Budget 2024: Hotel sector fights for industry status, GST cut, cites significant contribution to GDP and currencies

The hotel sector should be given industry status in the upcoming Union Budget to boost growth, senior sector executives said. Live mintThe sector made a “significant contribution” to the country’s gross domestic product (GDP), is labour- and capital-intensive and generates foreign exchange earnings, they stressed.

“The industry’s significant contribution to GDP, employment and foreign exchange earnings makes it deserving of such recognition. The industry cannot grow sustainably without an industrial status that helps drive its growth,” said Anarock Group Chairman Anuj Puri Live mint.

Last month, at a pre-Budget meeting with Finance Minister Nirmala Sitharaman, Confederation of Indian Industry (CII) president Sanjiv Puri, chairman and managing director of ITC Ltd, also suggested that the sector be given an “industry” tag.

Later, the Federation of Hotel and Restaurant Associations of India (FHRAI) also approached the government requesting to grant infrastructure status to hotels of all categories.

Sanjay Sethi, Managing Director and CEO of Chalet Hotels Limited, said the industry status “will provide a significant boost to companies as they reinvest in the sector.”

The directors also said the central government should reduce the goods and services tax (GST) on the sector, allocate more funds for skill development and introduce incentives to invest in sustainable tourism.

Currently, different services in hotels and restaurants attract different GST rates. FHRAI said a rate of 12 per cent should be imposed on all categories.

Anarock’s Puri also said the budget should emphasise on tax cuts, faster development and improvement of infrastructure, especially in emerging tourist zones, and significant improvement in tourism promotion.

“To further boost local and international tourism, the industry needs airports and immediate attention should be paid to their modernization. In addition, regulatory processes related to the hotel industry need to be urgently improved,” he said.

Sethi of Chalet Hotels said that to ensure the long-term viability of the sector, it needed to be encouraged to invest more.

“Advantages such as lower utility rates, reduced property taxes, easier access to finance and more favourable loan terms are key to reducing the cost of doing business, ensuring long-term profitability of the sector and consequently, greater investment in the sector will support job creation,” he noted.