India's hotel market trends spur growth

After demonetization—the switch to cashless, electronic transactions—a goods and service tax (GST) was introduced in a bid to realign the disparate tax structure and ensure greater compliance.

Because of or despite changes in economic policies, the tourism sector in India is thriving.

“GST is good for the hotels,” said Abhijeet Umathe, former associate director of hospitality and leisure at Knight Frank India, who is now heading startup Eco Lodge Hotels. “Hotels were paying a host of taxes for which they were getting no input credit. Now that will change. It will also bring transparency into the system of pricing as the prices will be uniform and will not vary from state to state.”

Vikramjit Singh, president of Lemon Tree Hotels, added that “with a consistently growing middle class and increasing disposable income, the tourism and hospitality sector is witnessing a healthy growth and accounts for approximately 7.5% of the country’s GDP.”

That’s due in large part to efforts by the Indian government to promote tourism, said Alok Chakravarty, director of sales and marketing for New Delhi-based Shangri-La Hotels & Resorts.

“In the recent years, the Indian government has taken several steps to boost travel and tourism, which has benefited the hotel industry in the country. Also, the entry of multinationals and Indian hotel chains expanding internationally only reinforces the segment’s untapped business potential,” Chakravarty said.