‘Hotel industry to contribute $1.5 tn to GDP by 2047’

The Indian hotel market has significant growth opportunities and is poised to contribute $1,504 billion to the country’s overall GDP by 2047, from $65 billion in 2022, suggests a report by the Hotel Association of India shared exclusively with Mint. It forecasts that the demand for hotels will increase over the next 25 years, however, the supply will grow in the same ratio if there remains a continuous development plan for the pipeline and new projects.

The association anticipated the growth to be at 11%, 13%, and 15% in the short, mid, and long term for the overall hospitality industry. The total contribution includes aspects of services from corresponding industry verticals such as food and beverages, salon & spas, etc. This excludes consideration of services market growth and therefore it also excludes scenario-based contribution estimates.

The direct contribution of the hotel industry to the GDP was $40 billion in 2022 and is expected to reach $68 billion by 2027, and $1 trillion by 2047.

The report highlighted that to reach the $3 trillion economic target by 2047, the tourism and hospitality sector will need policy support, including but not limited to ease of doing business and infrastructure status. There is an urgent need for a robust tourism policy structure; a rise in national and international tourist footfalls and 100% FDI, it said.

Policy and ease of doing business will play a key role in the way that tourism shapes up, said Madan Prasad Bezbaruah, HAI’s secretary general and former secretary of the Ministry of Tourism.

Bezbaruah said within the tourism and hospitality sector, 30 key sectors had been identified by the government which are important for the sector to function properly to reach its desired size. “Different states have different policies when it comes to tourism, while some have given the sector an industry status, others have not. We do not understand why because it doesn’t cost states money to do this,” he said.

The report added that the infrastructure status to hotels will facilitate long-term loans at competitive interest rates thereby boosting the industry’s growth.

Further, attractive investments through tax breaks, lenient land use rules, and providing cash flow assistance to support small and medium-sized enterprises (SMEs) and other infrastructure investments, including covering aviation programmes, regional tourism packages, business tourism grants, etc., will help the sector.

Meanwhile, Bezbaruah also said the ‘Brand India’ image must be reinforced but it is because there is a long delay in the National Tourism Policy which is expected to be introduced in 2023. “Internationally, we are in a leadership role in many areas now but overseas marketing of a country must go along with any vision that we have. The government’s tourism vision which is still yet to be formally adopted has plans for an Incredible India 2.0. This campaign has to be developed in new circumstances and focus on new areas of growth to attract more international meetings, incentives and conferences,” he added.

Under its Draft National Tourism Policy proposed in 2022, the Ministry of Tourism aimed to improve the tourism framework, support industries, and develop tourism sub-sectors. It said visa, immigration, customs procedures, and secure and hygienic destinations would also be part of the vision. It also said it will identify 50 new locations that could be developed as tourism sites.