Hospitality Industry Optimistic About Union Budget, Seeks Key Policy Shifts for Growth

by  EVENTFAQS Bureau Industry Watch | July 17, 2024 | News

Hospitality industry Minister Nirmala Sitharaman Union Budget

The hospitality industry is optimistic about the upcoming Union budget, expecting concrete actions from Finance Minister Nirmala Sitharaman, following the promising directions in the interim budget. Key proposals from the interim budget included comprehensive development of tourist destinations in collaboration with state governments, long-term interest-free loans for states, improved port connectivity to island destinations like Lakshadweep, and a quality rating assessment mechanism for tourist facilities. The industry hopes for proposals encouraging more investment in tourism infrastructure.

Trade associations have reiterated the need for infrastructure status for the sector, proposing the identification of 100 tourist destinations for future readiness and a data-based approach to decongest destinations. FAITH and other industry chambers have also pushed for increased overseas marketing budgets and linking a percentage of Foreign Exchange Earnings (FEE) through tourism to these efforts, as inbound tourist traffic remains below pre-Covid levels.

The Hotel Association of India (HAI) emphasized infrastructure status for hotels to unlock the sector's potential, enabling access to softer finances and better investment conditions. The upcoming budget presents an opportunity to enhance India's hospitality sector's contribution to India Vision 2047 by implementing these key policy shifts.

In a statement, Pradeep Shetty, President, FHRAI said, “We believe that tourism and hospitality, accounting for around 10 percent of India's GDP, should be declared a priority sector. Granting infrastructure status to hotels and convention centres of project cost of INR 10 crore and above is essential for attracting investments and accelerating growth in the hospitality sector.”

Supporting the industry's demand for infrastructure and industry status, Tejinder Gupta, Partner, Grant Thornton Bharat said, “Extended industry status to the hospitality industry along with enabling provision of affordable-rate infrastructure funds for the private sector would go a long way for large scale developments. We anticipate reductions and uniformity in GST rates for hotel room categories and reduction in income taxes to boost disposable income, along with annual LTA exemptions to encourage domestic tourism consumption. It is also expected that strategic policy reforms and skill development initiatives shall be initiated to ensure a vibrant and sustainable future for the Indian hospitality sector.”

Navneet Nagpal, Principal Consultant and Director, Spectra Hospitality Services said, "Recognising hospitality as an official industry and granting infrastructure status to qualifying hotels would be transformative. This strategic initiative would facilitate access to long-term financing at lower interest rates, streamline regulatory processes for quicker project execution, and offer potential tax incentives. These measures are not just about increasing occupancy rates; they aim to transform hospitality into a significant investment attraction, driving economic growth, job creation, and boosting foreign exchange earnings firm.”

Virendra Raazdan, General Manager, The Leela Bhartiya City said, "The recent travel boom presents a golden opportunity, but to truly unlock our potential, we need the government to strategically recognise hospitality as an industry and grant infrastructure status to hotels exceeding a certain bar. This will catalyze access to long-term financing at lower interest rates, streamlined regulations for faster project execution, and potential tax breaks for the industry. This isn't just about filling rooms it's about transforming hospitality into a magnet for investment."