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New Delhi: With tourism emerging from the pandemic’s shadow, hoteliers have urged the government to prioritize infrastructure development and tax reforms in the upcoming budget to unlock the 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,” M.P. Bezbaruah, secretary general of the Hotel Association of India.
An infrastructure status, something the industry has been seeking, comes with a bunch of perks for developers, particularly when it comes to financing their projects, like easier access to bank loans, cheaper development costs and tax benefits for projects.
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 ₹524 crore in 2021-22 to a mere ₹167 crore in 2024, have worried the industry. While acknowledging the benefits of digitization, Bezbaruah said traditional offline campaigns in attracting tourists shouldn’t be ignored.
“We would also like to suggest that marketing of India should be renewed, especially since inbound tourism has not grown much. We would be happy if there is more attention paid to the marketing of India. Something needs to be done to upgrade Incredible India,” he added.
“While digitisation of the campaign is also good and lots of tourists do follow digital campaigns, it is important to also have the regular offline campaigns as well and that should get the attention of the government. For instance, Vietnam, even though it is such a small country, is doing very well in its campaigns and is getting a lot of attention,” he added.
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Published: 26 Jan 2024, 11:31 PM IST
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