– By Zubin Saxena
2023 witnessed a remarkable resurgence in the hospitality sector, marking an almost complete recovery from the challenges posed by the global pandemic. With the forthcoming budget, and the buoyant sentiment witnessed in both the travel and tourism sector and hospitality, the industry eagerly anticipates policy changes that can propel more aggressive and stronger growth. A recent report underlines the pivotal role of the tourism sector, projecting a substantial contribution of $250 billion to the country’s GDP by 2030, along with employment opportunities for approximately 137 million individuals. This underscores the crucial importance of the upcoming budget in shaping the trajectory of the hospitality industry. We would all like to eagerly and passionately contribute to the government’s aim to reach a USD 1 trillion GDP contribution by 2047. A large part of this would stem from the overall tourism and travel sector both domestic and international. We look forward to seeing some transformative initiatives in the budget to significantly enhance growth and positive development in the hospitality industry.
Tax Concerns: A Call for Reform
At the forefront of industry expectations is a call for a comprehensive tax overhaul, with a particular emphasis on a substantial reduction in the Goods and Services Tax (GST) rate for hotels. The current 18% GST on hotel tariffs and restaurant services is deemed high in comparison to global standards. Industry stakeholders are hopeful for a noteworthy reduction to 12%, aiming to enhance competitiveness and attract foreign tourists. Beyond conformity to global standards, this move seeks to position the country ahead of regional rivals such as Thailand and Singapore, thereby making it more appealing to international visitors. Tourism, development and economic growth go hand in hand and our country has several gems of places which once developed, will see exponential growth with the employment boost and socio-economic development. This move brings tangible benefits such as lower utility tariffs, reduced property tax, improved financial access, and a more favourable business environment.
Infrastructure Status: A Game-Changing Move
The hospitality sector holds a firm expectation of being recognized with an industry-wide infrastructure status, akin to sectors like ports, roads, and highways. This acknowledgement underscores hotels as essential contributors to tourism infrastructure.
These advantages have the potential to significantly decrease operational costs for hotels, leading to a more attractive return on investments and potentially shorter development timelines.
India’s Bright Prospects: A Goldmine for Hospitality
India stands as a goldmine of opportunities, with the middle class emerging as the largest spender globally. Projections indicate that India will become the fourth-largest global spender on travel by 2030, driven by an empowered middle class constituting 47% of the population. Furthermore, the youth demographic, with a median age of 28.2 years, makes India irresistible for global tourism players. And as one of the top three fastest-growing outbound tourism markets, coupled with a booming economy and developing infrastructure, India’s hospitality industry is poised for exponential overall growth.
Overall, we look forward to a greater ease of doing business, providing developers within the sector with economic incentives & subsidies geared towards sectoral growth. India’s hospitality sector, when compared to the major lodging markets, presents a huge opportunity. Moreover, as one of the major contributors to employment, the industry stands as a crucial support for fostering sustainable economic growth nationwide. It is thus imperative that the government strengthen these strides with clear and decisive policy announcements. These measures will be both desirable and essential for ensuring unwavering and dynamic growth in the industry.
We saw some commendable initiatives like “Dekho Apna Desh” and Visit India Year 2023, coupled with the very successful G20 Summit that India hosted last year – all of which in a manner were emblematic of our potential and aspirations. The visibility these significant platforms gave to our country and sector has further upped our appetite and now we look forward to unlocking the true potential of the richness India has to offer. Summarising my wish list, we’d like to see a strategic alignment of policies that will propel the hospitality sector’s growth engine and fortify our position as a key player in India’s economic landscape.
(Zubin Saxena is the Senior Vice President and Country Head, India – Hilton.)
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