Reduction of tax burden, GST simplification, and 'yojanas' that for once yield more results than promises. Here's an UNBOUND view on what the industry expects from Nirmala Sitaraman's inaugural Union Budget 2019.
The curious case of GST:
When property owners give out their hotels/resorts/villas on lease, they have mostly one thing on their mind - maximising the minimum guarantee on their property in the form of lease / rent. This then becomes the biggest fixed overhead for the hotel operators especially when a GST of 18% is applied on that number. In a highly competitive landscape, with more and more homestays offering similar and more personalised holiday experiences, a project that would initially seem viable, suddenly erodes operating margins turning the property unsustainable.
What has also changed is that a number of these properties, especially homestays find ways to avoid billing and escape the paying GST at all.
Unbound Recommendation - Reduction if not removal of GST from rent on property given on lease and a single tax slab of 12% levied across all hotel categories to even the playing field for all.
Infrastructure & Connectivity:
When a cloud burst hit the upper reaches of Himachal Pradesh in September 2018, the unpreparedness of places like the Kullu valley, Lahaul-Spiti, etc. meant that all bookings for the Dussehra Holidays either got cancelled or resulted in no-shows. Being one of the few respites in an otherwise lean winter season, loss of this business resulted in average occupancy going down by over 70% for most hotels with a number of establishments shutting shop.
While certain natural calamities will undoubtedly still have an impact on tourism, disruptions caused due to inadequate infrastructure and limited connectivity can and need to be urgently addressed. A further financial impetus towards planning and more importantly timely completion of infrastructure projects will be key.
Unbound Recommendation - More allocation of funds towards highway projects, air connectivity and expansion of rail network. At an operational level, further checks need to be put in place to ensure timely delivery of projects.
Schemes that deliver work. Not just publicity:
When many of India's obscure heritage monuments, temples, forts, etc host more primates on a day to day basis than actual humans, you know something is amiss. And who better to resurrect India's heritage than the government claiming to be its greatest protectors.
The Adopt-A-Heritage project of the Ministry of Tourism while seemed to be a positive step in the public-private partnership direction, has at least till date failed to deliver to the initial fanfare owing to a number of reasons - lack of government spend on the project with only private parties being expected to bear operational expenses of monuments, lack of clarity over commercial and quasi-commercial initiatives, inability to coordinate work among the several stakeholders, etc.
A more clear-cut method and actual spend towards not just developing key tourist destinations but also maintaining them will help boost local tourism greatly.
Unbound Recommendation - Not just development of tourist destinations but an equal if not greater spend on the actual maintenance of these places with a clear outlook on roles & responsibilities of all stakeholders involved.
Develop Tourist Destinations:
While the Ministry of Tourism last year identified 12 sites, including the Taj Mahal as part of the 'Iconic Tourist Sites' project, which overlapped with another scheme launched with all the bells and whistles (and controversies as well) - Adopt-A-Heritage, very little impact has actually been seen on the ground. More worryingly, there seems to be no clear plan to turn what many describe as the real India - the rural India, into the tourism pull it ought to be.
While many of the so called 'iconic-sites' already suffer from over congestion, the lack of tourist facilities in the interiors of India's heartland mean they can only sell themselves as truly off-beat, and that too not by choice.
Unbound Recommendation - Allocation of funds towards better accessibility of potential tourism friendly destinations across each and every state with special focus towards last mile connectivity. Further allocation of funds towards development and maintenance of basic tourist amenities across these destinations.