Advocating for a change: IHCL's Puneet Chhatwal pushes for 'industry' status in the hospitality sector

In a resounding call for reform, Puneet Chhatwal, the Managing Director and Chief Executive Officer of the Indian Hotels Company Limited (IHCL), underscored the imperative need for the hospitality sector to be accorded industry status. Speaking at the inauguration ceremony of Taj Taal Kutir hotel in Kolkata, Chhatwal elucidated the pervasive challenges faced by the sector, particularly the burden of being categorised as a luxury entity, resulting in the imposition of the highest tax rates without commensurate exemptions.

Chhatwal said that the call for industry status extends beyond the confines of IHCL, resonating with the broader spectrum of the hospitality industry. The crux of this demand lies in recognising the sector’s pivotal role in the economic landscape and the multifaceted benefits that industry status would confer.

“92% of hotel rooms in India belong to non-luxury segment, yet the taxation is high. What we are looking for is thus an industry status, but it remains a state subject and we have to reach out to every state for getting the benefits,” he said.

According to a report by Hotel Association of India, the hotel industry’s direct contribution to GDP was $40 billion in 2022 and is expected to reach $68 billion by 2027. This will jump to $1 trillion by 2047, the report estimated.

Chhatwal said the hospitality sector also offers vast employment even to allied businesses such as a milk supplier and thus an industry status is a great thing.

The push for industry status, according to Chhatwal, is not merely a matter of financial relief; it is a strategic move that could unlock various avenues of growth. He said the potential advantages range from access to cheaper loans to subsidies that could catalyse transformative changes in the sector.The plea for industry status resonates with the broader economic narrative of India. With ambitious goals of becoming the world’s third-largest economy, the country is witnessing substantial infrastructure development, potentially leading to increased disposable income and higher discretionary spending.Chhatwal’s optimism about the hospitality industry’s resilience was palpable. Despite the severe setbacks faced during the pandemic, he is confident about the industry’s ability to not only weather the storm but to thrive in the aftermath. This optimism emanates from a foundation of strong management and operational strategies that have fortified IHCL against adversities.

IHCL, under Chhatwal’s stewardship, stands as a net debt positive entity, boasting robust cash reserves. A noteworthy feat, especially considering the tumultuous period of zero revenue endured during the COVID-19 crisis. More significantly, IHCL emerged as a compassionate employer, abstaining from layoffs despite the economic challenges, a testament to the company’s commitment to its workforce.

Aligned with the industry’s aspirations, prominent lobby bodies such as FICCI and CII have joined the chorus for the industry status.


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