Pradeep Shetty, President of the Federation of Hotel and Restaurant Associations of India (FHRAI), is currently preparing for the association's 54th annual convention, set to take place in October 2024. In an exclusive interview with Kumar Chellappan, Shetty shared insights into the immense potential of India’s hospitality and tourism sector, its challenges, and the expectations from both the central and state governments
What is the real potential of the hospitality and tourism industry?
India’s hospitality and tourism industry is on a remarkable growth trajectory. According to Mordor Intelligence, the sector is projected to reach a valuation of USD 247.31 billion by 2024, with forecasts indicating it could soar to USD 475.37 billion by 2029, growing at a compound annual growth rate (CAGR) of 13.96%. Key trends driving this growth include a shift towards sustainable tourism, with eco-friendly accommodations and community-based initiatives gaining traction. India’s rich cultural heritage, diverse landscapes, and geopolitical stability further bolster this expansion. However, to fully capitalize on its potential, the industry must address sustainability, infrastructure development, and adaptability to evolving consumer preferences.
How do you view the current and future employment trends in the hospitality sector?
Despite challenges posed by the COVID-19 pandemic, the hospitality sector is expected to rebound strongly. The India Food Services Report-2024 projects that by 2025, the sector will employ approximately ten million people. The industry's resilience, coupled with advancements in accommodation and government initiatives to promote tourism, supports its significant role in job creation.
What are the prospects for job creation in the hotel and restaurant industry over the coming years?
India’s hospitality and tourism sector has the potential to generate 50 million direct and indirect jobs in the next 5-7 years. This growth will depend on robust government support, including granting industry and infrastructure status at various levels. The sector’s resilience and strategic investments, along with effective policy implementation, are critical for shaping its employment landscape. Notably, the industry has already seen a 14% increase in Revenue Per Available Room (RevPAR) in the first half of the current fiscal year, with expectations of a further 15-20% growth in the latter half of FY24
What does the industry expect from the Government of India and state governments?
The industry seeks favorable policies that encourage investment, reduce regulatory burdens, and provide tax incentives. Essential infrastructure development, such as improved roads, airports, and connectivity, is crucial. State governments should align regional policies with national goals, streamline hotel project approvals, and support skill development through training programs. Promoting India as a global destination requires targeted campaigns that highlight its cultural diversity and unique experiences. Post-pandemic, enforcing health and safety protocols is vital for rebuilding traveler confidence, while state governments should foster sustainable tourism and create a business-friendly environment by simplifying licensing and permits. Public-private partnerships and engagement with industry stakeholders are also key to enhancing tourism growth.
Has the Government of India shown any commitment to granting infrastructure status to the hospitality sector?
The Government of India’s interest in granting infrastructure status to the hospitality sector is a promising development. If approved, this status could attract more investments and empower the sector to contribute to the development of the 50 new destinations recently announced by the government.
What benefits would infrastructure status bring to the industry?
Granting infrastructure status to the hospitality sector could provide access to more favorable financing options, including better interest rates. Currently, the lack of industry status in several states results in higher power tariffs and interest rates. Infrastructure status would incentivize both domestic and international investments, fostering stability and growth within the sector.
As the current President of FHRAI, how well is the Federation positioned to address these issues with regulators?
The Federation of Hotel and Restaurant Associations of India (FHRAI), founded in 1955, is the apex hospitality association in India and the third largest globally. It represents 55,000 hotels and 500,000 restaurants across the country. FHRAI advocates for the industry’s interests, engaging with government bodies, regulatory agencies, and other stakeholders to promote growth and address challenges.
What are the major issues facing the industry, and what do you expect the government to do about them?
The hospitality industry faces several critical challenges that require strategic solutions. First, GST rationalization is needed to implement a uniform rate of 12% across all hotels. Second, separating GST on food services from room rates would address high costs and complex regulations. Third, granting infrastructure status would provide access to better financing options and encourage investment. Finally, uniform sectoral reforms and streamlined business processes under the Business Reforms Action Plan (BRAP) would attract more investments. The government should simplify regulations, support infrastructure development, and provide incentives for training and technology to foster a vibrant and resilient tourism industry. Addressing these issues will enhance service quality and support industry growth.
