The growing technological advancements such as online travel portals, mobile app-based bookings, online payment tools have made it easier to book travel and accommodations. With continued government support, the tourism and hospitality sectors in India are now poised for exponential growth over the next ten years..
Tourism and hospitality are among the fastest-growingservices globally and India is notlagging considering the growthtrajectory. As of 2019, India hadwitnessed a growth rate of 3.5%compared to the global economicgrowth rate of 2.5%.
According to statistics available from the World Travel and Tourism Council, COVID-19had a negative impact on the tourism and hospitality sector globally with contributions to global GDP and employment decreasing by 49% and 19% respectively.
In the COVID era, countries across the globe announced several incentives andmeasures to boost the tourism and hospitality sector. India has also announced revivalpackages like collateral-free loans under the Emergency Credit Line GuaranteeScheme (ECLGS) and equity infusion through funds-of-funds for MSMES, extension ofloan moratorium and restructuring of medium and long-term loans.
All these initiatives have helped the tourism and hospitality sector in India to bounceback as the overall business is seen to be witnessing growth on account of the ever-increasing popularity of domestic tourism, domestic business travel, and resumptionof inbound foreign tourist and corporate travel apart from burgeoning social & MICEactivities.
The growing technological advancements such as online travel portals, mobile appbased bookings, online payment tools, etc. have made it easier to book travel and
accommodations. With continued government support, the tourism and hospitality sectors in India are now poised for exponential growth over the next ten years.
In spite of the future growth prospects, the tourism and hospitality sectors have their
own inherent challenges.
Lack of uniformity with regard to policy at the state level is restricting the sector frombeing granted an industry/infrastructure status and the approval-cum-licencing
process, particularly for hotels, remains a major concern.
Setting up a hotel is a capital-intensive project and requires higher institutional lending with a longer repayment period. Post-COVID, it has been observed that the cost of construction materials and labour has significantly increased leading to an increase in the overall capitalization of a project.
Further, the tourism and hospitality sectorshave to keep investing in newer technologies, upgrading facilities, life safety, skilling available manpower for multitasking, etc. to meet the demand of travellers for memorable experiences. The sector, therefore, requires long-term investment and as such the tourism and hospitality financing institutions arepushing an industry status and that the sector be declared as an 'infrastructure' sector.
The ongoing geopolitical conflict between Russia and Ukraine also has a cascading impact on both inbound as well as outbound tourism impacting the travel and hospitality sector directly. Added to it is the recent Israel and Hamas conflict that will also have a far-reaching impact on the tourism and hospitality sector globally.
Opportunities for Growth:
Honourable Prime Minister Shri Narendra Modi at a recently concluded G2o meeting of tourism minister held in Goa announced that the dictum of India's G2o Presidency is `VasudhaivaKutumbakam' - 'One Earth, One Family, One Future: Initiatives such as `Dekho Apna Desh, 'Namaste World' and 'Travel for Life' will further provide a boost to both inbound and domestic tourism having potential for employment generation and overall sectoral growth.
Throughout 2023 at the G20 Summit, 200 meetings across so cities have been conducted with the participation of world leaders and this series of events has provided growth opportunities for India's hotel sector not only in metro cities but also in tier II and tier III towns having rich historical and cultural heritage.
With stability on pricing, currently, hotel occupancy rates are seen to remain consistently high and as such the fiscal year 2024 is likely to be the best year for the tourism and hospitality sector with a projection for a growth rate greater than the pre-Covid era.
Budget 2023 has also highlighted tourism as a key sector for growth. The Ministry of Tourism is on a mission mode and is devoted towards promoting tourism through the convergence of various government programmes in collaboration with respective state governments. More than fifty selected destinations are currently under development through Public-Private Partnerships (PPP).
Considering the above-mentioned factors as opportunities for growth of India's tourism and hospitality sector, it can be summarized that the future prospect looks optimistic with immense potential for achieving sustained growth and investment opportunities. However, it will always remain important for the industry stakeholders to maintain reasonable pricing and uniformity with the objective of maintaining India's destination attractiveness to tourists while positioning India as a tourism hub in the global arena.