Hospitality experts voice their opinion on the recently announced Union Budget 2020. Here’s what they said
Finance Minister, Nirmala Sitharaman presented before the nation the most-awaited Union Budget for FY20-21 and also laid out effective plans and reforms to reverse the impact of global economic slowdown. While the budget overall had measures directed towards boosting the income of people and enhance their purchasing power through tax relief, it also introduced new measures for women welfare, education, real estate, manufacturing and agricultural sectors amongst others.
For tourism and hospitality sectors, The Union Budget 2020 largely laid emphasis on development of various sectors including transport, aviation, tourism and majorly infrastructure. The allocation of INR 2500 crore towards tourism development in the budget will give the much-needed boost to the tourism industry. With INR 1.7 lakh crore being allotted for transport infrastructure in terms of expansion of highways, new Tejas trains and 100 more airports getting announced, will enable seamless travel between tier II and urban cities. The initiatives to develop 5 new smart cities as well as building archaeological sites with on-site museums will open new avenues and experiences for visitors and boost travel. Besides, the Economic Survey has projected an economic growth of 6 - 6.5 per cent in the next financial year starting April 1.
However the failure to grant infrastructure status to the industry, allotment of tourism promotion fund, single-window clearance for all approvals and licensing and reinstatement of Input Tax Credit in GST were few of the issues that were left unaddressed.
Here’s a detailed look at how the hospitlaity industry reacted to the recently announced Union Budget 2020:
Vineet Verma, CEO Executive Director Brigade Hospitality Services Limited
Considering the budget was going to focus on tourism this time around, it piqued my interest. With the allocation of 2,500 crores in the tourism budget, and the State governments being requested to develop tourism roads maps, which the centre will support is very encouraging. For tourism is one of the largest employment generators and has the potential to place India among the top 5 tourism destinations in the world, the announcements made at the Union Budget will have a significant impact on the overall growth of the sector. And, we welcome the move to identify and develop new destinations but it is critical that we also focus on improving connectivity and infrastructure at our existing locations.
Satyen Jain, CEO, Pride Hotels Ltd
Over the last few weeks, the government has been actively engaging with industry and other stakeholders and has been proactively announcing measures to revive the economy. The industry has the potential to bring foreign currency revenue and create a lot of employment. In the previous year, the government had cut GST rates. They could have done a little more in this budget to match rates of 8-10% flat for all hotels whether they charge below or above Rs. 7500 to match other small countries who are attracting more international tourists than India.
The allocation of INR 2500 crore towards tourism development announced by FM Nirmala Sitharaman will give the much-needed boost to the tourism industry. Additionally, the plan to set up 100 new airports in the country along with the allocation of Rs. 1.7 lakh towards transport will uplift the domestic infrastructure to meet the global benchmark. Moreover, INR 9000 crore assign for the roads to key heritage sites will spur consumption growth. One aspect that has been ignored in the budget is granting infrastructure status to the industry. Today hotels with less than 200 rooms are not considered as infrastructure. The infrastructure industry gets benefits of concessional rates of interest from banks which is not available to the hotel industry. The current interest rates are very high and long tenures are not available to support the creation of new hotels. A tourism promotion fund could have been created to lend hotel loans at 5-6 % per annual for a long tenure of 15-18 years.Lastly obtaining multiple licenses is the biggest difficulty faced by the hospitality sector. The industry expected a single-window clearance for all approvals and licensing that makes day to day workings less complicated. However, this remains unaddressed in the budget.
Vijay Dewan, Managing Director, Apeejay Surrendra Park Hotels Ltd and Chairman of CII West Bengal State Council
It's a balanced budget, where government has taken measures by allocating INR 2,500 crore for tourism promotion in FY21 in order to support the Incredible India initiative. The vision of government to invest in the tourism sector will be a great push for the hospitality sector. India's heritage and culture rich experiences have always attracted tourists to the country and government's plan to develop five archaeological sites at iconic sites with on-site museums will attract more tourists from India and globally. The plan to develop 100 new airports will significantly help in building tourism infrastructure and will drive tourism growth.”
Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
While the budget overall had measures directed towards boosting the income of people and enhance their purchasing power through tax relief, it has some specific measures for the real estate sector too. The budget announced the initiative to develop five new smart cities in collaboration with States in PPP mode. This is a welcome move and will enhance the real estate prospects. It strengthened the commitment to affordable housing, which is the government’s focal point for real estate. The previous tax exemptions for both homebuyers and developers have been extended for another one year. Personal tax relief across various income slabs will invariably increase disposable income at the hands of the middle class, and boost their consumption capabilities.
While not giving direct benefits to residential real estate as a whole, the budget has laid more focus on alternative segments within real estate – such as warehousing, data centres, schools, hospitals and hospitality. Plans to build Data Centre Parks across the country will boost demand for more real estate spaces. Simultaneously, plans to develop 5 archaeological sites will open new avenues for employment and also indirectly push real estate development. Infrastructure development has been a top priority for economic growth and will have a major multiplier effect on not just the overall economy but on the real estate market as well.
We were also hopeful that the budget would chart out fresh stimulus in terms of bold fiscal measures for real estate sector to outperform its growth traction. We had certain expectations from the government from this budget which have not been fulfilled which includes our demand for Industry status, single window clearance and reinstatement of Input Tax Credit in GST. There was significant expectation to cut GST rates to a single, standard rate, and not have multiple rates or taxes. It seems the entire focus of the government was on the latter while undermining the importance of real estate to the economy.
Roop Pratap Choudhary, Managing Director, Noor Mahal
This budget is certainly a booster for the promotion of India’s heritage, tourism, and rich cultural diversity. We welcome the move of the Finance Minister towards the creation of a robust infrastructure by announcing the development of more than 100 airports till the year 2025. This will allow the new and offbeat destinations to emerge and grow at a faster rate. Announcing Rakhigarhi, Haryana amongst the five archaeological sites with on-site museums would also put Haryana now on the map of the international travelers. This will further strengthen Haryana’s position on both the Inbound and Outbound tourism stage. Planned electrification of 27,000 km of tracks and more Tejas like trains on the cards to connect iconic destinations will certainly inspire new tourism concepts and avenues. Completion of Delhi- Mumbai expressway along with the other projects would also boost tourism going forward and will enhance travel and tourism frequency and comfort between North and West India. Although a more liberal and reasonable investment and loan framework were expected from this budget. In the near future, we expect a more flexible and tolerant financial environment from the government to give small hospitality players to explore more growth avenues.
JB Singh, President and CEO, InterGlobe Hotels Private Limited
The Union Budget 2020 largely lays emphasis on development of various sectors including transport, aviation, tourism and majorly infrastructure. With INR 1.7 lakh crore being allotted for transport infrastructure in terms of expansion of highways, new Tejas trains and 100 more airports getting announced, we expect seamless travel between tier II and urban cities. The initiatives to develop 5 new smart cities as well as building archaeological sites with on-site museums will open new avenues and experiences for visitors and boost travel. With infrastructure being at the core for economic growth, we are hoping that this budget will help in creating and developing new and iconic destinations, thereby redefining the tourism industry, for the better and further improve spending, domestic travel and all this will have great long term benefits for the economy.
Sonica Malhotra, Joint Managing Director, MBD Group
It is a holistic budget which caters to all segments of the economy primarily education, health & women welfare, infrastructure & agriculture. What is heartening to see is that the government has put a lot of emphasis to boost the tourism sector. Announcement such as development of archaeological sites and world class museums at five identified sites and allocation of INR 2,500 for tourism promotion will not only further enhance the country’s ranking on the Tourism Competitive Index but will also generate huge employment opportunities and give a big boost to the spread of our rich culture and heritage all across the world. Also, the development of 100 more airports under UDAN scheme by 2024 and construction of 12 more highways will further boost connectivity and provide significant boost to the tourism and hospitality sector.
Jaideep, Ghosh, Partner, Travel, Hospitality and Leisure, KPMG in India
Continued emphasis on investments in transport infrastructure, education and digital areas would boost tourism and hospitality sector, which currently faces challenging economic situation. Grants to states for specified tourism initiatives, development of heritage sites and museums are welcome steps. Would expect the investments proposed in tourism, however, to be upped in the coming years.
Sarbendra Sarkar, Founder & Managing Director, Cygnett Hotels and Resorts
The government's push for infrastructure development by building more airports and as also the announcement of new Tejas trains will boost tourism outside the main centers. This, in turn, will have a positive impact on the hotel sector. We are building hotels in many new locations and with this kind of infrastructure development we will surely be a gainer.
Pushpendra Bansal, COO, Lords Hotels and Resorts
Presently, hoteliers have to run from pillar to post in order to obtain the required licenses and registrations. Single window clearance for licensing should be introduced to promote ease of doing business. Allocation of INR 2500 crore for tourism industry will definitely help in development of infrastructure which is need of the hour. GST should be reduced further on room tariffs to encourage more inbound and outbound tourism mainly for FIT's.
Preety Arora, Head Business Strategy, Amatra Hotels & Resorts
Budget has given the Indian hospitality sector the requisite boost by its initiative of developing museums in five archaeological sites. This would aid in creating the much needed social infrastructure around these locations and boost employment opportunities as well. New properties and resorts will come up in these locations and cater to these travelers. Also, the allocation of INR 2,500 crore for tourism promotion in this fiscal would abet in attracting domestic and international travelers to various locations in India. These initiatives would surely give the much-needed push to the Indian Hospitality & Tourism sector.
Pranav Maheshwari, Co-Founder at Vista Rooms
The budget definitely provides a holistic approach to the tourism sector. The expectations were quite high in terms of further GST reduction but the union budget has completely neglected it. The positives would be the initiative to develop 17 iconic tourism sites into world-class tourist destinations resulting in more foreign tourists, benefitting the hospitality sector as well as other stakeholders of the industry.
Also, the proposed transport and social infrastructure backed by digital platforms will further boost tourism. The steps to promote the rich tribal heritage and its culture will encourage tribal arts, crafts, fashion and architecture leading to generating better revenues and presence on the world map. The tax burden on employees due to tax on employee stock options to be deferred by 5 years or till they leave the company or when they sell, is good but it would be only applicable to successful startups. This is something which startup community has been asking for complete abolition till the exit.