Interim Budget: Indians are on a wanderlust, willing to explore more and more local destinations as India’s aviation and railway infrastructure has grown in the past decade and increased connectivity to far-flung areas. The rising SUV sales too point at poeple willing to buy bigger cars so they can drive to nearby destinations. But lack of good accommodation, overpriced hotels or poor services often inconvenience tourists. Indians have started vacationing more which is putting strain on the limited tourism infrastructure.
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The new trend of religious travel will further make India’s tourism infrastructure look wanting. The number of visitors to Varanasi has grown manifold since the construction of the Kashi Vishwanath corridor. ET has reported that 7.16 crore people visited Varanasi in 2022 and 2.29 crore in 2023 from January to May, The number can grow further. Ditto for Ayodhya and many other religious destinations. Domestic tourists numbered 677 million in 2021 and grew to 1,731 million in 2022, ET has reported. The number is expected to grow manifold.
The trouble with tourism
While tourism is booming, the tourism industry is struggling to expand which results in unsatisfactory services and poor infrastructure but high prices. Hotels have witnessed new highs in occupancy and room tariffs not just in metros but also in smaller cities and towns. It, however, is wary that issues such as long-term funding accessibility, high GST rates, talent acquisition and complex business processes could spoil the party.
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While all these problems become barriers to growth for the industry, they lead to travel experience which dos not come up to expectations.
The government has promoted tourism in recent years with ambitious schemes such as Swadesh Darshan, PRASAD and promotion campaigns like Dekho Apna Desh. Recent efforts by Prime Minister Narendra Modi to promote Lakshadweep as a tourist destination were welcomed by a lot of celebrities as well as common people. But the question of quality infrastructure and services rises again.
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What Sitharaman can do for tourism in Budget 2024
Finance Minister Nirmala Sitharaman is all set to present the interim budget on February 1, and the tourism and hospitality sector has high hopes from her. Due to growing domestic tourism, the industry wants more helpful government policies to cater to the rising demand with quality infrastructure and services.. One major demand is to grant infrastructure status to the tourism and hospitality industry.
“To encourage greater ‘Atmanirbharta’ or local investments, the hospitality sector is looking forward to hotels being accorded the status of an infrastructure industry on the lines of sectors like highways, ports, etc as hotels create key tourism infrastructure of tourist accommodation,” K.B. Kachru, Chairman Emeritus and Principal Advisor, Radisson Hotel Group South Asia, has written in ET. “Tourism is a state subject and the Central government is encouraging states to grant hotels the benefits offered to manufacturing industries. The benefits of an industry will allow hotels the advantages of lower utility tariffs, lower property tax, easier access to finance, softer loans, and ease of doing business thus reducing the cost of doing business significantly. This will reduce the gestation period for hotels and make the return on hotel investments more attractive.”
The industry has been clamouring for infrastructure status for decades. The status will enable hotel projects to have easy access to cheaper debt that is at par with projects in other industries. A reduced capital cost will have a bearing on both timely completion of projects and their overall financial health, which will lead to better services and infrastructure and, of course, competitive prices.
Hospitality and travel sector players have also demanded measures such as tax exemption on leave travel allowance (LTA) annually to boost domestic tourism. They also recommended removal of the current TDS levied on automated bookings for internal or closed user groups such as business travel platforms and reducing the total number of licenses required to establish a hotel.
The finance minister can offer other policy interventions that can boost investment in the sector. “A key step is improving the ease of doing business by reducing the number of approvals, licenses and classification-related issues required for hotel projects and hotel operations. Hotels are burdened not just with the requirement of a large number of licences but the process of acquiring the same is often tedious and very expensive. Creating a single window for all approvals with a timebound system of granting them will infuse efficiencies and economies for rapid hotel growth and development,” says Kachru.
Surely, Sitharaman can help you get more out of your vacation by offering these benefits to the tourism industry.
(With inputs from PTI)
