Why the Hotel Sector is growing so Fast

With the constant increase in the economy and income with the substantial increase in the large section of the middle-class population in India the hospitality industries have seen a high rise in growth and are contributing to the country’s GDP in an enormous way. It is expected, according to a report, that by the end of the next financial year, the growth in this sector will be almost doubled. Because of its wide range of activities, this sector incorporates a lot of job opportunities and thus, directly or indirectly has become a major contributor in the country’s economy by providing jobs to millions and millions of its people. And naturally, this industry has been a beehive to the investors and attracts foreign direct investments (FDI) inflow. As an important member of the net foreign exchange-earners category, it has contributed immensely to the economy of the country through indirect revenues collections like service taxes and entertainment taxes both at the central and state level.

Although the growth in the hospitality and service sector will continue to increase and its contribution to the country’s growth in the economy will run high in the years to come because of the huge potential in the tourism sector, but being the most heavily taxed industries this hospitality sector had been getting ravaged by the multilayer taxations. This irreverent procedure of taxation had naturally contributed to the additional burden of higher operational costs which directly or indirectly come over the profitability reductions. Now that the of Goods and Service Taxes (GST) has almost come a boon to this industry and is expected to create a positive change in the taxation system by rationalizing its tax structure to augment the myth of ease of doing business and thereby minimize the cost to the consumers. This would help the industries to grow faster and attract more and more foreign investments. This sector is a combination of or made up of the following sub-sectors:
· Hotels
· Restaurants
· Pubs and bars including night clubs
· Membership clubs
· Travel services
· Food and service providers
· Youth hostels
· Holiday parks
· Self-catering accommodation and also
· Hospitality services
Besides these above classifications of travel tourism and hospitality, there is a massive diversity in the types of jobs in the industry in accordance with the education and skills and technicalities. In addition to the generation of revenues, the tourism sector can stimulate the economy by creating plenty of job opportunities. Taking the enormous nature of job potentialities in the industry, Hotel Management is an important option for employability.
The development of infrastructure is the answer to the expansion and growth of the hotel industries. Taxes separately on the real estate sector will definitely curtail the rapidity of its accessories. To enhance the investments the government should ease out the taxation process so that this industry can flourish rapidly taking the tourism sector along. As an impetus to the tourism and hospitality industry to grow faster in India, the government should and must bring some relief to incentivize the investment opportunity in luxury projects. By putting some attractive schemes to incentivize the realtor industries like exemption of service tax or some tax holidays for new projects and development, they can attract more and more investment opportunities in this hospitality sector. The Government should consider reducing the proposed new tax slab of 18% in the GST establishment for this service industry and thus can have boomed in the investment opportunities.
The hospitality industry relies on some more important industries like transportation and communication and aviation and roadways. There are reciprocity and interlinking of all these industries. Without streamlining the growth and development of all these industries simultaneously, growth along in the hospitality sector is impossible to expect. Therefore, all-round development measures should be taken to give a face-lift to the hospitality industry.
The hospitality sector has immense power and the potential to be an important contributor to revamp the economy of the country. And this can be achieved only by putting some definite help and support with reasonable incentives in all categories of hotel industries including its luxury segments by the government to make it the most competitive and world-class to motivate its growth to make India its favorite destination.