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Government asks hotels to cut tariffs to beat decline in foreign tourist inflow

Amid the first signs of a slowdown in the foreign tourist arrivals in the country because of the global financial crisis, the Government on Wednesday asked hotels to cut down on their room tariffs as an incentive to tourists coming to India.

At a meeting to assess the impact of the global financial meltdown on the tourism industry in India, the Government suggested that hotels slash their tariffs by 10 to 15 per cent. Sources said representatives of the Federation of Hotel and Restaurant Associations of India, who were present at the meeting, were agreeable to the idea and promised to get back with their decision in a day or two.

The Government’s move comes in the wake of a definitive slump in the growth of tourist arrivals in the last month. In October this year, the number of foreign tourists coming to India was 4.53 lakh. This was a mere 1.8 per cent rise over the corresponding figure for October 2007, which stood at 4.45 lakh. In comparison, the increase in foreign tourist arrivals in October 2007, as compared to the same month in 2006, was 13.6 per cent.

Foreign tourist arrivals are increasing at a steady rate of 12-14 per cent every year and crossed the five million mark in 2007. The sudden slowdown being observed for the last two months has been attributed to a sharp decline in the tourist arrivals in Delhi and Mumbai, which together account for more than 50 per cent of the incoming tourist traffic.

Significantly, the decline in the growth of arrivals has not spread to the increase in foreign exchange earnings. In rupee terms, India earned about Rs 4,250 crore in October 2008, a 12.2 per cent increase over the amount of Rs 3,785 crore earned in the same month last year.

The representatives of hotel associations raised some of their outstanding demands such as infrastructure status for hotels, delinking of hotels from real estate, external commercial borrowings and the problem of Floor Area Ration that has been extended by the Ministry of Urban Development to the hoteliers in Delhi at high development charges. They asked the Government to facilitate single window clearance for construction of new hotels.

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