Hospitality Industry in India: Issues and Challenges

Context – As the world moves on, the service sector travel and tourism business is emerging as a major growth engine for the Indian economy. People are once again flying in great numbers, airports are crowded, hotels are well booked, and travelers want to explore, connect and feel alive through the exhilarating emotion of travel.

Despite several difficulties and challenging infrastructure in hospitality, the industry has fared extremely well.

What is Hospitality?

• Hospitality refers to the friendly and generous treatment of guests or strangers. It involves making guests feel welcome, comfortable and attended to during their stay or visit.

• The goal of hospitality is to create a positive experience for the guest and to ensure that they have everything they need to feel at home and enjoy their time.

Hospitality Industry in India

• Contribution to the Economy – The hospitality industry in India is a growing industry which contributes significantly to the country’s economy.

• India, a choice tourist destination – India is home to a number of popular destinations for tourists, due to its diverse culture, ancient civilization, art and architecture, spiritual knowledge centre and the paradise of natural beauty.

• Infrastructure upgraded with time – The hospitality industry in India has undergone significant growth in recent years, fueled by an increase in domestic and international tourism, as well as the development of new infrastructure, such as airports and roads.

• Hospitality companies determined to offer a diverse experience – Hospitality companies have consistently added supply across all segments of budget, business and luxury hotels, homestays, villas and so forth by developing new circuits and offerings that tap into the diverse and myriad potential of Incredible India.

Hospitality Industry’s Contribution to the Economy

• Tourism a Driving Force – Tourism is seen as a major driving force for any economy. It has a multiplier effect on associated industries like hospitality.

• Spillover Earning – Not only improves economic conditions but also enhances standard of living: The spillover of earnings from tourism into other industries not only improves economic conditions but also enhances the standards of living of the local population.

For instance, GDP and employment in Goa: This is most apparent at the popular beach destination of Goa. Contributing over 16 per cent to the GDP and 35 per cent to direct employment within the state as per the IBEF Report 2022, the domino effect of the sector on indirect job creation is unrivaled. Today, led by tourism, Goa leads the nation in per capita NSDP (Net State Domestic Product) as per the RBI.

• Significant Impact on high Employability – As per trends, every hotel room generates five to seven jobs, both directly and indirectly, further leading to a significant impact on other high-employability sectors such as real estate and infrastructure.

• Employment Generation Globally – In fact, according to the latest World Travel and Tourism Council (WTTC) report, the sector is expected to create nearly 126 million new jobs globally within the next decade with at least 20 percent of these from the Indian subcontinent. However, government support will be instrumental in achieving this.

• Will augment the Indian economy to reach $1 trillion by 2047 – With Indian companies reporting positive earnings this fiscal, the sector is poised to potentially grow three times compared to the pre-pandemic levels to touch $250 billion by 2030 and further accelerate to reach $1 trillion by 2047.

Opportunity presented with India’s G20 Presidency

• Challenge to provide world-class experience to visiting dignitaries – As India takes on the G20 presidency and starts preparing for the summit in 2023, positioning the country as a safe, tourist-friendly destination hinges on how the government can work together with the industry and provide world-class experiences to visiting dignitaries.

• Meetings mostly be hosted in hotels – Around 300 plus meetings are expected to take place during the summit, most of which will be hosted within the corridors of the finest hotels across the country.

• Adhering to the principle of Atithi Devo Bhava – Hospitality companies are leaving no stone unturned to showcase India’s cultural essence, and the inherent warmth of Atithi Devo Bhava in our service philosophy.

• India can set an impression – Using the summit to highlight the country’s unique and differentiated travel offerings, India can claim its position on the world tourism stage.

Way Forward

• Upgrading the infrastructure to cater new consumer demands well – The travel and tourism industry is constantly evolving, catering to rapidly changing consumer demands. A capital-intensive industry, the hospitality sector needs to continually plough back to keep the ball rolling.

• Attracting more Investments – A good start will be the Centre according infrastructure status to the sector, which will boost the industry, incorporating required incentives including regulatory ease, cheaper loans, tax concessions and contributing to a cycle of attracting more investments.

• Augmenting the infrastructure growth – In addition, industry status at the state and Union territories-level and augmenting the infrastructure growth will also have a much-needed positive impact. States like Maharashtra, Karnataka, Assam, Goa, Gujarat, Madhya Pradesh and Rajasthan have taken the lead, and more should follow suit.

Conclusion
India’s growth story remains immensely encouraging. On the back of strong consumer demand, travel and tourism offers promising growth and are at an important inflection point. Through collective action between industry stakeholders and government, we can undoubtedly shape an even more thriving future for the industry, one that can have a positive impact on the economy and society at large.

Download as PDF