Union Budget 2024-25: Absence of incentives disappoints hospitality sector

The hospitality companies have expressed their disappointment over the lack of sector-specific incentives in the budget. While the promotion of spiritual tourism will help the sector, hoteliers say the sector should be recognised for its potential to create new jobs and help consumption.

“Promotion by the government will help the spiritual destinations, which is great. But we were expecting a little bit more. Not covering the overall tourism infrastructure is a missed opportunity because that would have created a significant amount of employment, investments, and foreign exchange earnings for the country,” said Sanjay Sethi, chief executive officer and managing director of Chalet Hotels Ltd.

Vishal Kamat, chairperson of the Confederation of Indian Industry (CII) Maharashtra and executive director of Kamat Hotels (India) Ltd., predicted more investments into tourism, citing the sector’s good overall growth, but expressed discontent as a representative of the industry. “As a person from the hospitality industry, I am quite sad. But we, as an industry, are used to it because we don’t get due recognition. The hospitality industry is a barometer of how the population is doing. Restaurant spending speaks a lot about individuals’ financial conditions. Though the industry is not benefiting, the government’s efforts seem to be in a positive direction. Since this is an employment-oriented budget, it may bear benefits in the long run,” Kamat added.

Finance Minister Nirmala Sitharaman, while presenting the Indian budget for FY25, announced the development of the Vishnupad Temple Corridor in Gaya and the Mahabodhi Temple Corridor in Bodh Gaya, modelled after the Kashi Vishwanath Temple Corridor. Moreover, she also revealed the development initiatives to be undertaken for Rajgir and Nalanda as tourist centres. With all the above-mentioned projects situated in Bihar, Sitharaman disclosed the government’s intentions to also support Odisha as an ‘ultimate tourism destination’.

“The infrastructure at these spiritual tourist destinations is creaking. With this development, the demand for spiritual tourism is likely to increase by five times. Wherever the infrastructure is developed, people flock there in large numbers. Look at the five-star hotels in Ayodhya,” said Sanjiv Saraff, joint managing director of Bank of Baroda Capital Markets Ltd. He also emphasized the role of private players in hospitality, restaurant food chains, and logistics with the developing infrastructure that will boost income and consumption.

“As the finance minister mentioned India being a global tourist hub, I think the government is realising how helpful this sector is. Many pockets in the country can be developed,” said Ramesh Nair, chief executive officer of Mindspace REIT, K Raheja Corp., while recognising the price boom in real estate markets in religious cities like Ayodhya and Varanasi. Nair also pointed out the development in road infrastructure and digital tourism infrastructure, which is helping more people connect with these destinations that are situated more in tier-2 and tier-3 cities. The India Travel Trends Report by MakeMyTrip had noted significant interest among travellers for spiritual journeys within tier-2 and tier-3 cities in 2023.

India has witnessed a remarkable development in the tourism and hospitality sectors in the post-COVID-19 era. According to the Economic Survey 2023-24, India earned foreign exchange receipts worth ₹2.3 lakh crore through tourism, ranking 39th in the World Economic Forum's Travel and Tourism Development Index (TTDI) 2024.