Tour Operators Call For Tax Rollback to Revive Inbound Tourism

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While tourism to India has still not recovered, losing business to global players will hurt the Indian travel industry. Will they be able to take advantage of the opportunity?

The Indian Association of Tour Operators has requested the government to restore duty credit via the Service Export Incentive Scheme or introduce an alternative in the new foreign trade policy, as the country’s inbound tourism remains sluggish. The association also urged a rollback of the 5-20 percent tax — insisting that it be brought back to 5 percent or lower — which is collected at source on overseas tour packages announced in the Union Budget, effective July 2023. The hike in tax would hit the Indian outbound tour operators hard, as travelers could bypass them and book outside the country, causing losses for both the government and operators. In a letter to the government, association President Rajiv Mehra highlighted how the pandemic severely affected the tourism industry, with only 30-40 percent of inbound tourism to India having returned since international flights and tourist visas were revived. He also highlighted the challenges of competing with other countries due to high goods and services tax rates, the withdrawal of marketing and promotion activities in foreign countries, and the lack of alternative benefits, indicative of the stress the sector is reeling under. 

From five-star hospitality brands like Tata-Group owned Indian Hotels Company, Radisson and ITC Hotels to budget players such as potentially IPO-bound budget hotel operator and aggregator Oyo, companies are lining up to open new hotels in pilgrim city Ayodhya in the north Indian state of Uttar Pradesh. While Indian Hotels Company plans to open two greenfield properties with 100-room Vivanta and 120-room Ginger, Oyo also said it would add 50 properties in the city among which 25 will be homestays run by homeowners and another 25 will be small and medium hotels. Radisson Hotel Group is looking at launching two hotels in the city under their brands — Park Inn and Individuals. ITC Hotels is also exploring opportunities across its brands to bring them to Ayodhya to cater to the increased demand. 

India showcased diverse tourism offerings and highlighted its commitment to sustainable tourism practices at Dubai’s Arabian Travel Market 2023 — a leading global event for the travel and tourism industry — to attract travelers from the Middle East and North Africa markets. Encouraging inbound travel, the country also showcased ‘Incredible India! Visit India Year 2023’ campaign at the backdrop of India’s G20 Presidency to highlight unique tourism offerings of every state. Culture, heritage, adventure, and rural tourism along with niche tourism products such as cuisine, wellness, yoga, wildlife, and luxury were on display. More than 65 participants represented the India pavilion at the fair, including travel agents, tour operators, airlines, and hotels.

Tata-owned Air India is re-introducing its daily Mumbai-Coimbatore-Mumbai flight with effect from May 3. The A320-Neo fleet flight will also offer quick connections to Heathrow in London and San Francisco out of India’s financial capital Mumbai, the airline said in a statement. Flight AI 609 will leave Mumbai at 6:30 hours and reach Coimbatore in the south Indian state of Tamil Nadu at 8:20 hours. The return flight AI 608 will leave Coimbatore at 9:00 hours and reach Mumbai at 11:00 hours. The airline recently announced that it would hire over 1,000 pilots, including captains and trainers, as it expands its fleet and network. 

Amid the government looking to establish India’s capital as an international aviation hub, Delhi airport operator Delhi International Airport Limited has said the airport’s terminals will be able to handle 100 million passengers per annum once expansion work gets completed this year. With three terminals now, the airport handled around 65.33 million passengers, including 15.65 million international passengers, in the financial year 2023. “The government has asked Delhi airport and some of the major airlines to examine the global best practices on scheduling to ensure that international and domestic operations complement each other and provide enhanced connectivity from Delhi airport, essential for setting up India’s first international aviation hub,” the operator said in a statement.

Mumbai-based luxury real estate development company AweSpace Estate is set to develop more than 350 villa estates and mansions across India’s key travel destinations over the next two years with a revenue target of $305.7 million. The firm will be developing these residential retreats in Goa, Alibaug, Lonavala, Shimla, Nainital and Coorg in its first phase and in the Maldives, Europe, Australia and the U.S. in the second phase. “The move into the real estate market represents a diversification of our investment strategy, with a focus on meeting the lucrative and growing demand for luxury vacation properties in popular tourist destinations in India and overseas locales,” said Vijay Naraayanan, co-founder and CEO of AweSpace Ventures.

Dubai’s Department of Economy and Tourism has launched its latest summer campaign for the India market that captures the destination’s outdoor and indoor activities. “With the onboarding of outbound Indian travelers this summer, we aim to showcase unique offerings in the city, which will entice visitors from all age-groups making it an exciting destination for the summer break,” said Bader Ali Habib, head of South Asia at Dubai Department of Economy and Tourism. Earlier this year, travel site Tripadvisor ranked Dubai as the world’s most popular destination for holidaymakers in its 2023 Travellers’ Choice Awards for its luxury hotels, traditional souqs and family friendly attractions.

Guwahati-based airline Flybig has launched a direct daily Guwahati-Dibrugarh-Guwahati flight under the Assam Tourism Development Corp.’s viability gap funding to promote intra-state air connectivity. Under the viability gap funding, the state government will make up for the shortfall if the flights operate at less than 50 percent of their seating capacity to ensure the routes remain viable. The maximum price has been fixed at $49 and any additional prices will be borne by the state. Earlier in March this year, the Assam government had signed a memorandum of understanding with Big Charter Private Limited (or Flybig) under which daily flights would operate connecting Guwahati with Dibrugarh and Silchar in the northeast Indian state of Assam

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