Hospitality industry stakeholders are advocating for hotels to be granted infrastructure status in the upcoming Union Budget. This change would enhance the appeal of investments in new properties, shifting focus away from labeling them as luxury or 'sin goods'.
This move is seen as crucial given the sector's potential to significantly contribute to India's economic growth.
In addition, they are urging the government to offer incentives such as tax incentives or subsidies to encourage the adoption of sustainable and eco-friendly practices. They emphasize that the forthcoming budget should prioritize advancing the tourism agenda, viewing it as a chance to position Indian hospitality as a pivotal driver of GDP growth and employment creation.
Hotel Association of India (HAI) President KB Kachru said,The industry faces challenges including high taxation, costly and varied licensing requirements, approvals, and compliance measures. Hotels require substantial capital investment with a lengthy initial phase. Operating expenses for hotels are significant and predominantly fixed.
He also added, "This makes investments in hotels risky. There is a need to make hotel investments more attractive with an improved rate of investment and to promote ease of doing business."
He said that the forthcoming union budget presents an opportunity to unlock the potential of India's hospitality sector in contributing to India Vision 2047 by advocating for policy changes that recognize its capacity rather than categorizing hotels as luxury, elite, or 'sin' goods.
Indian Hotels Company Ltd Managing Director and CEO Puneet Chhatwal stated that,the sector's infrastructure status will drive investments and help India achieve its goal of becoming the third largest economy by 2027. Chhatwal, Chairman of CII National Committee of Tourism and Hospitality and FAITH, highlighted the sector's significant contribution to employment and economic growth.
He also highlighted that,in order to enhance the potential of India's hospitality sector, which is currently lagging behind other major lodging markets worldwide, it is imperative for the upcoming budget to prioritize the advancement of the tourism agenda.
Sanjay Sethi, the Managing Director and CEO of Chalet Hotels Ltd, emphasized that the hospitality sector not only creates a significant amount of employment opportunities, but also demands substantial capital investments due to its nature.
He added that benefits such as lower utility rates, decreased property taxes, improved access to financing, and more favorable loan terms are essential for lowering operational costs, securing the sustainability of the sector over the long term, and fostering increased investments that will enhance job creation.
Amit Jaiswal, Chief Finance Officer of Royal Orchid Hotels, emphasized that the hospitality sector holds substantial expectations from the forthcoming Budget. Specifically, there is anticipation for supportive measures to navigate the sector through recent economic challenges. A robust support framework is seen as imperative to facilitate recovery and foster growth.
He informed that,India levies one of the highest GST rates on tourism, exceeding those of countries such as Thailand, Vietnam, Sri Lanka, and even various European nations.
Tourism is one of the highest employment-generating sectors, it necessitates a targeted approach from the government.
The industry is hopeful for increased investment in infrastructure development, like better connectivity to tourist spots through airport expansions and road network enhancements, which could boost domestic and international tourism.
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