Budget 2022-23: Expectations for Hospitality Industry

In the Union Budget 2022-23, the hospitality industry is dependent on how well your guests are being treated and have experienced a pleasant stay. They always try to offer the best to their customers to have an enjoyable experience. But this ongoing pandemic has badly affected the hospitality industry.

COVID-19 concerns and lockdowns have negatively hit the hospitality industry in India and worldwide. Even though the industry is trying to get back on its feet slowly, many hospitable services shut down their services permanently. 

India is just another country that can reminisce its hospitality industry by setting strict rules and regulations. In the Union Budget 2022-23, the Indian hospitality network expected lower taxes and interest-free government loans. So, in this write-up, all the outlook about the hospitality industry in India is mentioned in detail, and we have tried explaining the expectations and the current budget updates. 

An Overview of Hospitality Industry in India

The Hospitality industry is a multi-billionaire business sector that heavily depends on leisure time and disposable income. Even though the industry has several underlying sectors, customer-centric approach and service remain the common factor in all these segments. 

When it comes to India, the country is full of colours, cuisines, ethnicities, activities and more, making Indian hospitality attract people from around the globe. The country has seen significant growth in foreign visitors since the early 2000s. All these reasons have contributed to making India one of the top ten largest tourism economies globally.   

The 5 Sectors of the Hospitality Industry

The Global and Indian hospitality sector is filled with various sub-categories that thrive and help the industry grow. The five sectors of the hospitality industry are:

●    Accommodation

The hospitality industry in India offers a broad spectrum of great ranges of hotels, resorts, campsites, and campgrounds. Lodging and accommodation is a wide sector that provides beds to breakfast to their guests. Efficiency, amenities, and comfort are the basic dimensions of the accommodation sector. 

When tourists travel, one of the most important factors is accommodation. Hence, lodging is an essential factor that cannot be overlooked in the hospitality industry. Some accommodation options for tourists are suites, resorts, lodges, etc. The industry is constantly evolving and improving its accommodation sector to provide a better experience to the tourist travelling.

●    Food and Beverages

Food and beverage is another wide hospitality sector in India and worldwide. This sector administers the other sectors for their essence and taste.

This sector can range from a small roadside shop to an expensive restaurant, with all other catering arrangements in between. The food and beverage sector can be divided into multiple sub-categories: restaurants, fast food shop chains, takeaways, retail food stores, hotels, bars, casinos, pubs, and many more.

While travelling, people are always on the lookout for food. When visiting a new place, people prefer to taste the local cuisines of that area. So food and beverage make an essential component of the hospitality industry in India and other countries.   

●    Travel and Tourism

Travel, tourism and hospitality are considered synonyms by many people. Whereas, Travel and Tourism is a sector under the hospitality industry. This is a vast sector in Indian hospitality and the global hospitality industry, with several main contenders. These include airlines, trains, tourist buses, cruises, etc.

The key player of this sector is the movement of people from one place to another. Travel and tourism is the most important factor of the hospitality industry as, without a profound number of both sectors, the hospitality of an area won’t grow.  

Travel does not always mean leisure time; it includes travelling for formal and informal purposes. People worldwide travel for various reasons, such as education, business, vacation, and many more. 

Like any other sector in the hospitality industry, this sector also stipulates consistency, leniency, customer satisfaction, a customer-centric approach, relationship management, and other marketing aptitudes.  

●    Entertainment

Entertainment has all the influential things of the hospitality industry. All the people are the buyers and receivers of the hospitality services; hence, both are interdependent.

Therefore, to run the hospitality business successfully, it is essential to keep the bucket full of fun and entertainment for the people.  

●    TimeShare

Timeshare is one of the most important and emerging sectors of the hospitality industry worldwide. Timeshare refers to vacation ownership of any place. In this sector, individuals or group of people owns the right to a property on their vacation for a specified period. 

The raised interest of the tourists makes timeshare a significant sector and the reason to place it on this list. Times share gives the option to either buy a membership plan or get a part of the facility to enjoy their vacation. During their timeshare, they get the right to use the place as they want. There are various places that people can buy during their timeshare period, such as villas, resorts, convention centres, etc. 

The Scale of Indian Hospitality Industry

The hospitality sector in India has seen moderate growth in the past few years and can multiply to large numbers in the coming years. Since India has a rich and diverse culture, it attracts tourists from around the globe on a large scale. 

Moving from 65th position in 2016 for travel and tourism in World Economics Forum’s competitive index to 34th in 2019, the country has shown continuous growth and improvement in the hospitality sector. On the other hand, the consistently increasing disposable income is because the millennials travel in their home country, boosting domestic travel. 

The hospitality industry in India is consistently growing and accounts for about 7.5% of the country’s GDP. The country is also part of the top Ease of Doing Business (EoDB) 100 club. 

To strengthen the cruising experience, the Indian government has chosen Kochi, Goa, Chennai, Mumbai, and Mangalore ports for developing it into tourism hubs for cruises. 

In 2020, less than three million tourists visited India because of the travel restrictions to control the COVID-19 pandemic. This resulted in a dip in the 7.5% of the hospitality industry’s contribution to the GDP. Due to the pandemic, the accommodation sector is the worst hit in the Indian hospitality industry. 

Indian Hospitality Sector: Before and After COVID-19 

The hospitality industry is the worst-hit sector because of the coronavirus pandemic. Before the pandemic, the Indian hospitality network thrived and grew every year. The industry used to contribute about 7.5% to India’s GDP. More than four million tourists used to visit before the pandemic that resulted in India’s hospitality sector growth. 

The COVID-19 pandemic hit the country in 2020, with less than 3 million tourists in India. In the same year, the hospitality industry’s contribution to India’s GDP was less than before and continued to drop in the past years. With lockdowns and travel restrictions, the Indian hospitality network came to a standstill. Only essential service organisations, such as household goods stores, medical services, etc., were allowed to operate.  

As per the Federation of Hotel and Restaurant Association of India (FHRAI), about 40% of the restaurants and hotels shut down permanently, only 20% bounced back and are gaining. In contrast, the rest are still at a loss due to the financial loss in the pandemic.  

In the fisc year 2020-2021, the Indian hospitality industry lost over ₹1.30 lakhs Crores because of the ongoing pandemic. 

The hospitality sector in India has pinned all its hope on domestic travel and tourism after the second wave, hoping that there will be no third wave. 

Latest News on Hospitality Industry in India

Union Budget 2022-23 for the Indian Hospitality Industry

On February 1, 2022, Finance Minister Nirmala Sitharaman announced the Union Budget 2022-23. In this new budget, the hospitality industry in India has been allocated ₹2,400 crores. This amount is 18.42% higher than the amount allocated to the industry in the previous budget. The new budget brought relief to the industry, as hospitality was highly affected by the effects of COVID-19. 

In ₹2,400 crores, ₹1,644 crores are allocated for the tourism infrastructural development in the country, and ₹421.50 crores is earmarked for publicity and promotional activities to boost the hospitality sector. 

Union Budget 2022-23 – Expectations for the Indian Hospitality Industry

The Finance Minister of India, Nirmala Sitharaman, is set to present the financial budget for 2022-2023 on February 1, 2022. In this new Union Budget, the hospitality industry in India is seeking lower taxes and incentives. The COVID-19 crisis had a harsh effect on the Indian hospitality network. Since the industry incurred a huge loss, they are looking forward to more reliefs in the new Union budget 2022-23. 

For the budget for the hotel industry, the people are also hoping for interest-free loans and significant subsidiaries. These amendments in the new Union Budget 2022-23 will help incur losses in no time. 

Because of the ongoing health crisis, the investment in the hospitality sector in India is nil. The government needs to provide softer funding options and extended repayment duration. This will help the budget for the hotel industry for development and creating job opportunities.  

The budget is expected to include sustainable schemes that will help promote the travel and tourism sector of India. 

On December 30, 2021, Finance Minister, Nirmala Sitharaman, met regarding the pre-budget with the state finance ministers. This pre-budget meeting took place for the rack-up of the Union Budget 2022-2023. 

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Top Hospitality Companies in India 

Many hospitality companies in India contribute to the growth of the Indian hospitality network. Here are the top hospitality companies in India:

FAQs About Budget 2022-23: Expectations