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Union budget disappoints hospitality Industry

Thursday, February 3, 2022, 10:39 Hrs  [IST]
HBI Staff | Hyderabad

The Union Budget 2022-23 reflected the development and investment orientation, with much-needed emphasis on infrastructure, technology, skill development and health. But when we look at the budget from a hospitality industry’s perspective most of the industry experts expressed that the Union Budget has been disappointing. According to them, the Union Budget 22-23 has made almost no reference to the industry’s recommendations such as tax relief, utility tariffs, Infrastructure status and financial assistance.

Expectation Vs Reality

The Union Budget 2022-23 bring forth the Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) and allocation of additional INR 50,000 crores for hotels and the hospitality sector till March 2023 has brought a wave of relief to the industry. Along with this the FM also announced the CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) scheme, which is expected to facilitate additional credit of INR 2 lakh crore for micro small enterprises and expand employment opportunities. The budget is also inclusive of aggressive infrastructure development with eight ropeways, an additional 25,000 km of National Highways, 400 new Vande Bharat Trains with modern facilities, etc. The introduction of the revolutionary ePassport in the Union Budget received a lot of appreciation from the travel trade as well as from the hospitality industry. According to the industry experts, all these will be instrumental in encouraging both international and domestic travellers to explore the country with ease and give a new lifeline to hospitality brands of all sizes. To summarise the industry sentiments, the hospitality industry experts have expressed mixed reactions to the Union Budget 2022-23. Hospitality Biz spoke with industry stalwarts to know their opinion…

Kabir Suri, President, National Restaurant Association of India (NRAI) and Co-Founder & Director, Azure Hospitality Pvt. Ltd.

“The Restaurant Industry was eagerly looking at some immediate liquidity support, Restoration of Input Tax Credit (ITC) on GST, Ease of Doing Business from over regulation and excessive licensing, a fair & equitable E-Commerce Policy for the survival and revival of the Restaurant Sector from the Hon’ble Finance Minister. While the Hospitality Sector was mentioned for the first time by Smt. Nirmala Sitharaman when she announced the extension of Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 which will allow one-year moratorium extension for loans availed under the ECLGS Scheme but it may ease current liquidity issues only for some businesses which have existing credit lines or outstanding sanction available loans. It was very disappointing to see that no specific announcements were made for the Restaurant Industry and we are yet again left to fend for ourselves.”

KB Kachru, Vice President, HAI and Chairman Emeritus & Principal Advisor South Asia, Radisson Hotel Group

"We laud the Finance Minister for extending the ECLGS upto March 2023. The additional amount earmarked for hospitality and related sectors will provide relief to the industry which is yet to match the pre-pandemic level. The announcement recognizes the distress in hospitality. However, the specifics require to be studied to understand better the impact on specific businesses and organisations. HAI in the past has been requesting for the scheme to be customised and tailored to the unique model of hotel business and the future outlook of the sector.”

Gurbaxish Singh Kohli, Vice President, Federation of Hotel & Restaurant Associations of India (FHRAI) 

“Though the Budget has been gravely disappointing, the extension of ECLGS with additional allocation to the crawling hospitality sector and provisioning an outlay of Rs.2 lakh crore through CGTMSE are the only relief measures provided as part of the Union Budget 2022-23. The special allocation through ECLGS will support the struggling sector to mitigate some of the pandemic-induced challenges and the CGTMSE scheme is expected to facilitate additional credit of INR 2 lakh crore for micro small enterprises and expand employment opportunities.”

Sanjay Sethi, Chief Executive Officer and Managing Director, Chalet Hotels Limited.

“We welcome the attention given to the hospitality industry by the Hon’ Finance Minister in the Emergency Credit Line Guarantee Scheme (ECLGS) announcement. However, we await fine print on the relaxations on meeting debt ratio covenants of previous ECLGS schemes, if any, and if the INR 200 crores cap under the scheme has been enhanced.

We are also very pleased to hear the Hon’ Finance Minister focus on the environment, sustainability, solar power and electric vehicles. The focus given to prioritize clean mobility and green energy in the current budget, is aligned with the initiatives and actions undertaken at Chalet Hotels Limited.”

Vineet Verma, Executive Director & CEO, Brigade Hospitality

"Hospitality & Tourism sectors have most regrettably been given the short shrift in the Union Budget 2022-23. Except for the extension of ECLGS till March 2023, there is no other announcement that could have provided the much needed succour for sectors that have been the worst hit."

Sanjay Jain, Director, Elanpro

"Budget 2022 appears to have struck a chord with the hotel and healthcare sectors. The tax extension of the ECLGS (Emergency Credit Line Guarantee Scheme) for the hospitality industry, as well as the investment in expanding digital infrastructure for the healthcare business, will be a boon to attracting investment while also creating job possibilities. It is vital to emphasize that the budget has prioritized alleviating the suffering in the travel/hospitality industry as a result of the global pandemic. The budget has also had an impact on the MSME sector. Expecting an increase in innovation and new ventures, the budget will undoubtedly lean toward the positive side of the graph."

Vikas Suri, Senior Associate Vice President, Lords Hotels and Resorts

“On the one hand, the Union Budget 2022-23 has proposed to extend the ECLGS as well as allocate an additional INR 50,000 crore to finance the credit demands of the hotel and hospitality sector.  This is highly welcomed and appreciated by the industry. However, our industry has faced the brunt since last two consecutive years because of the pandemic, the expectation was for more direct and immediate support.  Long pending demand of reduction of GST, waiver or reduction of licence fee would have aided business revival have not been addressed. Lords Hotels and Resorts is a leading hotel chain, and we will encash on the budgetary allocation for major tourism infrastructure schemes, INR 1181.30 crore, which has been earmarked for the Swadesh Darshan Scheme, and INR 235 crore for the Pilgrimage Rejuvenation and Spiritual and Heritage Augmentation Drive (PRASHAD) Scheme as we look forward to expand our hotels further ”

Rakshit Sharma, CEO and Director on Board – Intellistay Hotels

"We welcome the positive move of Government to extend the Emergency Credit Line Guarantee Scheme (ECLGS) up to March 2023 with an additional corpus of 50,000 crore for hospitality. Issuance of e passports will help faster revival of international travel. 400 new generation Vande Bharat trains to be brought in three years will provide better rail connectivity to various parts of the country."

Col. Manbeer Choudhary, Chairman cum Managing Director, Jewels Group of Hotels  

"By announcements made for the hospitality industry in Union Budget 2022, the government has shown that it understands the situation and plight of the industry, which has struggled to survive in the pandemic. Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) and allocation of additional INR 50,000 crores for hotels and hospitality sector till March 2023 has brought a wave of relief to the industry. The budget is also inclusive of aggressive infrastructure development with eight ropeways, an additional 25,000 km of National Highways, 400 new Vande Bharat Trains with modern facilities, etc. Plus, the introduction of the revolutionary ePassport. All these will be instrumental in encouraging both international and domestic travelers to explore the country with ease and give a new lifeline to hospitality brands of all sizes. The hospitality and restaurant industry is one of the biggest employers of human resources in the country and with this kind of promise and support from the government, the industry can expect better business in the coming time. This will encourage better investment by the hospitality brands in the country and generate more economic traction."

Vikram Agarwal, Managing Director, Cornitos 

"The Union Budget 2022-23 is a progressive budget, our Government is concentrating on infrastructure, employment generation, and future developments. This appears to be a growth-oriented budget as efforts are being made to reduce compliance burdens and improve ease of doing business. The Budget has given an extension of the ECLGS Scheme which would provide much-needed help to the MSME sector especially the hospitality and related food processing segments. The past few years have been tumultuous for the hospitality segment and I am hopeful that this initiative gives the industry a much-needed boost." 

Manoj Agarwal, Head – Asset Management, InterGlobe Hotels

 “Hospitality is one of the industries that still haven’t recovered from the pandemic. The third wave of virus restricted people from travelling and slowed down the recovery witnessed by the industry in the last quarter of previous year. We extol the announcement by FM in budget of extending the ECLGS by INR 50,000 crores and up to March 2023. Hopefully, this will provide some relief by creating further liquidity and aid to the faster recovery of the sector.” 

Krishna Kumar - Co-founder, Isthara Parks

“Over the last two years with the pandemic, the F&B sector has been the worst affected. While the sector was the first to be impacted, its recovery has been the last in this pandemic and the sector is still reeling from the pandemic impact. We welcome the budget announcement on the extension on the ECLGS till March 2023 and the additional allocation of INR 50,000 crore to finance the credit demands of the hotel and hospitality sector, which will provide some relief to the sector. This will provide an additional liquidity and help the sector to get back to its pre-pandemic level. This announcement shows that the government is aware about the severe challenges faced by the sector and has taken a right step that will help in the recovery of the sector as a whole.”

Sudhanshu Pokhriyal, Chief Operating Officer, Bath Products, Brilloca

“We welcome the initiatives announced by the Hon’ble Finance Minister towards improving the country’s overall housing infrastructure. The announcement of a high-level committee of urban planners and the use of five existing academic institutes as centres of excellence in urban planning showcases the government’s commitment to progress in a planned and sustainable manner. With an emphasis on the need for Indian ‘Mega cities’ to transform into centres for economic growth; we feel there will be unique opportunities for ecosystem members to come together and build economies of scale leading to an increase in overall employment generation.”

Sonica Malhotra Kandhari, Joint Managing Director, MBD Group.

"Overall the Budget 2022 is a positive & balanced budget which is committed to inclusive growth of the overall economy while focusing on key sectors such as agriculture, infrastructure & women development. We are happy with the announcement regarding the extension of ECLGS upto March 2023 and increase in guarantee cover to INR 5 lakh cr is a welcome step that will bring a lot of relief to the battered hospitality sector and pent up demand post Covid. The announcement regarding National Ropeways Development Programme to be taken up in PPP mode will not only improve the connectivity but will also give impetus to travel and tourism sector. Secondly, the budget has given a boost to the railway & infrastructure sector with the plan to develop 400 new generation Vande Bharat trains and expansion of national highway network by 25,000 kms by 2022-23 under Gati Shakti plan. This is a welcome step that would lead to the new growth trajectory of the economy and will lead to more job opportunities for the youth."

SP Jain, Managing Director, Pride Hotels Ltd. 

"Over the last few weeks, the government has been actively engaging with industry and other stakeholders to announce various measures to revive the economy. Tourism and Hospitality play a pivotal role in economic development and the industry was anxiously waiting for some key announcements from the Union Budget 2022-23. Finance Minister has considered the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) and its guarantee cover has been expanded by INR 50,000 crore to the total cover of INR 5 Lakh Crore. This will be a great boon for the hospitality and travel trade sector which has been adversely impacted by the pandemic for the last 2 years. This will give a much-needed boost to the sector by providing additional liquidity and helping it revive its position. The industry can now provide employment to millions of people who have lost their jobs. We welcome this announcement. This is a good budget for the hospitality and tourism sector. "

Ajit Shah, Partner at White Panda Hospitality which owns Tera Vita, Kiko-Ba and Dadel

"The ECLGS extension up to March 2023 and the increased cover of INR 50,000 crores to a total cover of INR 5,00,000 crore is a welcome move to empower our hospitality industry which has been struggling to cope with the COVID induced challenges. I would also like to express my delight on the rolling out of ePassports which was proposed a few months ago by our External Affairs Minister. However, the hospitality industry still remains incredibly fragile and faces myriad critical issues such as rising inflation, higher utility bills, wages and raw material costs. I strongly feel that the industry needs a tax holiday wherein we get relief from paying taxes for a year, along with temporary relief to comfort the cash flow crisis which has affected the vital functionality of the industry. These issues should have ideally been addressed in the Budget."

Amrut Mehta, Director, Little Italy

“The union budget brings a lot of hope as businesses and individuals look forward to receive help from the government in these trying times. The pandemic has been tough in all countries and industries. Many businesses have suffered due to government induced restrictions and lockdowns. The extension of ECLGS by the finance minister is a boon to the hospitality sector. This move will help the MSME sectors to cope up with the risks arising out of COVID induced challenges.”

Major Dinesh Sharma, Founder Academy of Pastry & Culinary Arts

“The government's vision of developing a skill based education system  will get a new direction with this  year’s budget announcement. What is interesting is the government's decision to develop digital infrastructure which is futuristic, especially due to students losing out on education during current pandemic crises. We need to be future ready.”

Sibasish Mishra, Founder & CEO, BookingJini

“The Union Budget 2022 no significant direct announcement impacting Travel, tourism and hotel though there is a extension of Emergency Credit Line Guarantee Scheme (ECLGS) upto March 2023 is a welcome move. The same has been further expanded by 5000 crores for the Hospitality industry. This will help the cash strapped hotel entrepreneur to bounce back from the burden and losses of covid19. Great news in the budget for backpackers and travelers exploring inaccessible by roads in the hilly areas, this budget proposed, 8 ropeway projects for a length of 60 km will be awarded in 2022-23 as a pilot and with the success of these there will be more to come.

He also added "The E-passport move will make the ease of travelling abroad much easier, travelers who already have been desperately waiting to go abroad since 3 years due to travel restrictions will avail this facility the most and we will witness surge in outbound tour. The Budget travelers' segment which compromises more than 66% of the traveler will look forward for a great experience under Vande Bharat Trains in near future thus boosting tourism and hotel industry. These trains will be not only be energy efficient but also cheaper, faster and safer"

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