March 1, 2016 TnH Global 0

Indian government has shown good intent in endorsing the travel and hotel sector, says Saurabh Rai

The Indian government has shown good intent and commitment in endorsing the travel and hotel sector, says Saurabh Rai, Executive Vice President, Preferred Hotels & Resorts on Budget 2016-17.

The hospitality industry in India is at a peculiar crossroad situation this year. On one hand is India’s desire and ambition to be recognized as one of the foremost tourism economies in the world, and on the other are some very tangible issues that our industry has been facing for decades. These challenges have a direct impact on how much one is able to accelerate growth.

The Indian government has shown good intent and commitment in endorsing the travel and hotel sector. There is some expectation that the forthcoming budget is able to level a few long pending concerns like rationalization of high taxes in the sector. An over 25% tax situation for hotels in India hinders our destination’s competitiveness in the region. The objective is to deliver a 360 destination experience where all touch points are geared towards a consistent level of service delivery, at a competitive cost. This will impact the global perception of India as a desirable destination to visit, which will in turn drive international tourist arrivals and further propel domestic tourism spend as well.

Hotels in India have been suppressed for a prolonged period. Cyclicality has to prevail and government policies on taxation, lending rates plus duration and infrastructure status for hotels need to come through. India has been globally known to produce some of the most unique and exceptional hotel products and service standards, particularly in the upscale to luxury segments. The average rates at these hotels in the last 3 to 4 years have been below par. The equilibrium of charging a reasonable and acceptable rate is critical, one which should be fair to both the consumer and the business. The current Average Daily Rates do not represent a fair picture for the business; expectations to deliver an outstanding product at a deflated price point is not sustainable in the long term, and may fundamentally impact the entire business model.

There is much anticipation with this budget to bring about some real reforms and amended policies that will support the hospitality industry. This is the fuel that we need to take the industry to the next level and remain competitive internationally. Great hotels in India have been the flag bearers of tourism, and made the destination synonymous with exceptional guest experiences that come from genuine warmth and a willingness to serve. This needs to be supported by government policies to ensure that hotels in India have a platform to succeed.