Tourism

Highlights

• No major issue put forward by the industry has been addressed in the budget.

Budget Impact
Policy/Tax

Companies that plan to invest in hotels abroad will benefit from the capital account liberalisation which allow a company to invest upto $50 mn annually through the automatic approval route.

Outlook
The period 1997-99 witnessed a downtrend in the tourism industry. However this year seems to be seeing a turnaround with occupancies in the major metros, during the April-December, 2000 period, increasing by around to 3-4 per cent. There was a 6 per cent cumulative increase in tourist arrival between the April-September period this year as against 4.8 per cent in the corresponding period last year.

Most hotel companies have seen an increase in net profit and net sales in the last quarter (Q3).

The major players are Indian Hotels Company Ltd (IHCL) which operates under the Taj Group of hotels and EIH Ltd, which operates under the Oberoi Group of hotels. Most big hotel chains get a large share of their revenues accruing from the metros. 

Occupancies and the average room rates are likely to pick up in Mumbai, Bangalore and Chennai. This is due to an expected increase in business travellers. The Delhi market is expected to be difficult. The metros are witnessing a lot of room addition and it is expected that by March 2001, the premium segment will see a room addition of 1,847 rooms.

Rupee depreciation is another factor that positively impacts the industry. This is because as high as 60 per cent of the total earnings of most hotels are in foreign exchange. 

One of the main demands of the industry has been the removal of expenditure tax. 

Voices
	Though no specific issue put forth by the industry has been addressed, the budget is positive for the industrial climate in the country. Moreover the boost given to the IT sector, financial services and business per se will indirectly benefit the industry..  L. Krishna Kumar, Vice-President (Finance), Indian Hotels Company Ltd