Notwithstanding the economic slowdown, India’s hospitality sector is likely to witness high growth in the long-run driven by increasing domestic travel, according to an industry survey.

“Majority of respondents from hospitality industry believed that India will not be affected by the economic downturn over the long-run.

“The growth in the sector is largely expected from the domestic travel - business or leisure,” industry body CII and consultancy firm PwC said in a joint study.

It said that with consumers becoming more demanding and price-conscious, the budget and mid-market segments are the possible growth areas.

“Therefore, budget and mid-market segments have emerged as the most preferred investment categories,” the study said.

“There has been a huge upsurge in the Indian domestic travel due to which the budget and the mid-market segments in this sector emerge as strong opportunities especially in view of the recessionary trends in the West,” CII Director General Mr Chandrajit Banerjee said.

The study further said that there are a number of challenges faced by the industry while managing talent and the tax and regulatory issues.

“The high costs of real estate and lack of tax sops are acting as hurdles for the hospitality sector. These challenges are further accentuated by overall infrastructure deficit in the country,” the study said.

“Rationalisation of the number of tax levies and implementation of single-tax regime will benefit the industry,” it added.

(This article was published on February 12, 2012)
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