Hotel industry's contribution to India's GDP to hit $1 trillion by 2047: HAI

New Delhi: The direct contribution of Indian hotel industry to the country's GDP is estimated to touch $1 trillion by 2047 driven by a significant jump in domestic tourist visits and international arrivals, according to a report.

As per 'Vision 2047: Indian Hotel Industry' report by the Hotel Association of India (HAI) and Benori Knowledge, the direct contribution of the hotel industry to GDP was $40 billion in 2022 and is expected to reach $68 billion by 2027. By 2047, it will reach around $1 trillion, it added.

The hospitality industry body also pointed out that for the sector to achieve its target, the accommodation growth will have to go beyond the metros to two and three-tier cities and also to the rural areas. The report, however, clarified that the total contribution includes aspects of services from corresponding industry verticals such as food and beverage, salon and spas but excludes consideration of services market growth and thus taking out scenario-based contribution estimates.

According to the report, the estimated growth can be attributed to factors such as GDP growth and increase in income level, increase in inflow of domestic tourists and foreign tourist arrivals (FTA). In the mid-term (2027-2037), domestic tourist visits are expected to increase from 677 million in 2021 to 1.5 billion by 2030 and are further expected to jump to 15 billion by 2047 in the long term (2037-2047), it added.

As for foreign tourist arrivals (FTAs) in India, the report said these are projected to increase from 1.5 million in 2021 to 15 million by 2024, and touch 25 million by 2030 and "are further projected to grow attracting 100 million tourists by 2047". "The number of domestic and international tourists visiting various states in India for business and recreational reasons is rapidly increasing. All these factors have created new opportunities in tourism and the hospitality industry," the report said.

While macroeconomic factors, technology, environment and social sustainability, and policy support will be important factors, HAI Secretary General M P Bezbaruah said that "overarching all the factors will be the sustainability of the sector and of all the operations". On the policy front, he said, "We have said that the government's policy of convergence of all stakeholders is a crucial factor because the hospitality and tourism will not achieve this target unless for example, the civil aviation grows to the same extent that we have expected, unless the connectivity to the remote areas which we are assuming there'll be great growth, is happening through Gati Shakti and other things."

Also on the accommodation front, Bezbaruah said in order to host the expected rise in both domestic and foreign tourists, destinations need to increase not in the metro cities but has to spread out far wider "otherwise there will be so much pressure that some of the places will become unviable". "Our vision is that the accommodation growth will have to go to two-tier, three-tier cities and also to the rural areas because real tourism is going to be one major plank of the future tourism because tourists are looking for new experiences," he asserted.

Bezbaruah also reiterated the need for giving industry and infrastructure status to the sector, saying it would help in the development of more rooms in order to bridge the demand and supply gap. The report pointed out that after the pandemic, the hospitality industry witnessed a shift in consumer preference and the service providers have found new ways to move forward, with hotel companies acknowledging the significant potential of domestic tourism.

"Major players are diversifying into the mid-market segment to develop budget hotels and cater to increase the inbound travel," it said, adding, the industry is on its journey for digital transformation, where operations are becoming leaner.