Hospitality is the Cornerstone of the Tourism Industry
Souvagya Mohapatra, Executive Director, Mayfair Hotels & Resorts Ltd., calls for Hospitality to be given the same push as Travel and Tourism through policy for India to emerge as a truly complete destination
IN HIS Independence Day speech in 2019, Prime Minister Narendra Modi had urged the people of India to visit 15 Domestic Tourist Destinations by year 2022. It was beyond a mere appeal to promote tourism. It was reflective of the Government's fast-changing policy outlook towards the sector, which had, for too long, remained low-priority at the policy level, notwithstanding its high economic relevance.
It's indeed, great that the Industry has finally received the attention it deserves, especially as India is a country blessed with tremendous tourism potential. Harnessing this potential is the key to the country's envisioned development goals. For instance, at a time when the Government's spending on Travel and Tourism in 2017 was around 0.1% of the GDP, our sector contributed 9.4% to the GDP. The next year, we contributed around 9.2% of GDP while generating 2.67 crore jobs. A sector that generates healthy revenues while also being employment-intensive, suit both the economic aspirations as well as demographic requirements of our country.
Robust Infrastructure Needed
However, making India a hotspot tourism destination needs to be backed up by a robust infrastructure, in terms of connectivity, accessibility and hospitality. This needs a major overhaul, especially in the Tier-II and Tier-III cities. Though much has been done to readdress these, much more needs to be done.
The intra-country connectivity has to a great extent improved by the Government’s ambitious UDAN Scheme, that has revolutionised connectivity in Tier-II and Tier-III cities. Likewise, the Expressways and Highways too have undergone a massive change in recent times, making travelling between cities fast, safe and affordable. Similarly, the Swacch-Bharat Abhiyan has rejuvenated India’s image as a clean destination while initiatives have also been undertaken to address security concerns.
Yet, these developments in the travel and tourism sector have not been reflected in the hospitality sector, which still bears the brunt of policy indifference. For any place to emerge as a thriving tourism destination, the presence of robust Tier-II and Tier-III destinations which encourage building of hotels is important. Inadequate accommodation facilities are marring the tourism prospects of these destinations.
For example, while Delhi has a room capacity across branded/star category of hotels of around 10320, the eight North-Eastern States with such remarkable tourism potential, collectively have only 2378 rooms. Such data is startling and seriously demands realigning of our policies to promote the inclusive growth of the industry.
Favourable Policy Needed
So, what is hindering the growth of the hospitality industry in these tourism destinations? It's the existing stringent lending norms with interest rates ranging anywhere between 11-14 per cent as against the 4-5 per cent in the developed countries. The short repayment tenure further adds to this adverse funding regime. Similarly, the RBI directive that prohibits banks from funding any land purchases is yet another major constraint. Land acquisition costs for a hospitality project range between 30-40 per cent of the total project cost and funding this whole cost with equity leaves the investor as well as the developer with little financial leeway.
Although the Government has in the recent past made efforts to promote investment in the Hospitality sector by relaxing the FDI norms while also offering a five-year tax holiday for 2/3/4-star category hotels located around the UNESCO-World Heritage Sites, yet this is a case of too little. Considering the levels to which we need to scale-up our accommodation facilities, incentives of this type should be rolled out on a pan-India basis, with particular emphasis on eastern and North-Eastern India. Extending the capital investment subsidy, remission on land conversion charges and interest subsidies, along with conferring the sector with an Industry and Infrastructure status, should be favourably considered to incentivise the establishment of hospitality projects.
Mayfair's Roadmap Ahead
Mayfair operates 11 palatial properties across nine scenic destinations. The properties themselves are an architectural delight of low-rise properties set amidst plush greenery. In its four-decade journey, Mayfair has set new benchmarks in hospitality through its unique concept of offering nature-themed luxury. In the coming five years, we look forward to taking this legacy of success ahead with an ambitious expansion drive.
We will be shortly opening our 12th Resort in Siliguri, which will be a first of its kind, luxury tea resort of India, set amidst thousands of acres of aromatic tea gardens. We will also launch our 13th property in Kolkata, a 250-key property with state-of-the-art conference and banquet facilities. Mayfair will also establish a mega Convention-Centre-cum-Hotel in Bhubaneswar and a Golf & Wellness Spa Resort on the banks of Chilika Lake, Odisha, the works for which are underway.
Mayfair is also considering operating hotels on franchise module and pilot project basis. We are all set to manage and operate a resort located midway between Puri and Bhubaneswar in the Satasankha region. The property will be an exquisite MICE and Wedding venue, scheduled to open in mid-2021. We are also progressively restructuring our corporate set-up.
This article was published in BW hotelier issue dated '' with cover story titled '5 Years Young & Just Begun'
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