Slowdown dents tourism & hospitality sector

While the hospitality industry is euphoric about a possible cut in goods and services tax (GST) for high-end tariffs, with the stocks of top hotel companies rising; data released by the Ministry of Tourism shows tepid foreign tourist arrivals (FTA) in India. For instance, between January and July, FTAs grew by about 2.1% from the year-ago period, compared to 5.7% y-o-y growth in 2018.

The aviation industry, which offers significant patronage to premium hotels, has also endured losses & even closure. This is likely to dampen investor sentiment. Further, lower utilization of hotel rooms is bound to erode the industry’s profit margins. 

This scenario is likely to continue amidst the economic slowdown and geopolitical tensions. Rashesh Shah, analyst, ICICI Securities Ltd, opines: “The general slowdown in the economy, along with the ongoing monsoon, will negatively impact occupancy levels in hotels in the medium term.”