Budget 2021: Expectations of the Travel & Hospitality Sector

It's time to delete the demand shock 

A few days ago, FHRAI had requested the center to bring the tourism under Concurrent List. It will lead to a better organisation of the sector with properly designated responsibilities between the Center and the state. Highlighting the same, Bhanu Chopra, Founder & Chairman, RateGain said, "The hospitality and tourism industry was amongst the worst-hit due to the COVID-19 outbreak. Now, there seems to be light at the end of the tunnel as the demand is slowly and steadily increasing."

He believes that a favourable decision will bolster the sector. "Budgetary provisions, better regulations, and policy decisions can go a long way for businesses of all shapes and sizes. The government should also consider granting the segment infrastructure status, given its importance in revitalizing the economy. Doing so will allow businesses to avail electricity, water, and land at industrial rates along with improved lending rates," he added.  

Similarly, Zubin Saxena, Managing Director and VP Operations, South Asia, Radisson Hotel Group stated that the travel and tourism sector faced a demand shock in the past 10-12 months, created due to the COVID-19 pandemic and the lack of infrastructure. 

He continued, "We are hopeful that the Union Budget will allocate sufficient resources to help the sector emerge stronger out of these times."   

Strengthen the sector with stimulus packages

Vibhas Prasad, Director, Leisure Hotels Group expressed that the Hospitality sector, is one of India's largest employment generating sectors. He also underscored the fact they have refined its offerings amidst restrictions to boost their revenue. 

Speaking about the revival of the sector, Prasad said, "An emerging key insight has been that a greater push to visit domestic destinations is essential which should be followed with stimulus packages for the Hotel industry to steer back into a path of revival and resurgence." 

Acknowledging the changing trends, he said, "We strongly foresee recovery to be strong, particularly on the domestic fore. We are exploring new ways to offer our spaces and services to generate revenue. The industry will bounce back as there is a huge demand for business and leisure travel and not forget the large social events and wedding industry. Furthermore, we predict some MICE movement to begin in the next three or four months - not necessarily the sitting in a conference room type but doing activities like rafting or going in a safari, even bungee jumping. We are seeing queries and are anticipating the outdoorsy type MICE events in coming months."

He added, "Infrastructure status to hotels with above ₹25 crores investment, excluding land, will benefit us, as currently, only those hotel projects with an investment of over ₹200 crores get infrastructure status, which limits the benefits to luxury hospitality firms. This will also enable financing if the government can also consider issuing guarantees for loans given to such projects which will allow credit flow from banks."

According to Prasad, there should be a cut in GST rates charged on services offered by hotels. He said that the GST on room bookings should be reduced from 18 per cent to 12 per cent with full benefit of input credit. This will improve occupancy and help the hotels become more competitive and at par with other Asian economies such as Hong Kong, Thailand, and Singapore. 

Expecting the much-needed booster shots 

Addressing the scenario created by the pandemic for the travel & hospitality Sector, Roop Pratap Choudhary, Managing Director, Noor Mahal said, "The pandemic is by far the worst crisis that has hit the industry impacting all segments - domestic, inbound and outbound; and all verticals - leisure, MICE, heritage, adventure and niche. The crisis has put the country's tourism business activity, which is estimated at USD 28 Billion plus and related activities, to an unimaginable halt." 

Referring to the numbers produced by the Hotel Association of India (HAI), Choudhary said that the hospitality sector has incurred a revenue loss of an estimated ₹90,000 crore revenue loss in 2020. 

He believes that despite the loss, the sector has immense potential to support India's self-reliant mission by generating massive business and job opportunities. Thereby, make India the global leader in the tourism and travel segment. 

Mentioning the Travel and Tourism sector's contribution in GDP, he said, "The sector contributes almost 10 per cent of the GDP to the economy and generates almost 9-10 per cent of the total employment. Hence the sector needs immediate and special attention."

"We expect the Union budget to give the much-needed booster shots to push tourism and hospitality growth in India. Large scale policy initiatives to boost local tourism, special incentives for infrastructure development, GST reduction and special stimulus packages can help the industry to move faster on the recovery path," he added.

Hoping for a special impetus to local infrastructure development, he said, "Development of road networks across the country gives regional and stand-alone players, at locations considered off the main grid, a fair chance to compete with the main-stream hospitality circuits. Other infrastructure developments in Tier-II cities would assist the growth potential of regional hospitality players and possibly flip the whole scenario."

Underlining the need for a liberal and reasonable investment and loan framework, he said, "A more flexible and tolerant financial environment can really give small hospitality players to explore more growth avenues in these tough times. To encourage guest occupancy, boost domestic travel and help small/independent properties to be more competitive in the market, GST on room bookings should be reduced from 18 per cent to 10 per cent. Also, the existing GST of 18 per cent for restaurants in hotels should be cut down to 12 per cent. Since liquor is one of the biggest income contributors to the hotel business, we hope the budget to bring liquor under GST, remove multiple state duties, waiver on license fees, and increase license timelines."

He said that the government could consider extending MSME working capital loans to save jobs in the hospitality and tourism sector. "The pandemic has also pushed new trends in the segment such as intimate weddings, short distance driveable holidays, city staycations, etc. We hope that these newly created segments will act as add-on revenue sources to the sector," he concluded.