Home / COMMENT / Hospitality Trends / Game, set, and match

The ministry is working closely with the industry to develop policy level interventions and strategies to overcome existing challenges

The hospitality industry is poised for a more buoyant future, especially with the ministry having taken up the issue of single-window and time-bound clearance of projects, says Devesh Chaturvedi.

The last fiscal year has been full of challenges for the Indian hospitality sector. The global economic downturn had a major impact on the world tourism scenario, with international tourist arrivals worldwide growing at less than two per cent.

The impact of this economic downturn manifested itself on the Foreign Tourist Arrivals (FTA’s), as well as Foreign Exchange Earnings (FEE’s), for India also. Then, we had the unfortunate and dastardly incident in Mumbai. The hospitality sector did face the impact of these trends, with occupancy rates as well as average revenues earned witnessing stagnation or decline.

The FTA’s to India witnessed a declining trend since September 2008, and the annual growth rate was a modest 5.6 % in 2008 as compared to over 14 % in 2007.

November onwards, there was a negative growth rate observed, which continued till May 2009, and it was only in June 2009 that FTA’s registered a positive trend as compared to June 2008.

The future looks optimistic, as it is projected that these positive trends would continue and, in another year, we should achieve the same level of vibrancy of double digit growth rate which India had witnessed till 2007.

Story continues below

Advertisement

COMMENT Comment on this article

The ministry has been working closely with the stakeholders of the tourism sector to develop policy level interventions and strategies to overcome these challenges.

Promotional activities in the overseas market have been more aggressive, and the ‘Visit India Year 2009’ launched to attract more and more tourists, has started yielding results as is evident from the positive growth rate in FTA’s since June 2009. The hospitality industry today is more buoyant and confident about its future.

It is estimated that the shortage of hotel rooms in India is to the tune of 150,000, out of which 100,000 is in the budget category.

The overall shortage of rooms and lack of decent budget level accommodation at important tourist destinations, can lead to a situation wherein India is out-priced by other competing destinations.

While there is a need to augment hotel accommodation of all categories to cater to future demands, a special focus is on budget category accommodation so that India becomes attractive for high-end as well as budget tourists, as also the domestic tourists.

India’s outbound tourism figures are much higher than inbound, and cost has been one of the reasons for this, with lack of affordable accommodation a major contributing factor.

The government has taken several initiatives to develop budget accommodation in important destinations by announcing five-year tax holidays for hotels coming up in the budget category in the NCR region as well as World Heritage Sites (except Mumbai).

Furthermore, to give a boost to domestic tourism, roadshows are being organised in various regions of the country wherein tourism products of the region would be showcased, and there would be one-to-one business sessions established.