The International Finance Corporation (IFC) is working on 3 tourism development projects in India: 1) Upgrading the Buddhist Circuit in Bihar and UP, 2) Enhancing tourism in Udaipur and Jodhpur in Rajasthan, and 3) Planning tourism asset development in Odisha. The projects are jointly funded and implemented technical assistance agreements aimed at delivering specific results to leverage other investments. IFC also provides investment tools for private sector companies and advises governments on positive business environment changes through jointly financed projects.

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INTERVIEW
In which avenues of
tourism in India do we
see IFC?
The International
Finance Corporation (IFC) is
the private sector develop-
ment and investment arm of
the World Bank Group. We
provide a variety of invest-
ment instruments for private
sector companies (including
hotel investors) and we
advice and partner with gov-
ernments - through jointly
financed technical assistance
projects - to implement posi-
tive changes to the business
and investment environment.
Please throw light on
the new initiatives by
IFC in the country?
We have a specific prac-
tice area focussed on tourism
development where we are
currently working in India on
three projects: (1) Buddhist
Circuit Upgrading - we are
working with the State
Governments of Bihar and
Uttar Pradesh and the Ministry
of Tourism to develop a very
focussed strategy for upgrad-
ing the Buddhist Circuit expe-
rience, improve connectivity
and site-level infrastructure,
improve marketing and pro-
motion strategies to reach
new markets, and improve
overall coordination and col-
laboration of different stake-
holders around the circuit,
including bringing into the
discussion the monasteries
and their constituents; (2)
Rajasthan tourism develop-
ment - IFC is partnering
with the Government
of Rajasthan in the
municipalities of
Udaipur and Jodhpur
to enhance the
tourism experience through
improvements in the urban
offerings for tourists. These
involve planning and design
for upgrading municipal
spaces to include options for
private investment in tourism
services and attractions; (3)
Odisha tourism development
- IFC is partnering with the
Govt of Odisha to plan and
develop its tourism assets.
How are these
projects funded?
These projects are not
loans provided to the state
governments. They are jointly
funded and jointly imple-
mented technical assistance
agreements that are focussed
on delivering specific results
that leverage other invest-
ment. For instance, on the
work with the Buddhist
Circuit, the project identified
approximately US$ 200 mil-
lion of infrastructure and
tourism development
improvements that were sub-
mitted to the Planning
Commission for consideration
and inclusion in the 12th
National Development Plan.
A part of that is now being
operationalised through a
proposed World Bank loan to
Uttar Pradesh to upgrade
infrastructure and urban
environments in Sarnath and
Kushinagar.
Which region in India
has the maximum
growth potential in
terms of tourism
infrastructure?
India’s cultural and his-
toric heritage are world-class
assets that are hugely under-
utilised and under-valued.
These assets could fuel local
economic growth and
employment with more
investment in the sites and
improved visitor manage-
ment. The same applies for
national parks in India. These
have immense potential for
the ‘African Safari’ type of
experience. Authorities are
currently unclear on how to
use these areas optimally for
both tourism and conserva-
tion objectives. Many parts of
Africa have very successful
tourism and community
development initiatives in
and around its national parks.
In some cases, this has led to
financial and ecological sus-
tainability for some of them.
The challenge in India is the
high volume of domestic
tourism visiting or wanting to
visit these cultural and natu-
ral areas. This can be
mitigated with well zoning
and effective visitor
management.
Could you elaborate
on the kind of
progress that has been
made in each individ-
ual project?
IFC’s tourism work in
India is too recent. We only
started working here in 2012.
IFC does not give loans to
governments, this is not its
mandate. We are a private
sector development institu-
tion and any loans that are
made, are made to the private
sector on commercial terms
for financially-viable projects.
With respect to our tourism
projects, we do not have
results yet. All our work are
in initial stages.
In a freewheeling discussion with , Shaun Mann, Senior Tourism
Sector Specialist, International Finance Corporation (IFC)-South Asia talks
about the organisation’s work with India’s MOT, state governments, and
private stakeholders to create an integrated tourism development strategy
and identify potentially transformative investments.
The‘IFC’touchin3tourismprojects
MEGHA PAUL
The fastest growing
hotel management compa-
ny in India, Sarovar Hotels,
has announced the opening
of Balaji Sarovar Premiere
in Solapur, Maharashtra.
This will be the group’s first
hotel in Solapur and the
ninth hotel in Maharashtra.
Others being Hotel Marine
Plaza, Grand Sarovar
Premiere, Grand Hometel,
Majestic Court Sarovar
Portico and Residency
Sarovar Portico -- in
Mumbai, the Sahil Sarovar
Portico in Lonavala, the
Lily Sarovar Portico in
Nashik and Noorya Hometel
in Pune.
The first upscale brand-
ed hotel in Solapur is spread
over three acres of land. It
is 15kms from the upcom-
ing Solapur Airport and
5 kms from the
Railway Station.
Commenting on the
opening of the Balaji
Sarovar Premiere, Anil
Madhok, Managing
Director, Sarovar Hotels
said, “We are happy to
announce the opening of
Balaji Sarovar Premiere in
Solapur which will help us
serve travellers to Solapur,
known for its cotton mills
and power looms. This pop-
ular city of Maharashtra will
now offer international
standard accommodation
and conferencing facilities
hitherto unavailable.”
Each of the 129 well-
designed guest rooms and
suites at the hotel are mod-
ern in appeal and offer all
contemporary amenities for
a comfortable stay.
With nearly 8,000 sq.
ft. of banqueting space, the
hotel is ideal for large social
functions, including wed-
dings as well as corporate
events for up to 800 guests.
Other hotel features include
swimming pool, spa and fit-
ness centre.
9th
Sarovar property in Maharashtra
Anil Madhok
Managing Director
Sarovar Hotels
Shaun Mann, Senior Tourism Sector Specialist,
International Finance Corporation (IFC)-South Asia
Travel has been a part of the Indian culture
for centuries… for pilgrimage yatras or
sightseeing, the average Indian traveller will
go thousands of miles to see different
environments, weather notwithstanding! The
summer holiday months see the largest
movements within India, which is the lean
period for inbound traffic.
Until a few years ago, domestic tourism
was confined to the lower income group and
so did not figure in hotel and restaurant
receipts. With the growing income and
expanding middle class, the domestic tourist
demands are shifting to good hotels and
resorts.Theytraveltobeachesalongthecoast,
nature parks and sanctuaries, take desert
safaris and visit archeological monuments. It
isnowuptothecentralandstategovernments,
while doing their development planning, to
provide clean and affordable accommodation,
good roads and convenient flight and train
connections at and to these places. And, it is
for the travel industry to work out exciting
packages that fit within their budgets.
Once we can gratify the needs of the
evolving domestic traveller, it will become
much easier to satisfy the inbound foreign
tourist, who have the finances to look after
themselves. The affluent travel to hill
resorts in the summer, these towns are well
equipped with accommodation and ground
transportation. But, even the capacity of these
is being tested to the maximum, as we saw
recently in Uttarakhand.
International tourism depends upon many
external factors such as international
economic projections, international political
conditions, air accessibility, and seasonal
changes. Domestic tourism is more stable.
Local infrastructure and standards are far
more acceptable to domestic than to
international tourists. Despite its significance
in national integration and development,
domestic tourism has not received adequate
attention in the process of development
planning. Regardless, this niche continues to
grow, giving sustainability and livelihood to
many that come within its gambit.
The number of domestic tourist visits
registered an increase of almost 20 per cent
in 2012 as compared to an increase of about
16 per cent in 2011, and it is only growing…
India dovetails its
inbound & domestic
FINAL_TT_NOVEMBER-1ST-2013:TT Layout 11/1/2013 11:14 AM Page 4

2. ANALYSIS14 TRAVTALK NOVEMBER 1ST
FORTNIGHT ISSUE 2013
The floods and landslides
on June 16 had caused
extensive damage in
Uttarakhand and adversely
affected the life of the people
in the state. The Centre
recently exempted the hospi-
tality industry in the flood-
ravaged Uttarakhand from
Service Tax till March 31,
2014. “There is a need to
provide support for the
local population by
reviving the hospitality
industry,” the Central
Board of Excise and Customs
(CBEC) said in its ‘ad-hoc
exemption order’. In the
wake of circumstances of
exceptional nature, the CBEC
said it has been decided to
exempt taxable ‘services by
way of renting of a room in a
hotel, inn, guest house, club,
campsite or other commercial
place meant for residential or
lodging purposes.’ The levy
on ‘services provided in rela-
tion to serving of food or bev-
erages by a restaurant, eating
joint or mess’ has also been
exempted.
According
to SM
Shervani,
President,
FHRAI; the
occupancy in
hotels of the
state came
crashing
from 90 per cent to below 20
per cent overnight after TV
channels aired footages of
the devastation in
Uttarakhand. Thus, the
recent step to exempt the
hotels from service tax
is surely a welcome step.
“While it would take another
three to four years for
the affected areas to rebuild
infrastructure, I wish
the government had
provided relief to the indus-
try for a longer period to
enable them to sail through
bad times,” he pointed out.
The state government
should reduce Luxury
Tax and VAT for at least five
years. The Central govern-
ment should also offer tax
exemptions on Leave Travel
Allowance (LTA) for employ-
ees who choose to vacation
in Uttarakhand, he added.
Praveen Sharma, Joint
Honorary Secretary, HRANI
feels unlike the Central
Government; the State
Government has not been
that encouraging. “The State
Government cannot wait till
the Budget, which will be out
only in March next year.
There has been no exemption
on entertainment tax, luxury
tax and VAT and this is still
hampering the industry. At
least, the State Government
should bring us at par with
other hill-states like Jammu
& Kashmir and Sikkim. In
The Centre recently exempted the hospitality industry
in the flood-ravaged Uttarakhand from Service Tax till
March 31, 2014. speaks to industry stalwarts
of the region to understand the advantages and
disadvantages of the sops.
Uttarakhandhospitalitygetsabreather
MEGHA PAUL
The State
Government
should bring
us at par with
other hill-
states like J&K
and Sikkim
The
Government
should have
provided relief
to the industry
for a longer
period
SM Shervani
President
FHRAI
Praveen Sharma
Joint Honorary Secretary
HRANI
The Govt. has to
be aggressive to
promote growth
and create the
support system
to maintain
it further
SP Kochhar
President, Hotels and Restaurants
Association of Uttarakhand
Contd. on page 90
FINAL_TT_NOVEMBER-1ST-2013:TT Layout 11/1/2013 11:14 AM Page 14

3. ANALYSIS90 TRAVTALK NOVEMBER 1ST
FORTNIGHT ISSUE 2013
J&K, there is zero luxury tax
while Sikkim has luxury tax
as low as four per cent. The
VAT in both the states is just
four per cent,” he said, con-
tinuing, “Tourism is a very
delicate business and tourists
always have many options –
if they don’t come to
Uttarakhand, they will go to
Kashmir. Thus, we still lose
business to these states.”
SP Kochhar, President,
Hotels and Restaurants
Association of Uttarakhand
asserted the tourism and
infrastructure facilities in the
state are deteriorating and
“no major steps have been
taken to rectify or rebuild the
infrastructure”. Good con-
nectivity in terms of roads,
rail capacity and airfares are
the biggest obstacles in the
growth of this state as a
tourist destination. Problems
such as water supply and
food preservation are also big
concern for hoteliers,
Kochhar added. “A guest
needs to enjoy and spend
time in a leisurely mood.
There is no entertainment
facility, but entertainment tax
is as high as 30 per cent, VAT
on food is 13.5 per cent and
luxury tax varies from five to
10 per cent (depending on
tariff), plus service tax of 5.16
per cent on room rent. There
is no parking facility, no sup-
port of state government in
tourism destination adver-
tisements. Moreover, trained
staff and friendly atmosphere
is the need of the hour. The
government has to be
aggressive to promote
growth and create the sup-
port system to maintain it
further,” Kochhar, who also
owns Madhuban chain of
hotels in the state, lamented.
Opined Vibhas Prasad,
Director, Leisure Hotels,
“Post the calamity, we saw
business vanishing not only
from Haridwar and Rishikesh,
but also from the unaffected
areas like Mussorie and
Nainital. The Central
Government has taken two
steps to mitigate the damage.
Firstly, they have given the
hoteliers an exemption of
luxury tax for the next six
months. Secondly, a one-year
moratorium on bank loans of
hoteliers in Uttarakhand has
also been provided. A lot of
people had taken bank loans
before the tourism season for
construction and renovation
with the hope that they
would be able to repay the
same. This step to extend the
period of repaying the loan to
one year has been another
welcome step. These two
steps are ‘baby steps’ by the
Central Government, but in
the right direction.”
As pointed out by Sahil
Gulati, Director-Operations,
EllBee Hotels, the exemption
of service tax for six months
is just a short-term gain.
“The service tax exemption
was from September 17 to
March 31. This anyways is
the lean season. Real busi-
ness starts coming in only
from April 1. And the scheme
will not be applicable then,
which is unfortunate. The
government should have
extended this sop for at least
a year for us to reap benefits.
Rather than giving discounts,
it is important that the gov-
ernment boosts the region.”
The State Government could
also direct PSUs to conduct
its meetings and seminars in
Uttarakhand. This can help in
long-term growth of the
state, he suggested.
The service tax
exemption was
from Sept 17 to
Mar 31. Real
business starts
coming in only
from April 1
The step to
extend the
period of
repaying the
loan to one year
is another
welcome step
Vibhas Prasad
Director
Leisure Hotels
Contd. from page 14
Sahil Gulati
Director-Operations
EllBee Hotels
SopsevokemixedresponseinUttarakhand
Tourism boosters
Maharashtrabatsforwomentourists’safety
Maharashtra is now gearing up to become the safest state in the
country for tourists – both domestic and international. Maharashtra
Tourism Development Corporation (MTDC) celebrated the World Tourism
Day by dedicating it to ‘Women’s Safety’. The corporation announced
few initiatives it has planned to ensure women tourists’ safety in the
state. It is in the process of designing a model Code of Conduct for safety
of women tourists in the state. A
dress code for photographers,
guides and other tourist facilitators
may also be devised. MTDC is also
developing a mobile application that tourists can down-
load and access a number of tourist groups visiting a spot,
as well as those of authorities. The mobile app will also
have a GPS system to track tourists as well as facilities
like sending alarm messages when in danger. All stake-
holders in tourist places including guides, photographers,
taxi drivers, shopkeepers among others will be trained and given the dos and don’ts of treating
tourists. Kishore Gadre, General Manager, MTDC affirmed, “The Code of Conduct will be
finalised in the coming months. It will include instructions on how tourists should be guided.
It will also include instructions to ensure good conduct while interacting with foreign and
domestic tourists. Also, there are plans to have various stakeholders to monitor tourist activity
in a particular spot to ensure that if he/she gets in trouble, immediate action can be taken.”
Sikkim to open new trekking routes
The state is looking at generating tourism business worth `1,500 crore per annum by 2020.
As per Bhim Dhungel, Tourism Minister, Sikkim, the state’s annual business from tourism jumped
from `75 crore in 2000 to `400 crore in 2010. The figure was only `1 crore in 1980. By 2020,
the state aims to attract one lakh foreign tourists and 20 lakh domestic tourists annually, the
Minister said. According to him, 12,862 domestic and 2,572 international tourists visited the
state in 1980. The number of domestic tourist
arrivals shot up to 7,00,011, while the visitors
from abroad rose to 20,757 in 2010. To promote
tourism, the state government has decided to
create more tourist destinations, open new
trekking routes and undertake aggressive mar-
keting. The Buddhist circuits are also being
developed to promote religious tourism in the
state, Dhungel added. “We will develop Sikkim
as a principal tourism destination in South and
South East Asia by 2015,” he added.
2 cr each for six forts in Rajasthan
The Rajasthan state government has approved a budget of ` 2 crore each for six
forts - Jaisalmer, Chittorgarh, Kumbhalgarh, Amber, Gagaron and Ranthambore, which
have recently been declared World Heritage Sites by the UNESCO. This amount has been
allotted for the promotion and conservation of these forts.
Along with this, the state has also given directions to the
authorities concerned to appoint a manager for each of the
World Heritage sites. The site managers will be responsible
for coordinating with all the agencies concerned to undertake
conservation of these forts.
Contd. from page 8
Kishore Gadre
General Manager, MTDC
FINAL_TT_NOVEMBER-1ST-2013:TT Layout 11/1/2013 11:17 AM Page 90

4. HIGHLIGHT
Postal Reg. No.: DL(ND)-11/6044/2012-13-14;
WPP No.: U(C)-178/2012-14 for posting on 1st
-2nd
and 15th
-16th
of the same month at New Delhi P.S.O., RNI No.: 53492/91
Date of Publication:30-10-2013
New agenda
The primary concern
that we would take up is
the hurdle of multiple tax-
ation. We have 22-24 per
cent taxation on hotels and
18-20 per cent taxes on
F&B. We get around six
million FTAs in India. Even
our neighbouring coun-
tries such as Hong Kong,
Singapore, Thailand
don’t have
taxes
beyond 7-10
per cent.
They obvi-
ously get
three to four
times the foreign tourists
India receives. There is
some lesson in it. You can
either have 20 per cent
taxes and get six million
FTAs or you can have ten
per cent taxes and get 12
million inbound. This also
discourages discretionary
spending by domestic
tourists as well. Thus, reg-
ulatory issues such as
multiple taxation
that are adverse-
ly impacting
India’s hospi-
tality and
tourism sector
will be taken up
this year.
FHRAI’s second key
strategic priority will be to
articulate and reflect the
concerns and aspirations of
small and medium entre-
preneurs, whose vision is
the future growth engine
of the industry. The mid-
segment or the budget
hotels will get volumes and
make India competitive.
This is where the future
lies. Also, hotels need to be
built in the heart of the
cities. For example—I feel
the MCD should move out
of the beautiful Town Hall
in Delhi. The monument
should be given to a small
hotel owner who can
revive the
structure. This
way, so many
monuments can
be restored as
well.
Going regional for membership
Our membership
comes from our four
regions. At the moment,
FHRAI has over 3,800
members. This is not
good enough, considering
the fact that the hotel
industry has grown a lot
in the last 10 years. We
need to focus on regional
activities and make the
regional bodies more
proactive. The West and
North have been more
active in terms of mem-
ber numbers. However,
even East and South are
now picking up.
Speed-breakers in the industry
There has been an
economic slowdown glob-
ally. The first casualty is
always the hospitality
industry. We need to gear
ourselves to cut costs and
let the times tide over.
Also, it is wrong to say
the rupee slow-
down makes
India cheaper
and attractive.
To an extent,
yes the country
does become
cheaper. But if
there is a
slowdown, we would not
get too many foreign
tourists. Also, our imports
become costlier. Our F&B
costs have already
increased along with elec-
tricity, water bills and
soaring fuel costs. In addi-
tion, we have an anom-
alous situation existing in
many states wherein lux-
ury tax is charged on pub-
lished room rates and not
actual tariff. Conceptually,
the proposed GST regime
has the potential to allevi-
ate a majority of the indus-
try’s concerns with regard
to taxation. FHRAI will
constructively engage with
the Central and State
Governments at the high-
est level, so that this
ambitious and progressive
initiative results in a
transparent and stream-
lined tax system.
In a tete-a-tete with , newly-elected FHRAI President SM Shervani talks
about laying greater emphasis on forging innovative Public-Private
Partnerships to address a wide range of complex challenges confronting the
sector, in particular alleviating infrastructure bottlenecks.
‘Multiple taxes curb growth’
SM Shervani
President, FHRAI
The Indian hospitality and
tourism sector today
faces unprecedented oppor-
tunities as well as some
equally serious challenges.
Thus, it becomes detrimental
for the Association to pin-
point some issues and work
towards them, says Shervani.
Regulatory issues such as
multiple taxation that are
adversely impacting India’s
hospitality and tourism sector
will be taken up this year.
FHRAI will concentrate on
improving standards of budg-
et and mid-market hotels.
The association will also look
at increasing membership
across all the four regions
of the country. Below
are the excerpts.
MEGHA PAUL
BudgethotelsonFHRAIradar
FINAL_TT_NOVEMBER-1ST-2013:TT Layout 11/1/2013 11:17 AM Page 102