Infrastructure

Paradigm shift in fundamental outlook – tourism India

Read more at bwhotelier.businessworld.in

Identify business hotels as part of the infrastructure of the economy.
Tourism being a state subject – Delhi centric Industry trade organisations have to reach out to states, states Mohankumar PK, Founder & CEO, Turnstone Hospitality LLP. In this article he shares more.

India, given its geographical spread functions as a federal set up. The constitution has identified tourism as a state subject while empowering Central Government with common criteria in terms of import policies like EPCG, classification and investment priority or rating for tourism projects. The country’s natural and historical resources like wildlife, archaeology, and heritage come under theCentral Government. 

Consequently, an evaluation of the development of tourism and leisure travel clearly reflects the contrasting prioritisation among all the states. In a critical analysis of the skewed development of tourism in India, only a handful of states have identified and prioritised travel and tourism in their economic agenda regardless of the political affiliation of the governments. Among the compelling reasons to universally adopt, as an integral part of the policy, planning and governance, tourism frontier states like Rajasthan, Kerala, Goa, Sikkim, and lately Chhattisgarh and Gujarat, have over the years experimented and attained a certain maturity in viewing tourism as a high potential job multiplier economic sector. Needless to mention all these states are abundantly blessed with natural beauty, historical, archaeological, and cultural legacy. These states all have high potential tourism products making holiday and travel sustainable throughout the year. Interestingly bulk of the international high-end holidaymakers choose to visit Rajasthan, Kerala, and Goa clearly positioning them as an attractive proposition for a diversified tourism and leisure destination. The governments in these states have therefore strategically created a very positive environment to facilitate land acquisition from identified tourism zones along with policies and guidelines helpful for infrastructure which in turn translates into hotels and resorts. Right from palaces in Rajasthan to large branded luxury to small family-run resorts and homestays in Goa, Kerala, Sikkim, these states have successfully transformed a hitherto low priority misinterpreted as a luxury sector into a viable independent economically vibrant sector. Interestingly tourism has dramatically elevated the visibility of these frontier states creating high brand equity. The best example is God’s own country – Kerala listed in the Lonely Planet making it a standalone independent brand.

Therein lies the paradox as to why the rest of the states have largely ignored or accorded low priority for tourism? Most of the states in India, economy, and economic development by default were largely dependent on agriculture, manufacturing, and post the 90s in the services sector mainly IT and IT-related services. Therefore, priorities of successive governments and political parties have always been focused on socio-economic development with the lion’s share of subsidies, incentives, and tax concessions offered to agriculture and manufacturing sectors. With the advent of the new economy driven largely by technology and powered by a huge consumer market-creating dispensable income, the burgeoning middle class opted for domestic holiday travel. Ironically, the choice in terms of organized structured tourism destinations with adequate and quality facilities was limited to these frontier states largely. In fact, these destinations became oversaturated inducing the majority of holidaymakers to overseas locations like Bangkok, Singapore, Vietnam, etc. It is a known fact, that in the last two decades, Rajasthan, Kerala, Goa, and a few other specific locations in the hills, safaris, and culture locations were overbooked during the high-season, and most of the weekend getaway occasions. It is not that there were no other naturally attractive sea-side locations or hills or wildlife or archaeological sites but most of them do not have quality infrastructure basic for attracting even the middle class and upwards, domestic tourists. Added to these vows is the lack of air, rail, and surface connectivity. Unlike Europe, Japan, or US, Indian railways despite an extensive network, have still not developed a “Eurail” model exclusive trains for tourists or for that matter Pan-India permit luxury coaches undertaking a nationwide package tour like the world-famous Trafalgar Holidays by luxury coaches across the developed countries seamlessly.

Having dwelt on the fundamental underlying reasons for structural, regulatory and legislative inadequacy as the bane for the underdevelopment of tourism and therefore the vulnerability of the hospitality industry, let us seize this opportunity before the next Union budget on “what strategic shifts and governance measures have to be brought in to provide a fillip and rejuvenation of travel, tourism and hospitality”.

We would recommend some far-reaching policy guidelines and initiatives which will have a salutary effect in the government’s endeavour to develop and tap the huge potential of tourism in the country. However, we would like to advocate strongly in favour of segregating “city and business hotels” in all the commercial townships in India to be treated as an integral part of economic development infrastructure. City business hotels are a separate universe by itself catering to business travellers and not tourists. 

India has to bring about a comprehensive policy in terms of hotel zoning, concessional land availability and identifying both central and state government lands to be offered as equity in PPPs/JVs ( ease of doing business continues to be low) in many of the new smart cities and towns coming up in India.

It is just not enough for cosmetic concessions or recognitions as Industry status since “ Land” as a basic and key component is for creating hardware(hotel assets), is the most crucial but expensive element in India making many of the hotel and resort projects unviable.

 Land, as well as Tourism, being a state subject, the debate with regard to tourism development has to shift its attention to the state governments while appealing to the Central government for favourable financial lending from Banks and Institutions, EPCG, GST, CRZ regulations , environmental clearance, fast tracking granting of landing rights to international air carriers , faster approvals to domestic airlines to expand their network and last but not the least “ Brand India” marketing in select  overseas markets and target groups besides  the domestic market. Lending policies have to be realistic (long gestation, vulnerability to any unpredictable scenarios) and flexible with a long term perspective and provision for restructuring in cases of financial distress merely to resuscitate. It is possible to enact relevant statutory provisions if there is a Paradigm shift in the fundamental approach towards Hospitality & Tourism sector. How about private sector tourist transport companies allowed interstate access passes and encourage the tour operators to develop packages enabling Indians to plan and travel by surface on a single Holiday tour across the nation “Bharat darshan” package.   Strategic long term outlook is the need of the day.  We really do not have a comprehensive India Tour holiday plan due to the many challenges facing the international holiday Luxury coach operators like Trafalgar Holidays all over the  developed geographies.  

There is a strong case for a governing council under the Chairmanship of Honorable Prime Minister, the Honorable Finance Minister, the Honorable Tourism Minister and the Honorable Chief Ministers of all the States & Union Territories. 

 Post- covid  industry pro initiatives such as infrastructure status, land zoning, incentives involving concessional rates, and taxes can be beneficial  only if  a moratorium on debt recovery for a minimum period of one year is brought in to help sinking  small & medium hotels & resorts categorized as MSMEs are to survive. 

India’s share of international tourists appears to be skewed with Bangladesh FTA topping the list! Domestic tourists mainly patronise the majority of the unorganised, independent, family-run hotels and resorts primarily on account of affordability. The branded and classified luxury, premium, and budget hotels constitute only 5%-6% of the entire lodging capacity with mismatched demand of high end tourists both overseas and domestic source markets.  Luxury and Premium profile foreign holiday makers continue to visit only the age old proven golden triangle as rest of the country is grossly inadequate in basic tourism infra like connectivity, last mile reachability, a visible absence of a Tourism culture.  The high end domestic holiday makers opt out to overseas destinations as they are all lot more attractive in terms of a predicable seamless and hassle free holidays besides shopping. This very niche segment of luxury hotels and resorts have already dwindled or undersold with discounted rates over the years thus making it vulnerable to distress leading to NPAs.

Legislative action must be taken to ensure that all hotels and resorts have to be classified mandatorily in order to ensure a level playing field, standardisation of safety, security, and compliance. Regulatory measures within the scope of classification will ensure that every unit is compliant with the basic laws. The classification criteria must be designed to suit the scope of limitation of each category so that the cost of development is in relation to the price band. The majority of the 27 lac rooms are not certified nor 100 % compliant with the minimum standards yet operationally profitable.

India’s demographic dividend offers ample scope for training and skilling hospitality and tourism associates for overseas markets as well as India. However, the biggest impediment for skilling these large number of able bodies young aspirants is that these teenagers mostly from the marginalised sections passing out of school at the age of 16 years just do not get selected to a skill center nor to a hotel job because of the minimum employable age criteria of 18 years making this very vulnerable age group drift away to unorganised daily wage labourers. Economic plight forces their parents and their teenage adolescent children to get onto earning rather than time and money draining learning skills. This is the reality!!  How about revisiting the Apprenticeship Act to allow school pass or drop out to be absorbed in the industry even at the age of 16 years?

Differentiation in Excise Laws to recognise and define Beer and Wine below a certain percentage of alcohol with minimal criteria approval & license and at a concessional level. Alcoholic beverages are today socially accepted like any tourist-friendly country in the world. In fact overseas tourists take it for granted availability of wine & spirits at all lodging & boarding establishments. This is one area where a lot more flexibility and ease of doing business can be dramatically improved. 

India can follow the example of China in terms proliferating across every city, town and tourists spots with affordable branded smart hotels and resorts (same segments as Ginger, Red fox, Zen, Bloom Rooms etc.)  under national brands to meet the growing demands of 200 Million and growing middle class looking for affordable classified and standardized safe hotels and resorts.

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