Yearender: Not much to cheer for hospitality industry in 2013

TouristsIndian hospitality industry witnessed an 'average' year in 2013 as slowdown in Europe and other nations hurt tourist arrivals. (Thinkstock)

For a country aspiring to be one of the sought-after global tourist destinations, the Indian hospitality industry witnessed an 'average' year in 2013 as slowdown in Europe and other nations hurt tourist arrivals, while taxation issues continued to plague the sector.

The natural calamity that struck Uttarakhand badly hurt tourism in pilgrimage locations in the state.

However, considering the overall long term potential of the country, several companies went ahead with their expansion plans

Be it from global hospitality chains such as Starwood, InterContinental and Kempinski, or domestic players like Apeejay Surrendra Park Hotels and Lalit Suri Hospitality, the announcements kept coming.

This was also a year in which the Indian hospitality sector saw a change of guard with the old generation Capt Nair (founder Leela Hotels), PRS Oberoi ( Oberoi Hotels) and R K Krishna Kumar (Indian Hotels Company) checking out from their respective active roles.

Significantly for the Tatas, this was the year when they decided to give up their 7-year-old chase of Bermuda-based Orient Express Hotels as Indian Hotels Company Ltd announced it was not pursuing its USD 1.86 billion bid after earlier two failed attempts.

"This was not a very good year for the hospitality industry, it was an average year. There was dearth of travel as slowdown in Europe and other countries affected foreign tourist arrivals. Domestic tourists were the saving grace," Federation of Hotel and Restaurant Associations of India (FHRAI) President S M Shervani said.

Also, the occupancy levels hovered around 50-65 per cent depending on locations and properties, he added.

The sector was up in arms when Finance Minister Finance Minister P Chidambaram, in the Budget, announced that service tax would be imposed on all air-conditioned restaurants.

Looking back, Shervani said taxation structures made Indian hospitality sector uncompetitive against its global peers, saying domestic firms face anywhere between 19-25 per cent of overall taxes as against 8 per cent on an average in international markets.

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