Union Budget 2024-25: Hospitality industry reacts with varied sentiments

There has been a mixed bag of reactions from hospitality industry stakeholders with the Union Budget 2024-25. While some have noted a lack of policy measures aimed at fostering sectoral growth and highlighted the absence of key initiative such as granting infrastructure status and implementing reforms for ease of doing business, crucial for revitalising the tourism and hospitality sectors, others have lauded Finance Minister Nirmala Sitharaman’s speech highlighting the Government’s commitment to making India a premier global travel destination through targetted investments and strategic initiatives. By focussing on the development of iconic spiritual and cultural sites, alongside promotion of natural and scenic beauty, the Government aimed to attract both domestic and international tourists, they felt. 

Sharing his views on the Union Budget 2024-25, industry veteran KB Kachru, Chairman Emeritus and Principal Advisor, Radisson Hotel Group South Asia and President, Hotel Association of India (HAI) shared that though the development of the eastern region, temple corridors in Gaya and Bodhgaya, and identification of Nalanda as a key tourism site continue to demonstrate the Government’s intent to utilise the potential of tourism, regrettably, there has been no policy announcement to facilitate the development of hotels and promotion of inbound tourism. 

“The announcement of GST simplification and comprehensive review of the Income Tax Act provides some hope for the sector that has been seeking rationalisation of taxes. The benefits to individuals on taxation will augment the spending power. The focus on skilling and incentivising employers for creating jobs are other positives that will benefit all sectors,” he said. Kachru added that although not directly linked to this budget, the industry would continue its ask for granting of infrastructure status for the hospitality sector and industry-related benefits by all state governments. 

Sanjay Sethi, CEO and Managing Director, Chalet Hotels Limited too shared mixed reactions on the Budget, stating the FM has presented an inclusive budget with a keen eye on enhancing employment, uplift of rural economy and key infrastructure initiatives. “At the same time, infrastructure status to tourism and hospitality is a missed opportunity. We were hopeful as this would have enhanced investments in the industry, leading to greater employment generation and adding to the exchequer’s forex earnings,” he shared in a disappointing tone.

Industry veteran Veer Vijay Singh, CEO and MD, Trance Hotels, shared that support has been extended to domestic tourism by PM Modi since the pandemic and that has been seen in this year's budget too. “Swadesh tourism and spiritual tourism are being promoted and allotment of funds is clearly visible. Also, skill development intiatives are welcome as the industry is facing a shortage on that front,” he said. He added that more could have been done by giving industry status, infrastructure status to be given to hotels as there is a need to build good hotels to meet the upcoming demand, Incredible India 3.0 should have got a larger fund allotment and GST should have been lowered.  

Welcoming the Union Budget 2024-25 which focusses on positioning India as a global tourism hub through progressive initiatives is Nikhil Sharma, Managing Director and Area Senior Vice President - South Asia, Radisson Hotel Group (RHG). “The surge in spiritual tourism has been recognised, and we are excited to see the sector receiving much-needed support in this year’s budget. The development of road connectivity projects, with a special emphasis on spiritual and cultural corridors, underscores the Government’s commitment to fuelling the growth of the country’s rich cultural and spiritual network of tourism,” he said.

Sharma added that RHG has always focussed on Tier II and III cities, leveraging a first-mover advantage with 50 per cent of the portfolio in these regions. “Our strategic commitment to these destinations aligns with the Government’s vision, allowing us to meet the increasing demand for spiritual experiences and further strengthen our presence across India. We are optimistic this development will not only propel the domestic tourism sector but will also provide an opportunity for foreign tourists to further explore the rich culture of India,” he said.

Bihar, known for its profound religious significance and historical sites, is all set to receive a major facelift. In her speech, the FM said the Vishnupad Temple Corridor and the Mahabodhi Temple Corridor in Gaya will be the prime projects earmarked for development. These sites will be transformed into world-class destinations, drawing parallels with the Kashi-Vishwanath Corridor, which has already seen substantial success in attracting tourists. Sitharaman added the focus upon the ancient cities of Rajgir and Nalanda, which are steeped in Buddhist history, will also witness significant investments and theses will be revitalised to restore their historical grandeur. 

The Budget also focussed on leveraging Odisha’s scenic beauty, temple architecture and cultural assets to boost the state’s tourism. Then FM stated that the Government will try to enhance tourism infrastructure like improving facilities at main key religious and cultural sites, promoting sustainable practices and further ensuring local communities benefit from increased tourist footfalls. The need for sustainable tourism practices has also been addressed in the Budget and there is an emphasis on preserving cultural and environmental integrity of spiritual sites. The measures include waste management, maintaining cleanliness and ensuring that the natural surroundings are protected. The Government also has plans to work closely with local communities to implement these practices, ensuring the influx of tourists does not harm the spiritual and cultural essence of these destinations. The FM’s speech also mentioned the importance of simpler tax regimes as corporate tax rate on foreign companies has been reduced to 25 per cent, reduction of TDS rates for e-commerce operators from 1 per cent to 0.1 per cent and a revised new tax regime rate structure. However, the travel and tourism industry, along with hospitality industry, has been left disappointed as the demands for reduction in GST, infrastructural status and abolishment of TCS hasn’t been granted.  

Sharing his views on the same, Somesh Agarwal, Chairman and MD, Radisson Blu Palace Resort & Spa, Udaipur, said, “The strong fiscal support announced in the Budget will undoubtedly unlock new economic opportunities for the sector. Additionally, under the government’s Viksit Bharat Vision, the substantial CAPEX allocation of Rs 11,11,111 crore for infrastructure, accounting for 3.4 per cent of GDP, stands as a testament to their commitment to robust infrastructure development over the next five years. Moreover, Phase IV of the PMGSY will be launched in the future, providing all-weather connectivity to 25,000 rural habitations.”

Commending the Government and the FM for looking to establish economic measures that will drive India towards a better economic future, Kabir Suri, President, National Restaurant Association of India, said, “The EPF support for new hires will go a long way in significantly bolstering levels of employment in the country. This is crucial in developing a stable, secure and robust workforce which will be beneficial to all industries including the food services sector. The reduction in income tax slabs is a commendable move, empowering individuals with greater savings and disposable income, thus driving higher consumption levels, an essential catalyst for sustained economic momentum.”

He added that the emphasis on boosting tourism is a strategic step towards revitalising the sector, promising a resurgence in hospitality industries. “Also, the support given to the MSMEs in the form of Mudra loan limit increase needs to be applauded.” Suri, however, termed it unfortunate that MSMEs in the food service sector missed out due to the fact that the food services sector has not been recognised as an industry yet. “The recent Economic Survey has laid focus on the creation of eight million jobs each year till 2036. The food services sector is ideally positioned to drive this goal since it employs people with all education and skill levels. The current direct employment by the industry of 8.5 million people is slated to grow by more than 20 per cent to 10.5 million in the next four years. However, lack of GST Input Tax Credit for the industry is slowing down the growth and job opportunities of this otherwise vibrant sector,” he felt.

Aashish Gupta, Consulting CEO, Federation of Associations in Indian Tourism & Hospitality (FAITH) shared that though it was encouraging to note the FM announcing India having the potential to become a global tourism hub, it would also been nicer to see Budget recommendation supporting the same, like an increase in the marketing and publicity budget, infrastructure status support to hospitality, abolishment of TCS on travel and reduction in GST rates on tourism travel and hospitality. “The support given to spiritual tourism through corridor development and cruise tourism through tax adjustment on foreign ships in Indian shores will support these sub sectors. There was the potential for this Budget to address a lot more opportunities for growth in Indian tourism in a structured manner,” he opined.

Meanwhile, Pradeep Shetty, President, FHRAI and Hotel And Restaurant Association (Western India) – HRAWI said that although the Budget fell short of the expectations for transformative changes in the tourism and hospitality sectors, “we acknowledge its positive focus on infrastructure, rural development and skill enhancement. These initiatives are crucial for overcoming current challenges and fostering growth. The commitment to develop iconic cultural sites and promote diverse forms of tourism is commendable and holds promise for attracting a broader range of domestic and international visitors,” he said, adding that the hospitality sector is disappointed but not dejected as the overall focus on infrastructure development, employment generation and skill development and development of religious tourism centres are the silver linings which will help the sector to tide over some of the critical challenges that it faces today.

A visually upset and disappointed Indian Association of Travel Operators’ (IATO) President Rajiv Mehra shared that multiple recommendations with regards to boosting inbound tourism given to the Government seem have been totally ignored or not taken up. “It hurts more as the Government’s stated objective is to give a boost to employment generation and there is no industry that comes closer to it in terms of the potential of employment generation.” 

Rikant Pittie, Co-Founder, EaseMyTrip, opined that the Government’s efforts to promote religious tourism and domestic tourism infrastructure is a welcome step. “With special focus on Bihar and Odisha, the Government plans to develop the iconic religious sites to support its infrastructure and transform them into world-class pilgrim and tourist destinations. We are optimistic this will enhance the overall experience of the tourists visiting these religious sites and will uplift the state tourism,” he shared. 

Additionally, he added, that the Government has shown interest in simplifying taxation in cruise business by proposing a presumptive taxation for cruise ship operations in India. “This initiative aims to encourage foreign cruise owners to operate in India, thereby providing a significant boost to cruise tourism in the country,” he felt. 

Agreeing with Pittie was Aloke Bajpai, Chairman, Managing Director & Group CEO, ixigo, “The Government’s policy initiatives to enhance spiritual tourism are a welcome move towards growing domestic tourism as well as making India a global travel destination. We saw a 40-50 per cent increase in demand for spiritual tourism last year, for destinations like Varanasi, Ayodhya and Tirupati. The PRASAD scheme has led to a remarkable transformation in Varanasi’s tourism sector, attracting an unprecedented 100 million visitors to Kashi Vishwanath Dham after the corridor project completion.” 

A similar sentiment was shared by Anuj Rathi, Chief Business and Growth Officer, Cleartrip. “Today’s budget announcement is a welcome move that promises to strengthen India’s position as a global hub for spiritual tourism. The continued investment in developing corridors will create a multiplier effect, stimulating the local economy and generating job opportunities. This initiative will add to the momentum that the industry gained from the Ayodhya boom earlier this year. The enhanced focus on infrastructure and road connectivity will make travel, especially road transportation, more accessible and affordable. These initiatives will further bolster India’s status as a premier travel destination facilitating economic growth,” he felt. 

MakeMyTrip Co-Founder and Group CEO Rajesh Magow too felt the Government’s continued emphasis on infrastructure development is commendable. “Enhanced road infrastructure will bolster the travel and tourism sector. We welcome the initiatives to develop iconic spiritual and cultural sites into world class tourist hotspots,” he said, adding the decision to reduce the TDS rate on e-commerce operators to 0.1 per cent is a welcome move. Furthermore, the provision of credit for TCS against income tax under ‘Income from Salaries’ is logical and provide much desired relief to taxpayers who travel internationally, he felt.

On the educational front, the Government’s allocation of Rs 1.48 lakh crore for education, employment and skilling, including training 20 lakh youth and upgrading 1,000 institutes, has been considered as a significant step forward. “For those pursuing vocational routes, this is a major win. It will help people develop practical skills and excel in their fields, bringing more youth into the formal economy. Additionally, with manufacturing bases in or near districts, there’s less need to migrate to cities, reducing mobility. Such initiatives are crucial for hyper-local job creation and boosting the manufacturing sector, driving India towards becoming a $10 trillion economy in the next 7-10 years,” said Kunal Vasudeva, Co-Founder & Managing Director, Indian School of Hospitality. 

The Union Budget’s provision for ₹10 lakh education loans with interest relief for higher education in India is a big win for those pursuing the academic route. “Given our low gross enrolment ratio, these loans will make quality education more accessible, allowing students to choose institutions of merit. This embodies Sabka Saath, Sabka Vikas, fostering inclusivity from the ground up. By enhancing local education opportunities and increasing our GER from 26 per cent to at least 40 per cent in the next five years, we can cultivate a skilled, competent and agile-thinking workforce. This workforce is essential for job creation, manufacturing growth, and meeting the workforce needs across various sectors, supporting Made in India for India and Made in India for the world,” he opined. 

Jehangir Aibara, Director at hospitality consultant Mahajan & Aibara, shared that the Union Budget 2024-25 has made a commendable effort to focus on areas of employment and skilling in the hospitality industry including doubling of the budget allocated to the Integrated Development of Tourist Circuits under the Swadesh Darshan 2.0 scheme from Rs 818 crore to Rs 1,750 crore. “In addition, spiritual and cultural tourism in Bihar and Odisha are expected to benefit from several developments under the proposed budget,” he said. 

However, despite significant government emphasis on tourism, primary concerns of the hospitality industry regarding the granting of infrastructure status and the rationalisation of GST were unfortunately not addressed in the budget, shared Aibara, adding, “The overarching focus of the budget on the themes of employment, skilling, MSMEs, and the middle class aligns with the government's bottom-up development strategy aimed at sustainable growth. While hoteliers might view the budget with some disappointment due to the lack of direct incentives, a patient approach may be a more realistic as these foundational improvements should set the stage for long-term benefits, while the industry lobby works towards its long-awaited targets.”