Budget 2021: What do hoteliers want?

2021 is being deemed as the year that will witness the hospitality sector's revival by the leading hoteliers. The last year caused an upheaval in the entire system of hospitality. This jerk brought by the COVID-19 pandemic was all the more painful because of the lack of infrastructural and monetary backing. BW HOTELIER interacts with Param Kannampilly, the Chairman & Managing Director, The Fern Hotels & Resorts, Satyen Jain, CEO, Pride Hotels Ltd. and Vineet Verma, MRICS, Executive Director & CEO, Brigade Hospitality to voice their expectations from the upcoming budget.

Nurse the hospitality industry 

The hospitality segment has already not received the industry status it has been requesting for long. Add to it the outspread of the COVID-19 pandemic. Now, in 2021, the virus has mutated as well while the world is witnessing the vaccination process happening in certain countries. Commenting on the current scenario and the status of the hospitality sector, Param Kannampilly said, "The Hospitality Industry certainly needs to be nursed at the rate it has been hit and virtually destroyed by Covid-19. Hopefully this budget will see a mention of our industry, which has been ignored in the past few budgets."

In the recently submitted pre-budget memorandum, The Federation of Hotel and Restaurant Associations of India (FHRAI), in addition to, direct tax and policy recommendations, requested the government to accord hotels, resorts and restaurants, the infrastructure lending status. Speaking about the move, Kannampilly said, "The government can do its bit if they are really serious to revive the sector. The FHRAI has requested the finance minister to lower the threshold for infrastructure status for the hotels. This will lead to a lot of positives for the industry."

He believes that this lowering of the threshold for infrastructure will allow the addition of more hotels under the infrastructure status. He also stated that with a favourable decision, the hoteliers will be able to get finances easily. 

He added, "The government should also lower the interest rates for these small and medium level entrepreneurs. It will also help to improve the sentiment, which is extremely important in these uncertain times."

Expressing his budget expectation, Kannampilly said, "The budget can provide a lot of relief to the hoteliers if the government decides to give relief on interest payment. Remember, hospitality is capital intensive; it requires a lot of money to build a hotel and a large chunk as working capital. The cash flow has dried up, and hoteliers are facing enormous difficulties in servicing the loans. The government can also help in implementing uniform policy as far as travelling regulations are concerned." 

Praising the step taken by Maharashtra to grant industry status to the hospitality sector, he said, "Though it was long overdue, still it was a step in the right direction. The Union government can take a leaf out of that and grant industry status to hospitality. This can be the first step towards taking the hospitality industry seriously and giving it its due." 

Mitigate the impact of COVID-19

As the inbound tourism has been hit heavily in the recent past and domestic tourism is all we can depend on, the hospitality sector must be given ample inputs to sustain with the changing times. Talking about the hospitality sector's inclusion in the economy as an industry, Satyen Jain said, "The hospitality industry is one of the hardest-hit industries compared to the other industry in the segment. So, we are expecting that in this budget the Govt. considers us as an inclusive part of the economy."

"We expect that the budget would focus on certain longstanding demands such as review of the Kamath Committee recommendations, industry and infrastructure status to hotels, resorts and restaurants across the country. Besides, the government should raise the threshold limit of hotel room tariff for charging GST, allowing IGST billing to hotels for corporate and MICE bookings," he added.

He also shares the same sentiment with all the hoteliers regarding granting infrastructure status to the hospitality sector. "We have asked for infrastructure status as hospitality is a capital intensive industry, and it cannot survive on a high rate of interest," he stated.

Elaborating his point, he said, "The infrastructure status will provide the sector with several benefits and concessions, including longer loan repayment tenure and lower borrowing rates, which will help in attracting substantial fresh investments and will go a long way in improving the health of the sector, which is currently struggling due to the ongoing pandemic."

In broad terms, Jain would like the government to support the sector for it to mitigate the impact of COVID-19. Highlighting the impact of the pandemic, he further added, "The hospitality industry is one of the hardest-hit industries, and business loss due to Covid -19 is unabsorbed. Today, Tourism and Hospitality as an industry accounts for 12.6 per cent of direct and indirect jobs in the country. If given the 'Industry and Infrastructure' status, it will help give the hospitality industry the boost to thrive in the long run. Moreover, we anticipate that the government reworks on the GST rates for hotel room tariffs of Rs. 7500 and above at 18 per cent."

Provide breathing space to the choked sector

In line with the expectations raised so far, Vineet Verma, MRICS, Executive Director & CEO, Brigade Hospitality said," Hospitality & Tourism sectors have been the worst hit during this pandemic and truly deserve to be resuscitated with government's support, both at the Centre and the State levels. While some measures have been rolled out, these are not enough, and a lot more is required to be done."

"It is important to extend some breathing space to the almost choked industry before it finds its way to recover to pre-COVID levels," he concluded.

He also shared a list of suggestions that the Finance minister should consider for reviving the segment:

* Waiver/reduction of Interest on Loans for the lockdown period.

* ECLGS should have working capital loans with reduced rates of interest.

* Drastic Reduction in GST rates for hotels & restaurants for 2021-22 to help boost travel & tourism.

* MV Act notification on 'One Nation One permit' to be expedited to help boost the inter-state movement of tourist vehicles.

* Impress upon respective State Governments to refund part of License fees & duties for the lockdown period. This includes Property Taxes, Liqour licenses, etc.

* Accord Industry Status to the Hospitality sector.