Budget 2024: The anticipation around Budget 2024 is palpable, especially in the travel and hospitality sectors. With the government’s sustained focus on bolstering tourism, stakeholders are hopeful for policies that could make travel more affordable. Here’s an in-depth look at the expectations and insights from industry leaders.
Aviation Industry’s Expectations
Kanika Tekriwal, Founder & CEO of JetSetGo, is optimistic about the future of India in the global aviation market. She advocates for customs exemptions for Non-Scheduled Operators (NSOs) similar to those for scheduled air operations, which would streamline the import process and level the playing field. Tekriwal also emphasized the need to bring aviation fuel under the GST regime, which would rationalize the tax structure and reduce operational costs. “We expect the newly formed government to provide a customs exemption for Non-Scheduled Operators, akin to the exemptions already available for scheduled air operations. This step would streamline the import process and level the playing field, allowing NSOs to operate more competitively and efficiently. The current tax structure on aviation fuel increases the overall operating cost for everybody in the aviation industry, particularly affecting NSOs operating on tighter margins than larger scheduled airlines. Bringing aviation fuel under the GST regime would result in a more rationalized and lower tax incidence, thus significantly reducing operational costs. This change would enhance the overall efficiency of our operations, leading to more cost-effective services for our customers. If the upcoming budget supports these expectations the growth and sustainability of the private jet and aviation industry will become more efficient, reliable, and affordable, contributing positively to the broader aviation sector and the economy.”
Impact on Hotel Room Tariffs
The hospitality sector is watching closely to see if Budget 2024 will influence hotel room tariffs. Keith Menon, Hotelier and Co-owner of Circle by Hermiting Hospitality pointed out that while infrastructure improvements and loans for tourist spots could attract more tourists, they might also lead to higher costs for hotels. “However, the budget’s support for restaurants and food businesses might help hotels manage their costs better and keep prices stable,” he said.
He said, “Following Budget 2024, there’s a lot of talk about whether hotel room prices will go down. The government is focusing on improving tourism infrastructure and offering loans for tourist spots. These moves aim to attract more tourists and improve their experience. When infrastructure gets better and more people visit, it usually means hotels face higher costs, which can push prices up. However, the budget also includes support for restaurants and food businesses, which might help hotels manage their costs better and keep prices stable.”
He added, “Plus, hotels are adopting new technologies and eco-friendly practices, which could make their operations more efficient and keep guests happy. So, while we might not see prices drop drastically, the way hotels set their rates could change as they adapt to these new opportunities and challenges.”
Ahsan Shervani, Vice President of Star Hotels Pvt Ltd, commented on the potential impact of Budget 2024 on hotel room tariffs in India. He expressed that the budget lacks specific measures to reduce hotel tariffs directly. However, Shervani highlighted the industry’s advocacy for changes that could influence pricing in the long term, such as seeking infrastructure status for the hotel sector and rationalizing the Goods and Services Tax (GST) on higher-priced rooms. His insights reflect the broader sentiment within the hospitality industry regarding the budget’s indirect effects and the role of market dynamics in pricing.
Shervani said, “Hotel room tariffs in India are unlikely to drop significantly as a direct result of the 2024 budget. The budget has not introduced any specific measures aimed at reducing hotel tariffs. However, the hospitality industry is advocating for various changes that could potentially influence pricing in the long term. Industry leaders are calling for infrastructure status for the hotel sector, which would allow for easier access to cheaper financing, potentially lowering overall costs for new projects. There are requests for further rationalization of the Goods and Services Tax (GST) on hotel tariffs, with suggestions to lower the GST rate on hotel rooms priced above Rs 7,500 from the current 12% to 18%. While there is optimism about continued growth and recovery, any significant reduction in tariffs will likely depend more on market dynamics and broader economic conditions than on specific budget measures introduced in 2024.”
Continued Focus on Infrastructure and Connectivity
Sunjae Sharma, Managing Director of India and Southwest Asia at Hyatt, emphasized the significant strides made in the tourism sector due to enhanced infrastructure and connectivity. Initiatives like Swadesh Darshan and Dekho Apna Desh have boosted domestic travel, particularly in tier II and III destinations. Sharma anticipates that the upcoming budget will continue this momentum with a focus on infrastructure investment and strategic initiatives to elevate India’s appeal for inbound travel.
He said, “Last year laid a strong foundation for India on the global tourism map as a preferred destination for business and leisure. We witnessed a distinct focus on infrastructure development and enhanced connectivity, revitalizing domestic tourism, particularly in tier II and III destinations. Initiatives like Swadesh Darshan and Dekho Apna Desh have also supported the surge in domestic travel further boosting the sector. We anticipate the upcoming Budget to sustain this momentum with a focus on continued infrastructure investment, policies facilitating travel trade & tourism, and hotel expansions to meet increasing demand, and strategic initiatives elevating India’s global appeal for inbound travel.”
The Bigger Picture for Aviation
The aviation sector has seen tremendous growth, with the number of airports doubling and the introduction of new routes. Nishant Pittie, CEO and Co-Founder of EaseMyTrip, highlighted the sector’s potential for rapid growth with the expansion of existing airports and development of new ones. However, he pointed out that the interim budget for 2024-25 saw a reduction in the allocated amount for the Ministry of Civil Aviation and the UDAN scheme.
He said, “The aviation industry has made significant strides over the past decade. The number of airports doubled to 149 and 517 new routes now carry 1.3 crore passengers. Indian carriers have ordered over 1000 new aircraft. The aviation sector is expected to exhibit rapid growth in the times to come with the expansion of existing airports and the development of new airports in the pipeline. We believe that infrastructural enhancements, improving connectivity, and sustainability initiatives will be key focus areas for this fiscal year’s budget. We expect increased budget allocation for the expansion of airports and the introduction of new air routes along with policies that will resolve challenges like regulatory frameworks and operational costs.”
He further explained, “The government has ambitious targets for developing the nation’s aviation infrastructure. The allocated amount for the Ministry of Civil Aviation and the UDAN scheme in the interim budget for 2024-25 was reduced. This move coincided with the ongoing roadblocks faced by airlines, from aircraft groundings and rising fuel costs to the need for financial measures supporting the industry. Hence, hopes are high that the budget will acknowledge these challenges and announce policies that will support the market in its growth trajectory.”
While Budget 2024 may not directly lead to cheaper hotel room tariffs or flight and train tickets, the expected policies and initiatives could create a more favourable environment for the travel and hospitality sectors. By enhancing infrastructure, rationalizing tax structures, and supporting local entrepreneurs, the government’s efforts could lead to more efficient and cost-effective services for travelers in the long run. The collaboration between industry leaders and the government will be crucial in maximizing the impact of these initiatives, ensuring quality standards, and fostering sustainable tourism models.
