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Hotels
The hotel sector has been witnessing a gradual recovery in the key operating parameters, backed by an
improvement in the economy and increased foreign tourist arrivals. In the last budget, the industry was given a
boost with investment-linked tax incentives for capital expansion in hotels under the two-star and above categories.
Following are the key demands of the industry from the Union Budget 2011-12, which would enable it to continue
on its growth trajectory:
The hotel industry has long been demanding the grant of infrastructure status under Section 80 IA (applicable to
airports and ports). This will enable hotel players to get the benefit of total deductions on profits and gains for 10
years. The granting of infrastructure status would provide more scope for reinvestment into new capacity, thereby
paving way for more guest rooms. In turn, it will help lower tariffs and will make India a more affordable tourism
destination, on the lines of Malaysia, Indonesia and Sri Lanka, further attracting foreign tourists.
The industry also wants the government to restore the depreciation rate to 20%. The depreciation rate was at 20%
till March 2007; however, it was lowered to 10% later. The reason behind this demand is that hotel buildings (like
factory plants) are used around-the-clock and require heavy investments for constant renovation and upgradation.
Overall, we are positive on the sector.
Budget Expectations
Head Current Status Wish List Potential Impact
Infrastructure status Not granted
Infrastructure status under
Section 80IA of the Income
Tax Act
Will enable hotel players to get the benefit of total
deductions on profits and gains for 10 years. Positive for
all hotel players.
D iti Depreciation Rate 10% 20% Will positively impact cash flows and tax outgo of all
hotel players
Top Pick: TAJ GVK
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hotels
The hotel sector has been witnessing a gradual recovery in the key operating parameters, backed by an
improvement in the economy and increased foreign tourist arrivals. In the last budget, the industry was given a
boost with investment-linked tax incentives for capital expansion in hotels under the two-star and above categories.
Following are the key demands of the industry from the Union Budget 2011-12, which would enable it to continue
on its growth trajectory:
The hotel industry has long been demanding the grant of infrastructure status under Section 80 IA (applicable to
airports and ports). This will enable hotel players to get the benefit of total deductions on profits and gains for 10
years. The granting of infrastructure status would provide more scope for reinvestment into new capacity, thereby
paving way for more guest rooms. In turn, it will help lower tariffs and will make India a more affordable tourism
destination, on the lines of Malaysia, Indonesia and Sri Lanka, further attracting foreign tourists.
The industry also wants the government to restore the depreciation rate to 20%. The depreciation rate was at 20%
till March 2007; however, it was lowered to 10% later. The reason behind this demand is that hotel buildings (like
factory plants) are used around-the-clock and require heavy investments for constant renovation and upgradation.
Overall, we are positive on the sector.
Budget Expectations
Head Current Status Wish List Potential Impact
Infrastructure status Not granted
Infrastructure status under
Section 80IA of the Income
Tax Act
Will enable hotel players to get the benefit of total
deductions on profits and gains for 10 years. Positive for
all hotel players.
D iti Depreciation Rate 10% 20% Will positively impact cash flows and tax outgo of all
hotel players
Top Pick: TAJ GVK
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