Indian Hotels, EIH, Lemon Tree: HAI demands 'infrastructure' status for hotels in Budget 2026; check other expectations

As regards the hotel and hospitality sector, the Hotel Association of India (HAI) on Wednesday called on policymakers to prioritise sector-specific reforms to drive growth and resilience in the sector while reiterating the demand for infrastructure status and allowing industry benefits to hotels.

Sharing the hospitality industry's expectations in the upcoming Union Budget, HAI President K. B. Kachru said the hotel sector should be given due recognition for its significant contribution to GDP, jobs, and foreign exchange earnings.

Kachru, who is also Chairman, South Asia, Radisson Hotel Group, urged "policymakers to prioritise sector-specific reforms to drive growth and resilience in the hospitality sector".

Kachru said the hotel sector should be recognised for its strong contribution to the economy, employment and foreign exchange earnings, and should be granted infrastructure status along with other industry benefits.

This will encourage investments in the sector and unleash the full potential of hotels to generate employment and play the desired role in realising India's vision of an Aatmanirbhar Viksit Bharat, Kachru said.

Benefits from infra status

A harmonised infrastructure status for the hotel industry will facilitate easier financing, longer loan tenures, and lower interest rates, enabling smoother access to capital and reducing project delays caused by financial constraints.

Other key points

Kachru further said there is "a need to further improve the ease of doing business by reducing both the number and the costs of approvals, NoCs and clearances required to build and operate hotels".

"A single-window clearance mechanism is a provision that requires urgent attention. Reinstating the rewards scheme for forex earnings and higher rates of depreciation for hotels are recommended," Kachru added.

Hotel industry outlook

Ratings agency ICRA, in its outlook on the hotels and hospitality sector in India, said that the Indian hospitality industry continues to enjoy a successful run, with the growth momentum of the last three years sustaining in FY 2026 as well, amidst persistent demand-supply imbalances.

Favourable sentiments for domestic travel, festive-led leisure demand, rising corporate mobility and a relatively slower pace of supply additions support the prospects of the industry, said Srikumar Krishnamurthy, Senior Vice President & Co-Group Head, Corporate Ratings, ICRA Limited.

"Occupancies and average room rates (ARR) have inched towards the FY2008 peak in most markets in FY2025 and are likely to rise further in FY2026. ICRA expects the credit profile of hoteliers to remain stable as the supply overhang factors continue and demand across segments remains strong," Krishnamurthy added.

Food & Beverage (F&B) industry and Quick-Service Restaurants (QSRs) expectations

Aayush Madhusudan Agrawal, founder and director of Lenexis Foodworks, said that the rationalisation of GST on commercial rentals would meaningfully ease cost pressures for the restaurant and QSR sector, particularly as input tax credit is not available to the industry.

Introducing a single-window clearance system across food safety, environment, labour and taxation can significantly improve ease of doing business by reducing compliance complexity and delays.

With organised QSR brands increasingly expanding into Tier 2 and Tier 3 markets, targeted incentives or capex-linked support can help accelerate growth in high-potential cities.

"Given the sector’s strong contribution to youth employment, budget policies that recognise job creation and support skill development and workforce expansion would further strengthen the industry’s long-term economic impact," Agrawal added.

Lenexis Foodworks is one of India’s largest homegrown quick-service restaurant chain operators. It operates brands like Chinese Wok, Big Bowl and The Momo Co.