Why the hospitality sector needs to be optimistic for 2024?

The industry is filled with excitement and hope, fuelled by both market forces and helpful government initiatives

The year 2023 witnessed a tremendous rebound in the Indian hospitality industry, driven by the rise of revenge tourism. With a surge in growth of working professionals and young travellers eager to discover new destinations, the sector has experienced an extraordinary trajectory. Major hotel chains have also been increasing their footprint, opening properties at a rapid pace all over the country - creating a pool of job opportunities for the youth. Combined with industry specific government measures, this spike in growth sets the hospitality industry for record-breaking developments over the next five years.  

Already in April 2024, the industry is filled with excitement and hope, fuelled by both market forces and helpful government initiatives. The massive contribution made by the travel and tourism industry of $178 billion to the nation's GDP can definitely not be ignored. The Indian hospitality sector is on the verge of a bright future, as it sets to brace itself for the upcoming increase of demand and rise in Indian tourism.

Challenges Addressed by Budget 2024

The Finance Minister's offer of long-term interest-free loans for states to promote local tourism was welcomed by the tourism sector with delight. This endeavour, together with the provision of a unified system used for rating the efforts on facilities offered and service quality, will pave the way for long-term and inclusive expansion of the sector. This step is speculated to have multi-faceted benefits which includes infrastructure development and boosting the spirit of entrepreneurship at local levels along with a much-needed exposure to local arts and crafts. 

Improved infrastructure and accessibility, particularly in spiritual tourism, further expanded the industry's potential, allowing visitors to interact with India's rich legacy and culture - as was witnessed during the Ram Mandir inauguration. Budget 2024 addressed the industrial difficulties head on, including infrastructure concerns and made grand announcements of projects to develop ports and other facilities, boosting tourism for the Indian islands including Lakshadweep. Acknowledging the significance of travel and tourism in driving economic recovery, the budget incorporated measures aimed at supporting the hospitality sector. 

The hospitality industry in India had high expectations for the reduction of GST rates in Budget 2024. Currently, the tax rates imposed on the sector are significantly higher than the international standards. The industry players were optimistic about the anticipated provisions and changes, which would have been warmly appreciated by the fraternity in India.

Optimistic Trends  
The Indian hotel landscape is well-positioned to capitalise on positive developments that are expected to completely transform the market in the coming years. The considerable increase in Indian tourists at domestic levels, is one of the most notable phenomena. This phenomenon indicates a strong rise in demand for hospitality services and reflects the nation's population's growing demand for travel. As per an overview by Startup India (Department For Promotion of Industry and Internal Trade), the Indian travel market is estimated to touch $125 billion valuation in 2027.

Government programmes like Dekho Apna Desh and Swadesh Darshan have been essential in fostering this increasing trend. These initiatives, which promote both domestic tourism and the discovery of unexplored and exotic regions, serve to both display India's rich cultural diversity and promote economic prosperity. This bodes well for the hospitality industry as more areas become sought-after vacation and business destinations.

An important trend that is also adding to the optimistic picture is the increase in religious tourism. The religious tourism sector is set to grow at a steady CAGR of 16 per cent between 2023 and 2030. Travelers looking for sacred experiences have traditionally been drawn to India's religious attractions as India has always been recognised for its spiritual tourism. Popular holiday booking platforms such as Make My Trip have witnessed a substantial growth of 97 per cent the searches for religious tourism destinations.

Strategically placed hospitality businesses in the vicinity of these locations stand to gain a great deal as tourists look for accommodation and services that enhance their overall travel experiences. According to the ministry of Tourism data, the religious tourism sector is expected to generate INR 59 billion in revenue by the year 2028. These upbeat developments support the notion that a vibrant and successful year for the Indian hospitality industry is just around the corner. 

AUTHOR BIO: Rahul Verma is Director of Sales & Operations, Kaara Hotels & Resorts



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