Tourism Industry on growth path
The Tourism Industry has been on a high growth trajectory. In the premium segment, RevPARs (Revenue Per Available Room) increased by 4 per cent to 40 per cent (during April-December 2007 as compared to the same period of 2006) across eight major cities with the exception of Bangalore.
This was mainly driven by an increase in Average Room Rates (ARRs). With higher growth, the sector is witnessing capacity expansion, entry of new brands and expansion of existing brands.
The organised segment is increasing its penetration in the budget hotel and serviced apartment segments. These are growing due to the expansion of the total market and rising ARRs in the premium segment.
A key issue in the capacity build-up has been the high realty prices. This has led real estate developers to don the mantle of asset developers and owners, thereby leading to the forging of alliances such as those between Hilton and DLF and Accor and Emaar-MGF.
Hence, along with expansion, a widening and deepening of the hospitality sector appears to be on the anvil.
Corporate impact | | “There’s nothing visionary for the tourism industry. The hotel industry was expecting grant of infrastructure status to help overcome the shortage of hotel rooms”
— Priya Paul |
Indian Hotels: No impact on its luxury category hotels. Expects some positive spinoffs for its Ginger branded hotels from the five-year tax holiday for 2-, 3- and 4-star hotels in districts with UNESCO World Heritage sites
- EIH (Oberoi Hotels): No impact on either its top line or bottom line, as it is not eyeing the economy/budget segment. Could benefit in a small way from the reduced customs duty on project imports for its forthcoming hotel projects, but there is no clarity on it yet
- ITC Hotels: There certainly will be a fillip to its Fortune Park brand of hotels, given the tax holiday proposal. Since most of its top-end hotels are in business destinations, buoyancy in the economy and increase in business travel will have a positive impact on its bottom line
- Park Hotels: Will not be impacted by the tax holiday proposals, as it is currently not planning any ventures in the economy segment
Sectoral impact - Tax holiday for new hotels in 22 districts with world heritage sites to boost investment in the sector
- Double tax avoidance of dividend income will help owning of different hotels in different companies by a single parent company
- Indian hotels saved from payment of service tax on bookings made through foreign agents for foreign tourists
- Hotels have to pay more for hiring equipment and works contractors as service tax levied on hire charges has been hiked from 2 per cent to 4 per cent for works contract
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