India's second-largest hotel chain ITC recently launched its 600-room behemoth ITC Grand Chola in Chennai. Speaking to T E Narasimhan, company's Executive Director Nakul Anand said though it might take some time to be at the 2007-08 levels, but the hospitality industry is optimistic. Edited excerpts:
How do you see the travel and tourism industry shaping up? Do you see any emerging trend?
Occupancy in the last two years was flat. Demand did not grow while supply grew. Occupancy was in the 60 per cent range. But in the last few quarters, we have seen some positive sign. I am optimistic about the future.
India's share in the global tourism industry is 0.55 per cent and must target, at least, one per cent and 12 million tourists. If a country like Turkey can get 15-16 million, why can't India? I also see the blurring of borders between leisure and business hotels. People who travel for business also want to relax at a spa. While people on leisure travel want to remain connected with work and the world, and hence, want to use business centres.
Major feeder markets like the US and Europe are yet to see recovery, where do you see travellers coming from?
True, these economies are yet to see recovery. But the good news is the industry is tapping new markets, especially in Asia. Besides, the extent of economic activity in India has not decreased. There has been a growth in travel albeit with compromise on hotel spends.
What will be the driving forces for this sector?
Outlook for the economy is positive and there is a direct co-relation between gross domestic product and tourism. The government also realises this and is taking steps to boost tourism. One segment that gets impacted when leading economies experience recessionary trends is a drop in the long-haul travel. This will, however, get partially offset by the weakening of the rupee vis-a-vis other currencies.
What are the bottlenecks and challenges for the industry?
We need to start developing and marketing new tourism assets that will help us to market the country to a more diverse group of global tourists. Better rail, air, road and hotel infrastructures is what will make travelling within the country not just possible, but also pleasurable. Also, the rising jet fuel prices has increased airfare, which has impacted domestic tourism.
The other major hurdle is the tax system. India’s cumulative taxes on the hotel industry varies from state to state and ranges from 20 to 30 per cent. In contrast, tax rates in hotels in countries such as Malaysia, Japan or Hong Kong are far lower, ranging between three and five per cent. So, there is a case to rationalise taxes.
There is also an issue of manpower availability. According to estimates, the industry would require around 300,000 people by 2020 in both skilled and unskilled category. There is lack of awareness about the career options available in this industry.