverages to attract consumers. With changing consumption patterns, the property is also designing interesting menus and cocktails to cater to various age groups and profiles.

“Also, the corporates are now preferring cocktails dinners instead of Lunch buffets as their team-building exercise, which became nonexistent in the last two years of working from home. So, we are curating special packages for corporate events too,” Ajay Sampige, area general manager of Hotel Royal Orchid Bangalore shared while commenting on a few of the revival trends.

Other challenges of nightlife industry 

Apart from the Covid impact, some of the challenges that the nightlife industry faces, in general, is that the business is heavily regulated, and the easing of regulations will increase this business by around 15 percent. The drinking age limit is now 25. The industry is lobbying for the drinking age order to reduce to 21 years not ignoring the fact that it comes with the additional responsibility of ensuring people are safe and drink sensibly. Just by lowering the drinking age alone, one can increase the market share by about 30 percent. Secondly, there are time limitations in India. Across the world, people are partying for 72 hours straight. The stakeholders are again trying to make the government understand that culture claiming that extended closing hours will add another 10 percent to the business.

Presently, the nightlife industry is the most heavily taxed industry paying the highest tax bracket of 25 percent. Not only they are paying VAT but also service charge, service tax and excise being possibly the only business in India which is paying all three indirect taxes. The urgent need of an hour is impetus and sops.

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