Travel industry packs its bags for a festive takeoff

The GST cuts have sparked hopes in the travel and hospitality industry, reeling from weak consumer sentiment in the fiscal first quarter, following the Pahalgam terror attack, Air India crash, and the Israel-Iran conflict which had disrupted international flight schedules.

With eating out and staying at budget hotels set to get cheaper, the industry is expecting a spurt in holiday bookings during the ongoing festive season and the coming quarter.

The GST Council, the apex decision-making body on the indirect tax, late Wednesday approved lowering of the GST rate on hotel rooms with tariffs of less than or equal to Rs 7,500 per day to 5% without input tax credit (ITC), from 12% with input tax credit (ITC) earlier.

Sudeep Jain, MD, Southwest Asia, IHG Hotels & Resorts, said the tax rationalisation will make quality hospitality more accessible to domestic travellers, further boosting tourism demand beyond the metros.


Sidharth Gupta, co-founder and CEO of Treebo Hospitality Ventures said almost the entire portfolio of the company falls under the Rs 7,500 bracket, and the tax cuts will help offer reduced prices to guests.

“The GST reforms take effect from September 22, coinciding with the start of Navaratri, and coming nearly a month ahead of Diwali. The timing is significant for the travel and hospitality sector, as it overlaps with one of the busiest booking periods of the year,” said Rajesh Magow, co-founder and group CEO, MakeMyTrip. Magow said the reduction in tax is likely to directly influence last minute decisions, giving a boost to festive season demand.

Searches for domestic destinations such as Ayodhya, Varanasi, Jaipur, are up by nearly 30% over last year on Yatra, while airfares on Hyderabad routes have already doubled, said Bharatt Malik, senior VP for the flights and hotel business at Yatra. “Flight fares for Patna routes are up nearly 50%,” he added.

Manjari Singhal, chief growth and business officer at Cleartrip said the company is seeing an uptick in travel across cities such as Kolkata, Dehradun, Bhubaneswar, and Pune, with bookings rising by 5-10% over last year, and airfares on certain routes like Hyderabad, Lucknow, and Pune rising 7-12%.

Scapia is experiencing a 50% jump in pre-festive bookings across flights, trains and buses, said CEO and founder Anil Goteti.

Airlines are counting on this year’s festive season to ignite a rebound in travel demand. Domestic air passenger traffic fell 2.9% year-on-year to 12.6 million in July, according to Directorate General of Civil Aviation (DGCA) data.

To boost demand, Air India has announced a special sale on Business Class and Premium Economy tickets for short-haul select international routes, while India's largest airline IndiGo is looking to add capacity in the second half of this financial year.

SD Nandakumar, president and country head for holidays and corporate tours at SOTC Travel said given that the Indian festive season coincides with autumn, international trips and itineraries include Alpine trails in South Korea and Japan, Northern Lights excursions in Finland and trips to Germany including Oktoberfest.

Vibhas Prasad, director at Leisure Hotels Group said for domestic travellers, lower tax rates translate into longer stays and should help boost confidence in opting for higher category hotels. "This is expected to drive stronger occupancies not only at established leisure destinations but also at emerging hubs that are steadily finding their place on holiday itineraries."