Looking good, but there's much more room for improvement

The domestic tourism industry in India is recovering after witnessing two bad years which burnt a hole in the bottomlines of hotel and travel companies in the country. The third quarter results were encouraging with a significant jump in turnover and net profits, thanks to improved occupancy rates owing to enhanced corporate activities.
All major players including Indian Hotels, ITC Hotels and Bharat Hotels showed improved performance in the third quarter of this fiscal.
Hoteliers attribute this improved performance to enhanced corporate activity. While trade meets, seminars and international exhibitions played a predominant role, most hotel companies also went in for a major transformation by streamlining of operations, cost-cutting and making an extra effort to market properties. In order to improve performance, the hotel industry has asked the government to take some strong steps such as abolition of hotel expenditure tax, giving an infrastructure status to tourism industry, complete suspension of service tax which was extended by the government till March 31, ‘03 and reduction of import duty on liquor.
According to Shyam Suri, secretary-general of the Federation of Hotel and Restaurant Associations of India (FHRAI), “The government should consider rationalisation of taxes to avoid multiplicity of taxes on the same item of expenses and to have an equitable tax structure which remains fair to the consumer.�
He said since luxury tax of state governments is being charged on hotel guests, there is no justification for charging expenditure tax of the Centre on room charges. “The raising of the lower limit of expenditure tax from Rs 2,000 per day per person to Rs 3,000 per day in the last budget actually resulted in lowering the limit from Rs 4,000 to Rs 3,000. This must now be raised,� he added. He said the import duty on liquor, specially the additional duty, is exorbitantly high and needs to be further reduced. In addition to this, he said, in order to create better investment climate, the industry should be given infrastructure status. A major constraint impeding growth in tourism was India’s perception as a high-cost destination owing to multiplicity of taxes imposed by the Centre and the state. The taxes added upto 30-40% of hotel bills of tourists in India as compared to 3-9% tax payable in other destinations like Indonesia, Hong Kong, Singapore and Egypt.