The Federation of Associations in Indian Tourism and Hospitality (FAITH) has been maintaining that the hospitality and tourism industry needs a clear, and shared, vision at the state and centre level. What is also needed is a national body that regulates and enables the travel and hospitality industry in troubled times.
This sector is the second largest contributor to India’s GDP and employment growth, after the IT industry. Sarbendra Sarkar, Founder and MD, Cygnett Hotels and Resorts tells that this is one chief reason to grant it an industry status in the upcoming Union Budget. Such a move will help the segment become better organised and well-prepared to deal with future calamities.
For long now, hoteliers have been demanding tax cuts. Do you expect that to come through in the Union Budget 2021?
The hospitality business has taken an epic fall during the ongoing pandemic, and we have not received much support from the administration so far. We expect the government to announce a concrete set of measures in the Union Budget to help the sector overcome these challenges.
More specifically, we are looking forward to thoughtful tax relief measures. This includes lowered GST rates on hotel room tariffs.
Moreover, we look forward to an increase in spending on infrastructure. Right now, our domestic destinations could really use a boost, keeping in mind the need for clean and hygienic spaces. We also hope for better connectivity between destinations to promote tourism.
What measures can the Finance Minister, Nirmala Sitharaman, undertake to revive the industry?
You are right, revival is exactly what the industry is looking for right now. And the Finance Minister can address this by announcing various measures. To begin with a special stimulus package for the hotel sector will help hoteliers overcome the catastrophic financial challenges they are undergoing.
Additionally, a soft loan scheme can help them overcome working capital challenges. This can also assist in employee reinstatement in several properties. The government can, moreover, offer relaxation of interest on loans and moratorium on loan repayment.
Other steps that the administration can undertake is proffering tax relief and concessions on hotel stay for tourism purposes. The government can also implement programs or initiatives that encourage domestic tourism. It can boost domestic travel by encouraging customer spending.
The Central government had announced an INR 2.6 lakh crore stimulus package last November. However the hospitality segment did not fall under this ambit. How can the extension of such a package help hotels?
Of course we do! While the government announced relief measures and stimulus for many industries, hotels have not really been offered any support. As such, our expectation is that the government should announce a hotel industry specific package in the budget so that we are back on track. I want to highlight again that hotels are one of the biggest employers and are critical for the revival of the country’s economy. Thus, any stimulus would help the industry employ thousands of people and this will have a multiplier impact on the economy.
How can the government give a relaxation by the way of GST credit available for input cost, to be set off against output GST payable, especially for F&B services?
The government should consider allowing input tax credit for business travel stay at hotels for the meetings. Also, The MICE segment is crucial for getting the hotel industry on track. Considering that virtual exhibitions/conferences cannot replace face-to-face business interchanges, organizers must align with the evolved requirements and the government should look at incentives to aid revive MICE.
Many hospitality associations are demanding that the sector should be given an industry status. How will this benefit the business, in tangible and intangible ways? How will your brand directly benefit if the government consents to this demand?
As highlighted above, it is very important for the sector to be given “Industry” status. The state of Maharashtra has already awarded “Industry” status to Hospitality. We await for this to be made a national thing.
This will not only help hotels get access to long-term funds for expansion, but also make them eligible to be charged at industrial rates instead of the commercial rates that are currently applicable, whether it is power supply, water supply, taxes and dues. Also, for additional floor space index (FSI), establishments will be charged at industrial rates. This in turn can attract more investors.
