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Budget 2010-11: Hotel

The hotel sector which has been suffering due to economic slowdown may have got a shot in the arm with the readjustment of tax rates. This readjustment has left disposable income in the hands of the travellers. Further, the focus on road and infrastructure development is a positive for the sector as this will help boost tourism. Moreover, investment linked deductions are expected to incentivize hotels to increase capacity. The Union Budget 2010-11 has been positive for the hotel sector and is expected to help accelerate the recovery of the sector.

 Budget Measures

  • Focus on road and infrastructure development.
  • Special Golden Jubilee package for Goa to preserve the natural resources of the State by restoring Goa's beaches which are prone to erosion, and increasing its green cover.
  • Providing the tourism industry an investment linked deduction applicable to two star hotels and above across the country.
  • Increase in MAT rate from 15% to 18% of book profits.
  • Adjustment in income tax slabs thereby increasing the in-hand income for 60% of the tax payers.
  • Focus on returning to a GDP growth of 9% and then crossing the double digit barrier.

     Budget Impact

  • Infrastructure growth is very important for tourism. Development of roads, railways and airports play an important part in developing the tourism sector.
  • Protection of Goa's beaches and increase in green cover will help promote an important tourism destination in our country.
  • Readjustment of tax rates will help put additional money in the hands of the travelers.
  • Investment linked deduction will provide the hotel industry an incentive to expand and increase room capacity.

     Company Impact

  • Better infrastructure and higher GDP growth will help the hotel sector grow. Major hotels to benefit are Indian Hotels, Taj GVK, Oriental Hotel, EIH and Hotel Leelaventure.
  • Readjustment of tax rates which has put more money in the hand of the domestic travelers will help boost the fortunes of the hotel sector. This is a positive for Indian Hotels, Taj GVK, Oriental Hotel, EIH and Hotel Leelaventure.

    Budget Impact: Hotels Sector Analysis for 2009  | Hotels Sector Analysis for 2011
    Latest: Performance Of Hotels Stocks | Hotels Sector Report

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    Sector Performance
    EIH 193.1
    TAJ GVK 218.3