After being battered by the COVID-19 pandemic during the first and the second wave, the travel, tourism and hospitality sector was beginning to see a flickering light at the end of a long tunnel towards the end of 2021.
However, the spread of the Omicron variant and subsequent extension of the suspension of scheduled international passenger flights till January 31, 2022, has come as a dampener to those who were looking to have some business in the winter season.
According to the industry body Federation of Hotel & Restaurant Associations of India (FHRAI), already 25 to 30 percent of establishments in the organised sector comprising around 60,000 hotels and 5 lakh restaurants have already shut shop and another 15 percent could follow suit if there is no impetus from the government to revive the sector.
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With inbound tourist arrivals unlikely amidst the pandemic, the industry wants the government to incentivise domestic travels with income tax benefits for a limited period so as to help the hospitality and tourism sector get up again by tapping the pent-up demand for holidays, within the country.
Here’s a look at the industry’s key budget expectations from union finance minister Nirmala Sitharaman:
Prahlad Krishnamurti, Chief Business Officer, Cleartrip: “Given that the sector has taken a heavy blow, some relief measures like travel and tourism to be treated at par with the IT sectors would help quickly revive business and propel the industry towards growth and progress.
Though Budget 2021 brought enhancements for public transport infrastructure, we are particularly looking for a proposal that talks specifically about the Indian travel and tourism industry’s short-term and long-term revival.”
Aloke Bajpai, Group CEO & Co-founder, ixigo: “Budgetary focus on the development of infrastructure, technology, and safety measures of existing and new airports in Tier 2 & 3 cities will help boost tourism by improving connectivity with those cities where trains or buses may be the only connectivity today. We are looking forward to the government strategising a sustainable long-term plan to help revive international travel which is currently disrupted by ongoing waves.
The introduction of innovative initiatives like the ‘sandbox schemes’ currently being followed by countries like Thailand and Indonesia will help India build a more resilient tourism economy going forward. We also expect the upcoming budget to allot incentives for domestic tourism and promote it within the country.
IT deductions on domestic travel and tourism spends will help incentivize tourism and boost domestic travel further. Tax breaks and waivers for the airline sector will also help aid faster recovery of the industry. Bringing ATF under the ambit of GST (which currently comprises 40-45 percent of the total operating cost of an airline) will bring much-needed relief to the aviation sector. “
Pallavi Agarwal’s, founder & CEO at goSTOPS: “goSTOPS expects a strong recovery for the hospitality and tourism sector, that is witnessing new consumer trends and patterns. The pandemic has surely created an itch towards shared experiences and facilities that are easy on the pocket. With domestic booking still on, there is a preference for off-beat destinations that offer local experiences with a sense of community.
With people pining for travel during the pandemic, drivable destinations for short weekend trips, staycations as well as workations that offer co-working spaces and high-quality internet continue to be in a rage. Venturing out of their comfort zone and seeking authentic experiences, solo travel among women is witnessing a welcoming increase.”
Manish Rathi, founder & CEO, IntrCity: “We are hopeful that in the forthcoming budget, stronger infrastructure initiatives will be incorporated into the National Infrastructure Pipeline. The mobility needs of smart cities will lead to the next wave of inter-city mobility growth and enable smooth connectivity with the nearest metro city, besides connectivity between those cities.
Better multiple boarding infrastructure in the city connected to SmartBus and digital booking will drive this growth and power the economic growth of these cities. Besides, they should also monitor the implementation of the All-India Tourist Permit for Commercial Vehicles, ensuring that it is accepted by all state RTOs.”
Pranav Dangi, founder, Hosteller: The prolonged effect of the COVID-19 pandemic on the overall hospitality sector has created a burden on small to medium-scale players to service their debt obligations. Ongoing pressure on such players to maintain high operational standards, as required in the hospitality industry, has pushed them towards higher operational costs and thereby leading to the inability to service their debts.
We feel, in the 2022-23 budget, the GoI shall create provisions to create liquidity for the travel & tourism industry, provide directions to the central bank to roll out low-interest working capital loan schemes, and expedite the paperwork process. This shall navigate the industry through the difficulties imposed because of the COVID-19 pandemic.”
PHD Chamber has suggested that tourism services provided to foreign tourists in India on receipt of foreign exchange should be treated as “Deemed Export” and exemption of GST should be made available.
To revive the consumer demand it suggested that all restaurant and outdoor catering services, irrespective of whether they are stand-alone or part of a hotel, should be zero-rated or in the least be subjected to GST at the rate of 5 percent with full availability of input credit.
