Interim Budget 2024 bats for local and spiritual tourism; hospitality industry shares its views and plans

The Interim Budget 2024 was a defining moment for the Indian tourism sector, with Finance Minister Nirmala Sitharaman making a few key announcements with the intention of boosting the tourism and hospitality industry in the country. 

Presenting the Budget, the finance minister said states would be encouraged to take up comprehensive development of iconic tourist centres on a global scale and a framework for rating these centres would be established. Long-term interest-free loans would also be given to states for financing such development, she said. 

Sitharaman also highlighted the development of India as an attractive destination for business and conference tourism and the emergence of spiritual tourism as a gateway for opportunities. 

The promotion of Indian islands including Lakshadweep, hosting global events (G20 Summit and ICC World Cup), and the focus on spiritual tourism indicate the government’s goal to make tourism an integral part of the Indian economy. The tourism industry currently contributes $178 billion to India’s GDP.  

“The commitment to bolster domestic tourism through initiatives spanning rail and air travel, coupled with the ongoing emphasis on tourism-led destinations, particularly in the realm of island tourism and spiritual tourism, reflects a strategic vision for the long-term growth of the travel and tourism sector,” says Rajesh Magow, Co-founder and Group CEO, MakeMyTrip. 

India as a spiritual destination

Spiritual tourism is set to get a major fillip after the recent inauguration of the Ayodhya Ram Mandir and the FM’s subsequent announcement in the Interim Budget to make India a spiritual tourism destination. 

According to Jefferies Analysts, around 100 million people are expected to visit the Ram Mandir in Uttar Pradesh every year. 

“As a group, we foresaw this trend some years ago, and we have already invested optimistically in expanding our business chain (O by Tamara) and mid-segment chain (The Lilac Hotels)—the latter will focus particularly on temple towns,” says Shruti Shibulal, Director and CEO of Tamara Leisure Experiences. 

Tamara Leisure Experiences, which operates O by Tamara in Trivandrum and Lilac Hotels in Bengaluru, recently opened its second O by Tamara property in Coimbatore and a Lilac Hotel in Guruvayoor. It also has hotels under development in Bodh Gaya, Kumbakonam, and Velankanni to cater to religious travellers.

Tamara Leisure Experiences is especially hopeful of its upcoming project in Bodh Gaya, which will combine the cultural heritage of the location and hospitality, to make travellers’ visits more meaningful. 

Tanveer Singh, Managing Director of Symphony Resorts, a luxury chain of hotels and resorts in the Andaman and Nicobar Islands, says religious and spiritual tourism are emerging market segments.

“We see exponential growth in hotel demand and higher hotel ADRs (average daily rate) as currently, it will take some time to build the desired inventory numbers where tourists can stay,” he says. 

Apart from Ayodhya, other pilgrim spots such as Shirdi, Amritsar and Tirupati have also seen consistent demand and higher occupancy for hotels. 

“With government concentration to promote Indian culture, heritage and religion, these cities should be the next target for hotel investors to look at,” says Singh.

Local destinations for growth

While driving tourists’ attention towards local destinations may appear a masterstroke, it also implies that the hospitality industry must gear up for a busy year ahead.

“India has many amazing places to visit; however, there is no hospitality ecosystem in place at the grassroots level of the locations,” says Puneet Sethi, Managing Director of Kaara Hotels and Resorts. 

Kaara is addressing this by joining forces with local bodies to bring the vision of ‘local gets vocal’ to life. 

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A weekend getaway in the unexplored Sindhudurg, experiencing rustic luxury in Coco Shambhala

Similarly, Ramee Group of Hotels, which has 40 mid-range hotels and service apartments across UAE, Bahrain, Oman and India, has upcoming projects in Jaipur, Jodhpur and Indore. Two more properties are also set to come up in Bhuj and Coimbatore.

The brand already has established hotels in Tirupati, Kolhapur, and Surat. 

“We consistently seek out exceptional locations and communities where we can introduce rich local culture to our guests,” says Saurabh Gahoi, Vice President, India, Ramee Group of Hotels.

Focus on islands 

With the Prime Minister’s recent push for Lakshadweep and the Finance Minister’s mention of the group of islands during the Budget, the archipelago will definitely garner interest from the hospitality and tourism sectors. 

Recently, the Tata Group announced its intention to set up two Taj-branded hotels in Suheli and Kadmat islands by 2026. More players will follow suit. 

“The government’s focus on promoting island tourism, particularly in Lakshadweep, is intriguing. We are actively exploring opportunities to extend our presence to these picturesque locations, curating unique and unforgettable experiences for our clientele,” says Tarun Gulati, Director of Himalayan Hotels. 

India has a vast coastline with the beaches of Goa, Kerala, Odisha, West Bengal, and Karnataka. The relatively unexplored Andaman and Nicobar Islands and Lakshadweep Islands spell huge potential for the tourism sector. 

“We have seen a surge in inquiries from travel agents for Lakshadweep. As tourism infrastructure develops in Lakshadweep, we will be launching holiday packages including sailing on cruise and overnight stay options,” says Chirag Agrawal, Co-founder of TravClan, a B2B platform catering to travel agents. 

TravelClan also plans to conduct webinars and educational programmes for over 15,000 travel agents to educate them on the potential of India, as a travel destination, including the islands of India.

Kaara Hotels and Resorts, which has properties across Gurugram, Jaipur and Jim Corbett, is actively pursuing opportunities to launch properties in the Andaman and Nicobar Islands. 

Ray of hope, but more action needed

Prior to the Interim Budget, stakeholders from the industry had shared with YS Life their great expectations from the government—industry status, infrastructure policies, tax restructuring, ease of licensing, and promotion of eco-friendly and sustainable practices. 

While many hospitality and tourism players call the Budget announcements a ‘ray of hope’, the sector says it was hoping for more than just a call for the development of tourist sites. 

“We were expecting the announcements to focus more around developing infrastructural policies for hotel companies and also on providing taxation benefits to the customers utilising the services from this industry,” says Sethi of Kaara Hotesl and Resorts. 

“This would create ample opportunities for the industry players to scale their business and explore various exotic and untouched regions for spreading hospitality services,” he adds. 

Gautam Aggarwal, Mastercard’s SA Division Head, agrees. 

“We welcome the government’s initiatives on developing iconic tourist centres and investing in tourism and connectivity infrastructure. Measures such as long-term loans to states will foster long-term development and unlock India’s tourism potential,” he says. 

He also hopes for more measures from the government to build air infrastructure and the hospitality sector. 

“This development will not just invite the world to explore our heritage but also ignite local economies and our pride,” he adds. 

Environmental impact 

Players in the hospitality industry believe that the development of tourism can come at a cost, and the government must take adequate steps to ensure it does not adversely impact the environment. 

“In addition to the government’s focus on strengthening infrastructure, we also need to mitigate the impact of over-tourism in accordance with global sustainability benchmarks,” says Shibulal. 

Shibulal suggests that this can be achieved through collaborations with private, public and non-governmental organisations in the industry. 

“One example of such an initiative would be establishing unique experiences in remote areas that would benefit from visitors and also aid in pulling tourists away from overcrowded destinations,” she explains

She also emphasises that the government must prioritise the well-being of native communities, the protection of heritage sites, the preservation of natural ecosystems, and the promotion of circular economies to ensure responsible consumption and production chains. 

Gulati resonates with Shibulal. “Considering the government’s initiatives, fostering sustainable and responsible tourism practices is of utmost importance,” he urges. 

Long-term measures

When the full Budget is presented by the government that comes to power after the 2024 Lok Sabha elections, all eyes and ears will be on the specific initiatives for the travel and tourism sector. 

Sethi believes the government should establish a unified platform for all hotel/resort licences and the taxation for social functions (seminars, weddings, etc.) should be reduced to 5%. He further adds that legal costs, such as registration fees, and land costs should be subsidised. “Urgently, a dedicated ministry is needed, recognising tourism’s potential GDP impact,” Sethi says. 

“We anticipate a transformative Union Budget 2024-25, hoping for targeted measures that will ignite recovery and stimulate growth,” Gahoi concludes.