Budget disappoints travel industry, except for heritage tourism

February 29th, 2008 - 11:07 pm ICT by admin  

A file-photo of P. Chidambaram

Mumbai/New Delhi, Feb 29(IANS) Even as the tourism and hospitality sector said it has been largely ignored by the national budget for 2008-09 that Finance Minister P. Chidambaram presented Friday, it welcomed the concessions to build hotels at India’s world heritage sites. “The budget failed to grant infrastructure status to the hospitality business which we were hoping since long. Even the pending issue of depreciation on hotel buildings has remained unchanged,” said S.P. Jain, managing director of Pride Group of Hotels.

The tourism and hospitality industry has, however, welcomed the tax holidays that are now available for setting up two-, three- and four-star hotels at heritage sites for the next five years.

“The budget has fallen short of our expectations. While the 5-year tax exemption on new two-, three- and four-star hotel properties in Unesco World Heritage Sites is welcomed, we were hoping that a similar exemption would be granted across all tier-2 and tier-3 cities,” said Chender Baljee, chairman and managing director of Royal Orchid Hotels.

“The tax holidays for hotels at Unesco sites would definitely give a boost to heritage tourism and are steps in the right direction. We, however, expected that the benefits would be extended to the other verticals as well,” said Pradeep Jain, chairman of Parsvnath Developers Ltd, which has recently tied up with the ITC group for its hotel business.

“We are building a hotel near Hampi in Karnataka in the next five years, so we can benefit from the tax holiday near Unesco heritage sites,” Keshav Balaji, vice-president of corporate affairs at Royal Orchid Hotels, told IANS.

“This is certainly a populist budget. The tax relief for construction of hotels in heritage areas in the country will be a huge boost to this sector. Based on the budget offerings, Phoenix Group is definitely open to investing in properties at heritage locations across the country,” said Sanjoy Bhattacharyya, vice-president of finance for Radisson Goa and Kumarakom at Phoenix Group Global.

But Balaji said that tax holidays should have been given on a pan-India basis considering that there is a shortage of 100,000 hotel rooms.

Director of Cox and Kings India Ltd Peter Kerkar, said: “Although heritage sites have a crying need for quality accommodation, India goes beyond Taj Mahal and Unesco.”

The increase in personal income tax exemption will lead to an increase in disposable income and lead to a growth in travel spends. This is good news for the travel industry, said Kerkar.

Lalith Sheth, chairman and managing director of Raj Travel and World, said: “The budget was disappointing. We had asked for exemption from service tax and fringe benefit tax for tour operators. But it remains unchanged.”

Echoing a similar sentiment, chairman of Stic travel group and Confederation of Tourism Professionals Subhash Goyal, said: “The government is killing the goose which is laying golden eggs. We are responsible for creating jobs in export and handicrafts sectors.”

Goyal said after depreciation of the dollar, there was a drop of genuine tourists coming to India.

“Rupee appreciation has made tourism more expensive here and there has been a drop of tourists coming here.”

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