Hotel industry hit hard by drop in tourist arrivals

Hard hit by 9/11, the hotel industry in India has further registered a decline in revenue earnings by 15 per cent in view of the threat of US-Iraq war.

If the trend continues, the hotel industry would suffer heavy losses and it might also lead to closure of some hotels, Vivek Nair, president of Hotel and Restaurant association, says.

The annual convention of Hotel and Restaurant Association in Aurangabad recently expressed deep concern over lack of special measures to promote tourism and encourage the hospitality industry, Nair says.

India had attracted over two million foreign tourists as against the 635 million moving across the world in 1998. The government has already set a target of attracting five million tourists.

However, there are just 1200 hotels in the classified categories of one star to five star, providing accommodation of 70,000 rooms. These will be totally inadequate to cater to the targeted five million tourists, Nair says.

In the unclassified sector there are 10,000 hotels providing over 200,000 rooms. By granting incentives, better facilities and services could be enforced and this large sector of unclassified hotels could be brought under classified sector, the association president says.

There are over 2 million restaurants employing over 20 million people directly, most of which are serving the masses and not the elite, association sources say.

Promotional efforts by the Centre, state governments and leading hotel chains to boost tourism and encourage the hospitality industry were inadequate and there was an urgent need to forge partnership between public and private sectors to promote India as a tourist destination abroad, the hotel and restaurant association sources felt.

Most industrial houses in India have refrained from investing in this industry despite their resourcefulness. The industry has thus remained in proprietorship/partnership mode. It was high time to study why such investment was not forthcoming, the sources say.

Hospitality business is capital and labour intensive. High cost of finance in India compared to availability of funds at low rates of interest and on soft terms abroad, is a big hurdle in additional investment. The government should, therefore, source low cost funds from abroad and make them available to the Indian tourism sector, industry experts felt.

Tourism was both a union and state list subject under the constitution. There was thus an overlapping effect, creating imbalances in growth. Significantly, the hospitality industry holds the distinction of maximum number of units for any single category of industry with nearly 25 hotels and restaurants in the entire country, the sources say.

The various state tourism development corporations were working on low budgets and tourism at state level was a low priority activity except in Kerala, Goa and Himachal Pradesh.

By according priority to tourism, which is a non-polluting and fast developing service industrial activity, larger economic benefits could accrue through its distinct multiplier effect, the sources opined.

Despite a long coastline of over 1500 kms, only three all weather ports were existent in Western India. Use of waterways was thus negligible compared to the roaring cruise business being done by neighbouring countries in South East Asia, Hotel and Restaurant association sources say.

The sources also expressed concern over several constraints on seat capacity of Air-India, directly affecting flow of foreign tourists resulting into their skipping India.

The ratio of indirect employment generated by the hospitality industry was 1:8. Thus, over 16.5 million tourists were indirectly employed in sectors connected with this industry. Considering the average size of the Indian family, it is estimated that a population of over 120 million is dependent on the tourism sector.

The ratio of domestic tourism to foreign tourism is 1:10. Thus the volume of the domestic tourist is almost 25 million travellers every year. Inspite of a large domestic tourist movement, the concept of Yatri Niwas has not grown in India, the sources lamented.

The association has suggested the ministry of tourism to set up a tourism industry development council on the lines of construction industry. Such a council would plan, coordinate and supervise growth of tourism to ensure speedy implementation of policies.

The association has suggested the union government to draw a tourism policy, which is both tourist and investor friendly and finalise the master plan accordingly.

It has suggested implementation of the tourism policy through state tourism councils comprising experts representing various segments of hotel industry such as hotels, restaurants, educational and financial institutions, airlines, railways, shipping companies, roadways, travel agents, tour operators and government officials.

Mumbai, the Gateway of India, needed specific attention by way of development of certain attractions. Special tourist spots should be created to win over foreign tourists to stay in Mumbai and thereafter move in Maharashtra, the association has recommended.

Experts in the association felt that Mumbai, the commercial capital of the country, should be developed as an international business and convention centre. This will give a boost to the financial centre and lead to direct foreign investment as well as incremental investment in the manufacturing sector.

Experts opined that at least three more all weather sea ports should be developed to propel the growth of the Konkan region and utilise Konkan railway facilities to the optimum.

For Gujarat, the experts suggested relaxing prohibition policy and tax structure by granting parity with general industry in respect of electricity duty and developing integrated travel circuits.

They also suggested promotion of integrated travel circuits to bring Madhya Pradesh on the tourism map of India and encourage wildlife and eco-tourism in Chhatisgarh and Madhya Pradesh.