Political Analysis of Hotel Industry:
An unstable political situation in India made the foreign investor cautious leading to both a slowdown in foreign investment and business travel. However, government is trying its best to boost tourism in India which will further boost hotel industry.
The hotel industry is at present going through one the toughest periods. Weak economic conditions have lead to a steep decline in foreign as well as Indian business arrivals. Tourist arrivals have also seen a major decline following 9/11 and because of increasing terrorism.
The US government’s appeal to its citizens not to travel to Asian & African countries affected the tourism & hotel industry as the occupancy crisis hit the industry.
Crumbing to WTO pressure Government of India has reduced the tariffs & duties on various items which proved attractive for foreign traders to invest & perform business in India. With improved relations & trade affairs with other countries encouraged trade & travel which proved to be a boon for the Indian Hotel industry.
The FDI policy on 100% investment through the direct route is still offshore this has created a confusion in the minds of foreign venture capitalists as the laws in Joint Venture investment reveal a different story.
With the limitations on granting of visas by the External Affairs Ministries & policies of the embassy’s in granting visas & maintaining relations has affected the growth of hospitality industry over the years.
The Central Government and the State Governments are expected to be taking various opportune steps in the hotel sector like divesting its stake in the Indian Tourism Development Corporation (ITDC) and the Hotel Corporation of India, both organizations own a large number of hotels in prime locations.
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