Since March 2020, India’s travel and hospitality sector has managed to survive on the domestic-demand driven economy. Amruda Nair, Director of Araiya Hotels and Resorts believes that hoteliers are fortunate that India as a country has a robust domestic market that is large enough to sustain the tourism industry until international travel returns.
This also underlines why it is critical that intra-travel is not only supported, but encouraged. “This would mean support across the sector in terms of access to capital for the creation of new or upgradation of existing hotel assets, liquidity to the travel trade and tax incentives for promoting domestic business as well as large scale infrastructure investment in the form of airports and roads,” she elaborated.
THE RIGHT CONNECT
Five years ago, the government had introduced the Ude Desh Ka Aam Nagrik (UDAN) initiative to connect smaller towns and cities to the wider domestic air travel network under its Regional Connectivity Scheme (RCS). This programme was meant to democratise air travel by making it accessible to unserved and underserved cities. The plan was set up new airports as well as heliports and water aerodromes and boost regional connectivity across second and third tier cities and towns.
However, less than 450 of the 948 awarded routes are currently operational under this scheme. Nair hopes that added impetus to this initiative will give domestic tourism the fillip it desperately needs.
“About 23 airports were completed by December 2021 based on market demand for routes. The scheme is well underway to boost traffic to underserved or even unserved airports in smaller towns. The addition of as many as 1,000 new routes has the potential to transform domestic tourism by making it both affordable and convenient,” she stated.
STATUS QUO
Access to capital has always been a key concern for the hospitality sector given the high initial capital requirement as well as the long gestation period involved in projects. Moreover, the current volatility in the market due to the pandemic as well as the restricted trade due to lockdowns, curfews and limitations on capacities has put further strain on an industry that was already struggling.
For long, this sector’s primary ask from the government has been recognition of hotel assets as infrastructure and inclusion in the concurrent list. This change in status would provide more runway for repayment that is in line with the industry’s shifting cash flows.
“Infrastructure status and inclusion in the classified list has been a longstanding ask from the industry as it would mean longer tenures for repayment as well as lower borrowing rates,” Nair said. “My father, Vivek Nair, who is a veteran in the hospitality industry has been a strong proponent of favourable tax and fiscal policies given the tremendous potential that the tourism sector has to not only generate employment but also have a multiplier effect on the economy.”
