India’s hospitality sector is optimistic about receiving infrastructure status, which would lower financing costs, along with a revamp of goods and services tax (GST) rates to keep pace with international standards. The implementation of a digital single-window system for hotel licenses and approvals, alongside efforts to enhance the skilled labor force, are also on the industry’s wishlist.
Stakeholders argue that the full potential of India’s travel and tourism sector is yet to be realized, especially given the noticeable deficit in hotel room availability compared to other countries.
Pradeep Shetty, spokesperson for the Hotel and Restaurant Association of Western India (HRAWI) and vice-president of the Federation of Hotel and Restaurant Associations of India (FHRAI), noted, “The hospitality sector is hopeful that the government will grant infrastructure status to hotel and convention center projects with a budget of Rs 10 crore or more.”
Shetty emphasized that offering industry status and related benefits nationwide would significantly enhance sectoral growth. These initiatives are crucial for India to attain its $1 trillion tourism economy goal by 2047, which would lead to increased employment and foreign exchange revenue.
K.B. Kachru, president of the Hotel Association of India (HAI) and chairman of South Asia for Radisson Hotel Group, stated that expanding the inventory of hotel rooms is essential to address the demand-supply imbalance. “Achieving the objectives for 2047 requires attracting international investments,” he explained.
Both Shetty and Kachru agree that this would provide long-term financing at more manageable rates, greatly benefiting small and medium-sized enterprises.
Another critical expectation is the rationalization of GST for hotels and restaurants, particularly a reduced GST rate on MICE (meetings, incentives, conferences, and exhibitions) for international segments and tourists.
HAI suggests lowering the 18% GST on hotel rooms priced above Rs 7,500 to 12%, which would enhance India’s appeal as a tourist destination while helping it compete with other Asian nations. Additionally, reducing GST rates for hotel restaurants to 12% with full input tax credit (ITC) would align them more closely with standalone restaurants, which enjoy a 5% GST rate without ITC.
Tejus Jose, director of operations at ibis and ibis Styles India, remarked, “This approach would allow us to manage current expenses better, increase capital investments, open additional restaurants, and ultimately drive job creation and revenue for the government.”
Dhruv Shringi, co-founder and CEO of Yatra Online, echoed this sentiment.
“We also call on the government to streamline GST compliance for online travel agencies with centralized registration, easing administrative burdens, and level the playing field with international competitors,” Shringi said.
Dharamveer Singh Chouhan, co-founder and CEO of Zo World and Zostel, suggested that creating public-private partnerships (PPP) or incentivized programs to develop new tourist spots could reveal the untapped potential of various regions. Offering affordable land or specialized schemes for tourism operators could diversify travel options and enhance the sector’s economic contributions.
Industry experts contend that establishing a digital clearance system for hotel licenses, no-objection certificates (NoCs), and approvals would significantly improve the business environment.
Moreover, the industry is still recovering from a slow influx of foreign tourists back to pre-Covid levels. Kachru noted that India sends out significantly more tourists on outbound trips than it receives inbound.
“Investing in infrastructure for tier II and III cities and strengthening global tourism campaigns, similar to ‘Incredible India,’ will further stimulate inbound tourism and encourage balanced regional development. These initiatives will empower the hospitality sector to be a key driver of India’s economic transformation,” Shringi added.
Avinash Chandani, partner at Deloitte India, observed that the recent depreciation of the rupee against the US dollar may lead to rising airline fares. He urged the government to explore subsidies or exemptions on aircraft fuel and emphasized the need to enhance the skilled workforce in the sector.
Rajan Bahadur, CEO of the Tourism and Hospitality Skill Council (THSC), remarked that increased investment in skill development, apprenticeships, and digital initiatives will equip the workforce to meet future challenges and seize opportunities.
“While great strides have already been made in these areas, there remains much work to fully harness the potential of this vibrant industry,” Bahadur concluded.