Budget 2024: Travel industry seeks infra status for hotels, measures to drive domestic tourism

Budget 2024 wish list of travel and tourism sector.

The travel industry is hoping for infrastructure status, rationalisation in Goods and Services Tax, modifications to Leave Travel Allowance (LTA), and incentives to boost local destinations from Budget 2025.

The infrastructure status for the hospitality industry will increase branded hotel supply at lower costs, said Aashish Gupta, Consulting CEO, Federation of Associations in Indian Tourism and Hospitality (FAITH).

The country currently has 170,000 branded hotel rooms and there is a need to have 3-4x of the rooms at present, said Federation of Hotel and Restaurant Associations of India (FHRAI), President, Pradeep Shetty who is batting for infrastructure status for the industry who added that infrastructure status should be granted so that more hotels can come up.

"Extended industry status to the hospitality industry along with enabling provision of affordable-rate infrastructure funds for the private sector would go a long way for large scale developments," said Tejinder Gupta, Partner, Grant Thornton Bharat.

Hotel companies have thrived post-pandemic, driven by strong demand boosting occupancies across all segments. Travel companies have also seen strong growth as Indians have increased the number of trips they take in a year from one long trip earlier to multiple shorter trips in the post-Covid phase.

The World Travel & Tourism Council (WTTC) 2024 projects that travel and tourism will contribute almost Rs 21.15 trillion to the India’s GDP in 2024, 21 percent above 2019 levels. With jobs predicted to increase by 2.45 million this year, this represents one in every 11 jobs in the country.

To transform India into a destination of choice, Madhavan Menon, Executive Chairman, Thomas Cook (India) Limited (Thomas Cook, SOTC, Sterling Holidays and TCI) said, Leave Travel Allowance (LTA) exemption annually, against twice in four years will catalyse domestic tourism.

The interim budget of February 2024 had already set a positive roadmap, with substantial increases in budgetary allocations for the tourism ministry, highlighting a clear focus on enhancing tourism infrastructure. This approach aims to boost domestic tourism and create new job opportunities, said Nishant Pitti, CEO and Co-Founder, EaseMyTrip.

Initiatives like 'Swadesh Darshan" and infrastructure development at tourist destinations can increase domestic tourism, potentially impacting the sector by Rs 10,000-15,000 crore, pointed out Balasubramanian A, Senior VP at TeamLease Services. "This could lead to significant job creation in hotels, restaurants, transportation, and other tourism-related services."

The government must create awareness about less-visited places for tourism purposes to reduce the excess burden of tourists at already popular places, said Rama Mahendru- Country General Manager- India, Intrepid Travel.

He added that inbound international travel has grown in the last decade in India and has huge potential. "It will get a further boost with the support of the upcoming budget that prioritises the necessities, such as hygienic public spaces and increased security awareness, to guarantee that foreign guests have a great time."

Balasubramanian noted that simplified visa processes and targeted marketing campaigns can attract more foreign tourists, potentially doubling tourist arrivals within five years.

Overall, rating agency ICRA expects robust revenue growth of 11-13 percent for the Indian hotel industry in FY25. Overall, the tourism sector is anticipated to sustain its momentum and grow significantly in FY25.

Shikhar Aggarwal, Joint Managing Director of BLS International Services Limited said that the past few years have underscored travel and hospitality sector's resilience and adaptability. "We are optimistic about the sector's potential. We firmly believe that strategic government support is crucial to fully harnessing this potential," he said.