Hospitality sector’s New Year resolution

New Delhi, Dec 22 (PTI) As the Indian hospitality industry prepares to uncork the champagne to welcome 2025, it is gearing up to roll out the red carpet to foreign tourists, whose arrivals are likely to cross pre-Covid levels next year while looking to continue its significant contribution to the country’s economy and make ‘India inevitable’.

The sector, which is poised to contribute USD 1 trillion to India’s economy by 2047, however, is looking up to the government for policy interventions, such as unified licensing, workforce upskilling, and targeted infrastructure investments to enable the vertical meet demand generated by India’s drive towards becoming the world’s third largest global economy.

“India aims to become the third-largest economy by 2047, and the hospitality sector is set to play a pivotal role in achieving this goal. The sector’s multiplier effect on the economy surpasses that of manufacturing and agriculture,” Hotel Association of India (HAI) President KB Kachru told PTI.

Asserting that the future of the hospitality industry looks promising, he said, “There is an expectation of higher occupancies and average room recoveries”.

Citing a report by IBEF, Kachru, who is also the Chairman of South Asia at Radisson Hotel Group, said, “India’s travel market is projected to grow from an estimated USD 75 billion to USD 125 billion by FY27. Additionally, the total number of international tourist arrivals in India is expected to reach 30.5 million by 2028”.

A boom in domestic travel in the past couple of years has helped the hospitality industry traverse an accelerated growth path. However, international tourist arrivals to India have been lower compared to the pre-Covid times, which has been a cause of concern for the industry.

Kachru, however, said the inbound tourism segment is also showing signs of steady recovery and is likely to reach pre-Covid levels early next year.

Expressing similar bullishness, Indian Hotels Company Ltd (IHCL) MD and CEO Puneet Chhatwal said India will continue to be among the fastest-growing major economies on its path to becoming the world’s third largest global economy.

“This coupled with limited supply addition in the country’s top ten lodging markets, foreign tourist arrivals expected to exceed pre-Covid levels, and the permanent shift in consumer behaviour with travel becoming a non-discretionary spend will continue the demand buoyancy in the hospitality sector is experiencing,” he noted.

Equally optimistic is the Federation of Hotel and Restaurant Associations of India (FHRAI) Vice-President Pradeep Shetty, who feels that the outlook for India’s hospitality and tourism sectors in 2025 is very promising.

“Domestic tourism is expected to grow by 15-20 per cent, driven by initiatives like ‘Dekho Apna Desh’ and infrastructural improvements under the Swadesh Darshan 2.0 scheme,” he said.

Shetty further said, “International tourism is poised to make significant strides, with foreign tourist arrivals expected to surpass 17 million, generating over USD 36 billion in foreign exchange earnings. The Ministry of Tourism expects 30.5 million international visitors to come to India by 2028”.

According to him, hotel occupancy rates are anticipated to rise to 75 per cent or higher, driven by increased leisure and business travel. The Meetings, Incentives, Conferences, and Exhibitions (MICE) segment is set to contribute significantly, with India hosting multiple high-profile global events.

“Overall, the hospitality sector is projected to grow by 10-12 per cent, making a substantial impact on GDP and employment,” Shetty said.

Similarly, Royal Orchid Hotels President Arjun Baljee said the industry is set for sustained growth, fuelled by digital innovation, personalised experiences, and eco-conscious travel.

“We look forward to a promising 2025, creating memorable experiences for travellers and contributing to India’s tourism growth,” Baljee added.

However, the way towards creating memorable experiences and playing its role in India’s economic growth has not been a bed of roses for the hospitality sector, which has been seeking government intervention.

“Despite the emphasis on infrastructure development in the recent budgets, the hospitality industry has yet to receive recognition for its critical role and immense potential for generating jobs, contributing to GDP growth and foreign exchange earnings,” Kachru lamented.

Reiterating HAI’s demand for classifying hotels as infrastructure and also granting industry benefits to hotels, he said, “Such a designation would enable access to favourable financing terms, including lower interest rates and extended repayment periods, thereby attracting and boosting investment”.

Stressing that the industry is not looking for subsidies, he said, “But, we need due acknowledgement of the sector’s role in the nation’s economy. These supportive policies will catalyse investments in the sector”.

“The sector is poised to contribute USD 1 trillion to the economy by 2047 but will be dependent on the strength of these timely policy interventions. The industry would like to grow in a responsible and sustainable manner, and continue to contribute to a more inclusive economy and make ‘India inevitable’,” he added.

Reiterating the demand for uniform recognition of hospitality as an industry across all states, FHRAI’s Shetty said, “This would bring benefits, such as lower electricity tariffs, easier land-use permissions, and better access to finance. Many hotels are unable to qualify for infrastructure status due to strict requirements, which restricts their ability to access low-cost loans”.

Reflecting on 2024, Baljee of Royal Orchid Hotels said it has been a year of strong growth and resilience for the Indian hospitality industry, driven by a surge in domestic travel, a shift towards experiential stays, and a focus on sustainability.

Kachru acknowledged that significant investments in transportation infrastructure by the government, such as new airports, high-speed rail networks, and improved highways, have made travel more convenient and accessible.

“The improved connectivity has fuelled the growth of hotels and resorts and the development of tourism in new areas,” he added.

A Chalet Hotels spokesperson said India’s hospitality sector is experiencing impressive growth, with record-high occupancy rates and substantial increases in average daily rates (ADRs) nationwide, underscoring the industry’s resilience and its ability to meet the rising demand for quality experiences among travellers.

Summing up, Shetty said, “2024 has been a milestone year for India’s hospitality and tourism sectors, collectively valued at over USD 24 billion”.