How Does The Hospitality Industry Work?

. 5 min read
How Does The Hospitality Industry Work?

What Does Hospitality Industry Include?

  • Indian Hospitality and Tourism industry has shown its potential as a key player in the Indian economy.
  • This industry contributes to over 6.8% of the national GDP.
  • The WTTC (World Travel and Tourism Council) has ranked India tenth in terms of the hospitality industry’s contribution to the country’s GDP.
  • The hospitality industry is still rising, it has yet to reach its full potential in India, the industry’s rapid growth rate and ability to attract investments, in the form of venture capital funding, is driving the development of this sector.
  • The Indian middle class has a larger disposable income which can be spent on tourism.
  • In addition to this, there has been a large inflow of foreign tourists in India in the past two decades.
  • Thus providing the impetus needed for this industry to grow by creating more demand for hospitality services.
  • India is the seventh-largest tourism economy in the world and is set to break new records in the next decade.
  • There are many initiatives towards the development of several new tourist hotspots spanning India’s diverse geography.
  • India’s thriving hospitality industry has incorporated technological advancements at the very core of its development structure.
  • The Government is set to start a provision for E-Visas which is bound to increase the in-flow of tourists thus increasing the demand for hospitality services.
  • The E-visa facilities have been extended to 166 countries.
  • During 2019, India saw the arrival of  2.93 million foreign tourists using E-visas.
  • With the launch of Swadesh Darshan, fifteen tourist-based circuits have been identified along with five circuits which are pan-India.
  • This industry has opened up 15 million new jobs and accounts for 8.8 % of India’s total workforce.
  • Indian Hospitality may be divided into lodging, transportation, theme parks, food, and beverages, etc.
  • Lodging entails hotels, motels, resorts, and serviced apartments.
  • The hotel industry is growing at a rate of 7% per annum.
  • Transportation is the lifeline of the hospitality and tourism sector, a tourist place with the best transport facilities is bound to prosper quickly.
  • The main modes of transport in India are roadways, railways, and airways.
  • Roadways and railways are more popular because of accessibility, abundance, and cheap rates.
  • Food and beverages (F&B) is the largest hospitality sub-sector, it can be subdivided into organised and unorganised sectors.
  • The organised sector includes fine and casual dining services.
  • All of these sub-sectors are interconnected and dependent on each other for the smooth functioning of the industry.
  • Medical Tourism: Recently India has become a global hub for high quality and low-cost medical surgeries, this brings in huge crowds of  patients and their families who depend on the hospitality industry during their stay here.
  • Religious Tourism: India is a global religious site hot-spot.
  • Organising pilgrimages and group excursions to various religious sites has become a very promising business opportunity in the hospitality sector.

Details Of Hospitality Sub-Sectors

Lodging and Accommodation

  1. Hotels, Motels, rental spaces, camping spaces, resorts, etc.
  2. Hotels can be part of a chain or be independently established.
  3. They can be further divided into Star Category Hotels and Heritage Category Hotels.
  4. Star Hotels can be Five Star Deluxe, Five Star with or without alcohol, Four Star with or without alcohol, Three Star, Two Star, or One Star.
  5. Heritage Category Hotels are further subdivided into Heritage Classic, Heritage Basic, and Heritage Grand.

Food and Beverage

  • Restaurants, cafes, pubs, fine dining, bars, night clubs, food treks, supplying food to railways and airlines, catering, food trucks, etc.


  • Bus and cab services to and fro from the accommodation, cruise ships, private jets, railway tours, etc.

Amusement Parks and Theme Parks

  1. These have various rides and games.
  2. Theme parks have certain unique themes attached to them, for eg forest-themed, water park themed, etc.
  3. All of these Parks have restaurants and sometimes even lodging.
  4. They organise tours and give out annual packages.
  5. Visiting Amusement Parks are some of the most popular urban activities in India, thus this sector has a lot of scopes.

Event Management

  • Organising weddings, parties, VIP events, conferences, venue management, concerts, etc.


  • Destination management, treks, organising tours, seasonal excursions, MICE tourism, etc.

Permits Required In The Hospitality industry

  • All the basic licenses required for starting a hospitality business are-
  1. Premises Permit
  2. Fire Safety Permit
  3. Police Clearance
  4. Health Trade (or Trade) License
  5. Business Registration
  6. Employees Provident Fund Registration
  7. VAT Registration
  8. Administration Tax License
  9. FSSAI Food Business License

In Conclusion

  • Over the past ten years, the hospitality industry has sky-rocketed into a vast sector with many possibilities.
  • The Indian Hospitality Industry is rightfully considered a ‘sunrise industry’.
  • The tourism sector has received an FDI (Foreign Direct Investment) inflow of USD $15.8 billion in the past twenty years.
  • Carving out a niche in this industry will be very profitable in the long run.
  • India is a part of a top group of countries on EoDB (Ease of Doing Business).
  • The government has marked STZs (Special Tourism Zones) all over the country to encourage the setting up of hospitality businesses.
  • Infrastructure is the backbone of the hospitality industry, tax relaxations on hospitality and tourism real estate development will encourage more investments in this sector.
  • Covid-19 pandemic has proven to be a huge road-block with respect to the Hospitality Industry.
  • International travel has been blocked completely and national travel is restricted, however, the lockdown is lifting and the industry is picking up pace slowly.
  • The hospitality industry has adapted to the pandemic, taking health safety precautions, and following compulsory quarantine precautions.
  • All-in-all there has not been a better time to get into the gold-rush of the hospitality sector in India!

Also Read:

How Does the Tourism Industry Work? Structure of Tourism Industry

The-5 Biggest Markets/Industries In The World

How small business promotes industrialisation?


Q- What is venture capital funding?

Ans- Venture Capital funds are investment funds that are combined together in order to safely manage the money of investors, these investments are considered to be high risk but promise high-returns as well.

Q- What is MICE Tourism?

  • MICE is the short form for Meetings, Incentives, Conferences, and Exhibitions.
  • These are pre-planned corporate work trips and involve a large number of people.

Q- What is working capital?

  1. Working capital is also known as NWC (net working capital), it is a part of operating capital and is important for the smooth running of the company’s finances.
  2. It is the difference between the company’s current assets and inventory, and its liabilities (e.g. account payable).
  3. Examples of working capital include cash and other cash equivalents such as savings accounts.

Q- What is POS hardware?

Ans- POS hardware is Point of Sale Hardware, examples include a credit card reader, bar-code scanner, ticket printer, receipt printer, cash drawer, etc.

Q- What is an Angel Investor?

Ans. An angel investor is an individual of high net worth who provides financial backing to entrepreneurship in exchange for equity.

Q- What is FSSAI?

  1. FSSAI is the Food Safety and Standards Authority of India, it regulates and supervises food safety.
  2. It is an autonomous body working under the Ministry of Health and Family Welfare.

Q- What is the ‘sunrise industry’?

Ans- An industry that has immense scope for the future is called the ‘sunrise industry’, such industries are growing rapidly in terms of investments and profitability.