20 May 2024

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Hotel industry’s contribution to India’s GDP is expected to reach USD 1 trillion by 2047

The hotel industry is expected to reach $1 trillion by 2047. The hotel industry body also stated that in order for the sector to accomplish its objectives, accommodation expansion would need to extend beyond metro areas into second and third-tier cities, as well as rural areas.

According to research, the direct GDP contribution of the Indian hotel industry would exceed USD 1 trillion by 2047, owing to a significant increase in domestic and international tourism.

The Hotel Association of India and Benori Knowledge published a study titled “Vision 2047: Indian Hotel Industry” that estimates the hotel sector’s direct GDP contribution at USD 40 billion in 2022 and USD 68 billion in 2027.

The analysis, however, made it apparent that the overall contribution includes elements of services from important industry sectors such as food and beverage and salons & spas but excludes consideration of services market growth, hence removing scenario-based contribution projections.

According to the study, the expected growth can be attributed to factors such as GDP growth, income level development, and an increase in domestic and international visitor arrivals (FTA).

Domestic tourist visits are expected to increase from 677 million in 2021 to 1.5 billion by 2030 in the medium term (2027-2037), and then to 15 billion by 2047 in the long term (2037-2047), according to the report.

According to the report, 1.5 million international visitors are expected to arrive in India in 2021, 15 million by 2024, 25 million by 2030, and “are further projected to grow to attract 100 million tourists by 2047.”

“A growing number of local and foreign visitors travel to various Indian states for both business and pleasure.” According to the report, these variables have created new opportunities in the tourism and hospitality industries.

Despite the importance of macroeconomic difficulties, technology, environmental and social sustainability, and governmental aid, M P Bezbaruah, secretary general of HAI, told PTI that “overarching all the factors will be the sustainability of the sector and all the operations.”

In terms of policies, he stated, “We have said that the government’s policy of convergence of all stakeholders is a critical factor because hospitality and tourism will not achieve this target unless, for example, civil aviation grows to the extent that we have expected, unless connectivity to remote areas, which we are assuming will grow significantly, happens through Gati Shakti and other things.”

To handle the expected increase in both domestic and foreign travelers, Bezbaruah stated that destinations must expand outside of big cities because “otherwise, there will be so much pressure that some of the places will become unviable.”

“Our vision is that accommodation growth will have to go to two-tier, three-tier cities, and also to rural areas because real tourism is going to be one of the major planks of future tourism because tourists are looking for new experiences,” he added.

Bezbaruah also underlined the importance of giving the sector industry and infrastructure status, arguing that doing so will drive the development of more rooms and narrow the supply-demand gap.

According to the report, the pandemic caused a shift in client preferences in the hotel sector, and service providers identified inventive ways to move forward. Domestic tourism has begun to be recognized as having huge potential by hotel industry companies.

“Major players are diversifying into the mid-market segment to develop budget hotels and cater to increase inbound travel,” said the report, noting that operations are becoming leaner as the industry transitions to digital transformation.

Hotel Industry contribution in Indian Economy

The Indian economy is predicted to grow at an unprecedented rate in the future decades, with the hotel industry making a significant contribution. According to the Hotel Association of India (HAI), the hotel industry sector has the potential to contribute up to USD 1 trillion to India’s GDP by 2047. The hotel industry has played an important role in propelling the country’s tourism, employment, and infrastructure development. This article dives into the several aspects that support HAI’s bold claim.

According to the most recent data, the hotel business already contributes significantly to India’s GDP. With a growing middle class, improved access to travel options, and an increase in international tourism, the sector has seen rapid expansion. Although the COVID-19 epidemic was a brief setback, the sector has demonstrated resilience through measures like digitalization, hygiene advancements, and tailored experiences.

The USD 1 trillion contribution mark is likely to be reached as a result of the expected exponential growth rate in both domestic and international tourism. Various public and private changes and investments are expected to accelerate this growth even further.

The hotel industry sector is labor-intensive, requiring a wide range of managerial and manual skills. It is estimated that every USD 1 million invested in this business will generate about 78 direct and indirect jobs. With the sector expanding at an unprecedented rate, job possibilities will be plentiful, bolstering the country’s socio economic foundation.

Another area where the hotel business has an impact is infrastructure development. Expansion of hotels and related services provides value to local infrastructure ranging from urban to rural areas. It improves roads, encourages the expansion of neighboring businesses, and needs improvements in services such as electricity and water delivery.

To cater to a tech-savvy generation and enhance operations, India’s hotel business is embracing cutting-edge technology. From artificial intelligence-based customer care to blockchain technology for secure transactions, this boosts GDP and propels the country forward in technological adoption.

The government’s emphasis on ‘Ease of Doing Business’ is projected to have a substantial impact on the hotel business. Measures such as single-window clearance, tax breaks, and incentives for tourism infrastructure investment make India an increasingly appealing market for major hotel chains.

Development Goals By 2047

The hotel industry sector intends to connect itself with sustainable development goals by 2047. Eco-friendly hotels, trash management systems, and community engagement programs are just a few examples of efforts that will benefit the economy and promote sustainable living.

The development is projected to be centralized in critical cities as well as in regional locations. This extensive growth is expected to contribute to balanced regional development, which is a crucial influence in the country’s overall GDP.

The Hotel Association of India’s ambitious objective of USD 1 trillion in contributions by 2047 is a tribute to the hotel industry’s potential and a blueprint for multi-dimensional growth.

Employment, infrastructure, technical advancements, and long-term development are all factors that contribute to this massive total. The industry is well on its way to become a cornerstone of India’s economy in the coming decades, with proper legislative support and new business models.