Finance Minister Nirmala Sitharaman is all set to present the Union Budget 2021 on February 1, and all eyes are set on her. The hospitality industry will especially be watching her speech with feelings that are likely to swerve from between hope, anxiety and trepidation.
This sector bore the hardest brunt of the pandemic and subsequent lockdowns. It is still battling cash flow challenges, even as most hoteliers are trying their best to revive business operations.
Vikram Cotah, COO of GRT Hotels & Resorts tells Vinita Bhatia that players in this segment are hoping for growth-oriented policies, lower tax rates and favourable compliance measures in the upcoming Budget. More than that, he is rooting that the Finance Minister awards the sector an industry status.
The reason? Once they get the status, eligible hoteliers can avail of industrial rates for power and water supply, get rebates in property taxes and also be charged industrial rates for additional floor space index (FSI).
What fiscal announcements are you hoping for in the Budget?
For several years now, the industry has been requesting for an infrastructure or industry status to develop tourism in the country and make it attractive for investors. Currently, hotel projects worth over INR 200 crores are given this status, but these usually comprise top-end luxury properties.
The hospitality segment is promoting domestic tourism as per government guidelines. Hence, mid-sized hotels are required not only in the major metros but also in other tourism circuits. If the Finance Ministry gives an industry status to hotels with an investment starting from INR 25 crore, excluding land, more players would be keen on investing in the business.
How will the granting of this status benefit the sector at large?
If the sector is given an industry status, the tax benefits would help hotels avail long-term loans with a repayment schedule of up to 25 years. This is especially crucial for an industry that is known to have long gestation periods.
The allocation of this status will also allow hospitality establishments to benefit from electricity and water charges as well as property, development and non-agricultural tax at industrial rates, which is currently enjoyed by sectors availing this status.
And how will this be an advantage to your brand in particular?
GRT Hotels was poised to expand its footprint in all four major states of southern India. This abruptly came to a halt due to the pandemic and lockdowns, which also affected the cash flow.
An industry status will give our brand the much-needed push to expand into smaller towns. This, in turn, would boost domestic tourism in these regions, giving an impetus to the country’s overall economy.
