Budget 2024: Tourism, Hospitality Sector Disappointed As Demands Remain 'Unaddressed'

Industry participants in the hospitality and tourism sectors are disappointed with the Union budget 2024—despite announcements on developing tourism in states such as Bihar and Odisha—as many recommendations remain "unaddressed" by the government.

“We are totally disappointed with the budget announcement. We had given multiple recommendations with regards to boosting inbound tourism, but they seem to have been totally ignored or not taken up,” said Rajiv Mehra, president, Indian Association of Tour Operators.

Aashish Gupta, consulting chief executive officer at the Federation of Associations in Indian Tourism and Hospitality, concurred. “There was a potential for this budget to address a lot more opportunities for growth in Indian tourism in a structured manner.”

Gupta had expected announcements around providing infrastructure status support to hospitality, abolishing tax collected at source on travel and reducing GST rates on tourism, travel and hospitality.

“Some key demands of tourism and hospitality to revitalise the sector, such as GST rationalisation, granting of infrastructure status and bringing ease of doing business and policy reforms, have not been considered in the budget once again, given the well-accepted multiplier effect of tourism on employment and the economy," said Pradeep Shetty, president of the Federation of Associations in Indian Tourism and Hospitality, in a post-budget note.

Weeks prior to the budget announcement, Shetty had told NDTV Profit that the government was looking into some of the demands made by the industry body that could be fulfilled going forward. In its pre-budget meeting with the Ministry of Finance, the industry body was expected to demand 'Infrastructure status' for hotels with a project cost of Rs 10 crore and above, including the travel and hospitality sectors under the concurrent list.

"There are chances that the government may seriously consider the removal of 18% GST (on room rates above Rs 7,500) and inclusion in the 12% GST bracket, which is also the need of the hour,” Shetty had told NDTV Profit.

As per the current norm, hotels charge a Goods and Services Tax of 18% on room rates equal to Rs 7,500 and above. According to FHRAI, there are serious issues with the implementation of this norm, as the rates in hotels are seasonal and very volatile. "And this norm only makes rooms expensive," said Shetty.

“I think what was missed probably was to give hospitality and tourism sector infrastructure status,” Sanjay Sethi, managing director and chief executive officer at Chalet Hotels Ltd., told NDTV Profit. “If that had been done, there would have been a significant investment opportunity in the hospitality industry going forward, which would also create jobs and lots of foreign exchange earnings for the government,” he said.

Finance Minister Nirmala Sitharaman announced a slew of measures for the tourism sector while presenting the Union budget 2024–25 in the Lok Sabha on Tuesday, including the development of the Vishnupad temple corridor and the Mahabodhi temple corridor in Bihar to make them world-class tourist destinations.

Rajgir will also see a comprehensive development initiative that will be undertaken, she announced. The development of Nalanda as a tourist centre, besides reviving Nalanda University, will also be undertaken. The announcement also ushered in some gains in the shares of hotel majors in today’s session. However, they were not enough for industry bodies.

Apart from Bihar, Odisha is also expected to see a boost in tourism, considering its varied culture, nature and wildlife.