Expect More Reforms For Hospitality Sector In Upcoming Budget, Says FHRAI President

The hospitality sector expects more reforms from the upcoming Union Budget in July, as Prime Minister Modi's third term is likely to intensify its thrust towards travel, tourism and hospitality.

According to Pradeep Shetty, President of Federation of Hotel and Restaurant Associations in India, the government is seriously looking into some of the demands made by the industry body that can be fulfilled going forward.

FHRAI is meeting with the Ministry of Finance on June 25 for pre-budget consultations for the sector, Shetty told NDTV Profit in an interview. "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."

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.

Other major demands of the industry body include obtaining 'Infrastructure Status' for hotels with a project cost of Rs 10 crore and above, and including the travel and hospitality sectors under the concurrent list.

The former will enhance growth and lending prospects for hotels across states and also in Tier-2 and Tier-3 cities, while the latter will help in better coordination between the Union and states to work towards the development of this sector.

According to Shetty, the government's focus on infrastructure and tourism, followed by interest in religious tourism, will continue to gather more tourists both in the country and overseas.

"The government has been focusing on attracting up to 100 million foreign tourists by 2047, and considering this, we are expecting more tourist arrivals, and more incentives will be given by the government."

According to the industry body, tourism is contributing intensively to the economic growth of the country, and hence, proper policy formation and implementation are required. Inclusion in the concurrent list will provide ease-of-doing business to both the centre and states for this sector, said Shetty.

Besides, domestic travel will continue to fuel growth in the sector. "Solo travel has also become very popular, especially among women, so more focus is on ensuring safety and security in the hotel premises."

In terms of how much AI has contributed to enhancing safety and security systems in the hospitality sector, the FHRAI President said that the use of artificial intelligence is still at a very nascent stage and is mostly used for reservation and data collection. However, it is expected to become a significant part of the sector going forward.

"Companies should capitalise on all these trends for better growth," said Shetty. "The room inventory is likely to grow to 2,35,000 from the current 1,78,000 by 2028. So, we foresee a golden period for the hotel industry in the next five years," Shetty said.