Budget 2024: Hospitality players seek infra status for hotels

BUDGET EXPECTATIONS | Hospitality industry advocates urge the government to classify hotels as infrastructure in the upcoming Union Budget. This move aims to boost investment attractiveness and move away from luxury or 'sin goods' categorization. They also seek incentives like tax breaks for eco-friendly practices, emphasizing tourism's potential as a driver of GDP and job creation.

"The sector is burdened with high taxation, expensive and multifarious licences, approvals and compliances. Hotels are capital intensive with a long gestation period. Cost of operating hotels is high and largely fixed. This makes investments in hotels risky. There is a need to make hotel investments more attractive with an improved rate of investment and to promote ease of doing business," Hotel Association of India (HAI) President KB Kachru told news agency PTI.

He emphasized that the upcoming Union Budget presents an opportunity to maximize India's hospitality sector contribution towards India Vision 2047 by redefining its policy perspective, shifting away from categorizing hotels as luxury or 'sin' goods.

Kachru highlighted that HAI's primary budget recommendation is for hotels to be classified as infrastructure by the Centre.

"This will allow them access to softer finances at better interest rates with longer periods for re-payment thereby attracting investment," Kachru was reported as saying.

Puneet Chhatwal, Managing Director and CEO of Indian Hotels Company Ltd, echoed similar sentiments, stating, "Granting infrastructure status to the sector will significantly boost investment, enabling it to catalyze India's ambition to become the third largest economy by 2027."

Chhatwal, also Chairman of CII National Committee of Tourism and Hospitality and Federation of Associations in Indian Tourism & Hospitality (FAITH), emphasized that the sector contributes approximately 10% of total employment in India and remains pivotal for economic growth.

"To unlock India's hospitality sector, which remains underserved when compared to the major lodging markets globally, the upcoming budget must accelerate the tourism agenda," Chhatwal said.

Sanjay Sethi, Managing Director and CEO of Chalet Hotels Ltd, emphasized that the hospitality sector, in addition to being a significant employer, demands substantial capital investments.

"Our long-standing demand for infrastructure status and industry benefits at the state level will only provide significant thrust to companies to keep reinvesting for the growth of the industry," he added.

Advantages such as lower utility tariffs, reduced property taxes, easier access to finance and softer loans are crucial for reducing the cost of doing business, ensuring the long-term viability of the sector and in turn, more investments in the sector will bolster job creation, PTI quoted Sethi as saying.

(PTI inputs)