As more cases were detected in India, the administration imposed nighttime curfews and banned Christmas and New Year celebrations. Covid curbs only increased in January 2022, especially in the capital as restaurants and bars were closed and the weekend curfew was strictly enforced.
The contribution of the travel and hospitality sector to the economy can hardly be ignored. According to the World Travel and Tourism Council (WTTC), the contribution of travel and tourism to India’s GDP was 6.8% in 2019. It fell to 4.7% in 2020 due to the induced lockdowns by coronaviruses, including worldwide travel restrictions.
As one of the hardest hit industries since the Covid-19 outbreak, what are the travel and hospitality industry’s expectations from Budget 2022?
Zorawar Kalra, founder and managing director of Massive Restaurants, with brands such as Masala Library, Farzi Cafe and Pa Pa Ya in his portfolio, says much needs to be done to bring the sector back to life. “The input tax credit (ITC) for the GST should be reinstated. This industry operates on very thin margins and after two years of very difficult times, we need support at this stage. In the absence of
, it’s hard for everyone to keep their heads above water. There should also be a mechanism in place to protect the industry from further lockdowns. For example, why not offer a furlough scheme, as has been done in the UK, and perhaps introduce an insurance mechanism. After all, if there is earthquake and fire insurance, why not the pandemic? he questions.
The restaurateur adds that with only the delivery option currently open, it has been an extremely difficult time for the industry. “It would be beneficial to make working capital loans available to the industry at very low interest rates, as restarting after each lockdown is capital intensive,” says Kalra.
In its statement released earlier in January, industry body National Restaurant Association of India (NRAI) observed how more than 25% of restaurants were closed last year and more than 24 million people lost their jobs across the country. “The new guidelines, which completely ban eating and only allow deliveries, are totally unsustainable. It is like an excruciating and painful slow death for a once vibrant industry,” said NRAI Chairman Kabir Suri.
While the restaurant industry was hit hard, the travel and tourism industry fared no better. Industry players want the sentiment of travel to be revived in the budget via stimulus packages and tax incentives for personal and business travel. “A reduction in personal income tax rates will put more money in the hands of an individual, which can accelerate the growth of travel. It can also include incentives for states to spend more of their budget on improving infrastructure and connectivity that can help tourism,” says Nishant Pitti, CEO and co-founder of EaseMyTrip.
Despite the restrictions, Pitti expects a stronger recovery in the travel sector in 2022. He predicts that more travelers will prefer places that adopt sustainable tourism practices. “There will be a growth in revenge travel in 2022. Many travelers have realized the benefits and the need for sustainable tourism in a post-Covid scenario. There will also be a preference for places that focus on wellness activities that will help them rejuvenate and lead healthier lives,” he adds.
Others in the industry are of the view that relief measures for a sector like travel and tourism should be treated on an equal footing with the IT sector, to help it get back to business faster. . “We expect the government to support the immediate revival of the industry and provide incentive proposals accordingly,” said Prahlad Krishnamurthi, chief commercial officer of Cleartrip.
A slight increase, he said, is seen in the rate of cancellation of international flights and reservations. However, domestic booking and travel trends are doing better, with metropolitan destinations seeing good progress. “Leisure destinations like Goa, Chandigarh and Jaipur are showing a massive increase over last year. Similarly, most customers are looking at tourist destinations like Manila and Abu Dhabi for international travel. online booking trend will prevail for the foreseeable future,” he said.
Echoing similar sentiments, Amit Damani, co-founder of Vista Rooms, a vacation home and villa rental company, says domestic travel is still hot, with short leisure breaks popular. “People go for short weekend trips to nearby destinations that are accessible by car. Business travel, however, has been significantly impacted and it will take another 3-6 months to get back on track,” he says.
For the next budget, Damani wants more clarity at the national level on the rules and tax systems that apply to the homestay villa segment. “Right now it’s pretty fragmented, and each state may have its own set of laws surrounding what constitutes a homestay or a BnB, and that’s more of a recognition than a policy. We try to simplify and register each property as a BnB nationally,” he says.
Given that homestays have become a popular component of domestic tourism, Damani believes that sufficient legislation and political recognition are essential and expects to see such suggestions in this year’s budget.
Hopes are high for a sector that has repeatedly fallen victim to the Covid-19 pandemic. The travel and hospitality industry hopes that FM Nirmala Sitharaman will consider all relevant aspects in the budget to help them grow.