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Rising number of foreign tourists driving India's hospitality sector

DUBLIN, January 3, 2022

The hospitality industry in India has been recording a moderate growth in the past few years and has great potential to score an even greater number in the future.
 
The nation rich in culture and diversity has been attracting a large number of tourists from all over the globe. This was revealed in a report 'Hospitality Industry in India - Growth, Trends, Covid-19 Impact, and Forecasts (2021-2026)' by ResearchAndMarkets.com, PRNewswire reported.
 
India has also been recognised as a destination for spiritual tourism for international and domestic travellers. The country is showing continuous growth moving from 65th in 2013 to 34th position in 2019 in the World Economic Forum's travel and tourism competitiveness index.
 
On the other side, the growing middle class, rising levels of their disposable income, increasing interest among millennials to travel in their home country are a few major reasons that are making the domestic travel industry a profitable one.
 
To attract the millennials, ventures like Airbnb, Oyo rooms have changed hospitality scenarios on a global level and are offering price-sensitive stays in most of the prime locations with flexible check-in and check-out options.
 
The hospitality and tourism industry has been witnessing a healthy growth and accounted for 7.5 per cent of the GDP.
 
India is a part of the top 100 clubs on Ease of Doing Business (EoDB) and ranks 1st in the greenfield FDI ranking globally and to strengthen the cruise tourism sector, the Government has selected Chennai, Goa, Kochi, Mangalore, and Mumbai ports to develop them as cruise tourism hubs. These terminals will have facilities like hospitality, retail, shopping and restaurants.
 
Less than three million foreign tourists visited India in 2020, a dip of around 75% as compared to the previous year, due to travel restrictions imposed to control the coronavirus pandemic.
 
To incentivise stakeholders in the tourism industry, the guidelines for the scheme of Market Development Assistance (MDA) for providing financial support to stakeholders for the promotion of domestic tourism have been modified to enhance the scope and reach of the scheme. In addition, promotional activities have been incorporated including online promotions and the extent of financial assistance permissible has been enhanced.
 
Due to the Covid-19 pandemic, India's hotel sector - one of the worst-hit segments of the economy - contracted by 47% in April-June 2020, as per data released by the National Statistical Office (NSO) on August 31, 2020. The hotel industry, in May 2020, experienced an occupancy decline of 77% over the same time last year.
 
The domestic hospitality industry, which has been severely affected by the Covid-19, is likely to witness a decline of over 65% in 2021.
 
India has been registering a growing number of foreign tourists year on year. The nation's cultural bases, diversity in traditions, and food choices are making it a heritage-rich nation along with several other factors. 
 
In 2017, India received more than 10 million foreign tourists for the first time, registering 14% growth over the previous year and which is almost double the number it received in the years 2009 and 2010.
 
Travel and Tourism Competitiveness Index ranked India 34 out of 136 countries in 2019 and in the category of price competitiveness, India's tourism sector stood at 10th position out of 136 countries which means India is an affordable tour option to most international travellers from developed nations.
 
The government has been making efforts to boost investments in the tourism sector. India received Foreign Direct Investment of 430,000 crore rupees ($60.1 billion) in 2016-2017. Free FDI inflows are allowed in the majority of sectors except for major sectors such as defence, atomic energy among others.
 
The 100% FDI in the hotel and tourism sector is paving its way to more investments in the country. A 5-year tax holiday has also been offered for 2-4-star category hotels which will be located around UNESCO World Heritage sites (except for locations like Delhi and Mumbai).
 
Special Tourism Zones (STZ) to promote tourism and investments in the sector is at the negotiation stage, which if get passed by the government will provide single window clearance for setting up the zones. An STZ is to be located in tourist cities and destinations along the coastline. They will offer a 100% tax exemption for a period of 10 years.
 
STZ is proposed to be developed where there will be a provision for 2,000 to 3,000 hotel rooms (either existing or to be constructed), facilities for entertainment, amusement parks, shopping, etc. There will also be an exemption from import duty on different capital goods, followed by withdrawal of luxury tax, etc.



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