As tourism emerges from the shadows of the pandemic, hoteliers are advocating for the government to give priority to infrastructure development and tax reforms in the upcoming budget. This, they believe, will unlock the full potential of the hospitality sector.
“The government has set an ambitious target of 100 million tourists by 2047 and this requires massive accommodation. We hope the budget will announce infrastructure development plans for hotels and tourist destinations,” said M.P. Bezbaruah, secretary general of the Hotel Association of India.
The industry has been pursuing infrastructure status, which brings a range of advantages for developers, especially in terms of financing their projects. This includes simplified access to bank loans, reduced development costs, and tax benefits for their initiatives.
Bezbaruah pointed to last year’s budget proposal to develop 50 new tourist destinations, a plan which remains largely unimplemented.
“We need much more development to achieve a $1 trillion tourism contribution to GDP, which the government has set its targets on,” he said, highlighting the potential for sustainable tourism growth, and showcasing India’s diversity.
“We have so much to showcase to the world too, it would be a great addition to have 50, or even more new tourist destinations. Otherwise, many destinations like Agra, Jaipur etc., could see over-tourism and would be at risk of becoming unsustainable.”
Bezbaruah acknowledged the limitations of a vote on account budget in an election year. “Significant changes are unlikely, but we hope the government will consider our suggestions in the long run,” he said.
One key area of concern is the goods and services tax (GST). “The current 18% GST rate on hospitality is higher than other sectors, and rationalizing this could boost revenue for both the government and the industry,” he added.
Another hurdle is the differential GST rate between restaurants in hotels and those that are independent, creating an uneven playing field. Bezbaruah urged the government to address this disparity.
Revamping the ‘Incredible India’ campaign also figures prominently in hoteliers’ wish list. “Inbound tourism hasn’t recovered fully and renewed marketing efforts, both online and offline, are crucial. Vietnam’s successful campaigns show the potential to us and the rest of the world.”
The government’s recent cuts to overseas promotional budgets, from INR 524 crore in 2021-22 to a mere INR 167 crore in 2024, have worried the industry.
While acknowledging the benefits of digitization, Bezbaruah said traditional off-line campaigns in attracting tourists shouldn’t be ignored.
Infrastructure status for the industry comes with a bunch of perks for developers, particularly when it comes to project financing. (Source The Mint)