Impending Budget a Roaring Opportunity for Government to Usher in Long Term Positive Shift for Travel & Hospitality Segment
The tourism industry had to take one of its hardest hits in the year 2020, navigating through the uncharted waters but this also presents an unprecedented opportunity for long term transformation for the Indian Travel & Hospitality industry. Historically, the government has often partnered in several long-term positive shifts across sectors and introduced revolutionary measures to curb national crises from time to time. With this budget, the government can continue its efforts at the revival of the sector.
India’s economy, however, has shown resilience and is bouncing back much more quickly than anticipated, this is the right time to introduce long term policy reforms to transform the future of the Travel & Hospitality Industry. By the Q3 FY22, the sector is likely to get back to Pre-COVID levels and the impending budget could significantly speed things up for the sector.
One of the prime measures that the government can undertake, is to use this period as a leverage to promote domestic tourism like never before, as people try and overcome the fatigue brought on by the pandemic. Initiatives like extending and increasing the threshold LTA benefits for expenses incurred for domestic travels and stays can significantly aid in the recovery of all tourism allied industries all over the country.
The various sub-segments within the sector can also benefit tremendously if the government goes on to roll out incentives in the upcoming budget such as sector specific sops. Steps like reduction in GST slabs to increase profits, waiver/normalization of various license fees to provide much needed fiscal relief, sector specific stimulus package for upcoming avenues with long term potential such as wellness and holistic healing (with several measures such as interest support by government, additional funding by lenders, etc.) can lead to a great boost.
A pivotal spectrum of the industry, that has taken the hardest hit in the last year is Business Travel & Hospitality (viz., marriages, etc.). Due to rigid social distancing and work from home, large scale gatherings have been nowhere close to previous numbers and a special relief package for the Meetings, incentives, conferences, and exhibitions (MICE) events would significantly aid hotels all over, that lost out big time on their corporate revenues. Tax exemption on the same could also turn around figures for the segment in the year 2021. However, these measures have to be rolled out in close coordination with the vaccination drive and a keen eye on new infections.
While 2020 was a year of caution, there is a steady uptick in hotel occupation being witnessed throughout the country. Leisure travel destinations can be cross promoted by the government, by enhancing liquidity support. Hospitality focused AIFs with benefits like tax holidays, etc are some incentives that can revive the segment and stir great demand within the country.
The government can also cash in on several new age offerings that are likely to take precedence in the coming years and give them an early push to aid the sector. Several emerging trends such as staycations to unwind on a quick holiday, a spike in destination weddings creating an alternate source of revenue generation for resorts, an increased interest in heritage tourism, and a rising international interest in ancient Indian healing practices like Ayurveda can be encouraged in the impending budget to promote local tourism.
Lastly, the sector provides huge employment opportunities and contributes greatly to the GDP, and a significant step by the government can make is the much-anticipated decision of including travel & tourism in the RBI Infrastructure lending norm criteria for access to long-term funds.
Even though the segment took a huge hit amidst the pandemic, the industry has the capacity to contribute tremendously to Aatmanirbhar Bharat and revive the economy and create new opportunities. With active vaccination rollouts and a steep decrease in the number of corona cases in every corner of the country, the Indian Travel & Hospitality is all set to make a comeback with a bang, and in turn benefit the larger ecosystem, with active support from the government.
