Mumbai: Hoteliers said the budget on Friday did not bring them widespread benefits nor help the industry tackle the shortage of rooms in India.
Finance Minister Palaniappan Chidambaram in the 2008/09 budget proposed to grant a 5-year tax holiday for two, three and four-star hotels established in specific districts that are UNESCO-declared ‘World Heritage Sites´.
The hotel should be constructed and start functioning during the period 1 April , 2008 to 31 March, 2013, he said.
“This budget, as far as the hotel industry is concerned, is negative,” S.P. Jain, senior vice president, Hotel & Restaurant Association, Western India, said.
“The shortfall of rooms will continue and there’s no support from the Finance Minister to attract finance to the sector.” Jain, also managing director of Pride Group of Hotels, added.
To help meet the shortage of rooms, the hotel industry wanted to be given infrastructure status, benefiting from easier financing, and a tax holiday to be given to all categories of hotels across India.
“This will give boost to tourism sites like Hampi,” Chender Baljee, chairman of Royal Orchid Hotels Ltd said.
“It’s a very small benefit and not very significant. The tax holiday could have been extended to Tier II, Tier III cities, which can do with budget hotels,” he added.
“It’s a positive step but it’s not relevant to us,” Rajiv Kaul, senior vice president, Hotel Leelaventure Ltd said. “The need of the moment is to build more hotel rooms and this incentive will perhaps add up to 2,000 rooms.”
About Rs400 billion would be needed to build an estimated 100,000 rooms, needed for the expected arrival of 10 million foreign tourists in the country by 2010, the Federation of Hotel & Restaurant Associations of India said.