Hotel industry to contribute $1.5 tn to GDP by 2047

The Indian hotel market has significant growth opportunities and is poised to contribute $1,504 billion to the country’s overall gross domestic product (GDP) by 2047, from $65 billion in 2022, suggests a report by the Hotel Association of India (HAI). It forecasts that the demand for hotels will increase over the next 25 years. However, supply will grow in the same ratio if there remains a continuous development plan for the pipeline and new projects.

The association anticipated the growth to be at 11%, 13% and 15% in the short, mid and long term for the overall hospitality industry. The total contribution includes aspects of services from corresponding industry verticals such as food and beverages, salon and spas, etc. This excludes consideration of services market growth and therefore it also excludes scenario-based contribution estimates.

The direct contribution of the hotel industry to GDP was $40 billion in 2022 and is expected to reach $68 billion by 2027, and $1 trillion by 2047.

The report highlighted that to reach the $3 trillion economic target by 2047, the tourism and hospitality sector will need policy support, including but not limited to the ease of doing business and infrastructure status. There is an urgent need for a robust tourism policy structure, a rise in national and international tourist footfalls and 100% foreign direct investment, it said.

Policy and the ease of doing business will play a key role in the way that tourism shapes up, said Madan Prasad Bezbaruah, HAI’s secretary general and a former secretary in the ministry of tourism.

Bezbaruah said within the tourism and hospitality sector, 30 key segments had been identified by the government which are important for the sector to function properly to reach its desired size.

“Different states have different policies when it comes to tourism. While some have given the sector an industry status, others have not. We do not understand why because it doesn’t cost states money to do this,” he said. The report added that granting infrastructure status to hotels will facilitate long-term loans at competitive interest rates, thereby boosting the industry’s growth. (Source: The Mint)