Kashmir, a stunning region nestled in northern India, presents a plethora of investment possibilities in the hospitality sector. The area’s mesmerising landscapes, snow-capped mountains, and verdant valleys attract both domestic and international tourists, fueling a prosperous hotel and lodging industry. In this article, we delve into the various investment opportunities available within Kashmir’s hotel and lodging sector.
For the first time in the history of Jammu and Kashmir, record 1.88 crore tourists visited the union territory in 2022. In the first two months of 2023, over 2.5 lakh tourists have already visited Kashmir and with the onset of spring, the numbers are increasing with each passing day. The last time the valley saw tourists in large numbers was in 2012 when about 1.3 million travellers visited. Bed Capacity For tourism-related activity reached 60,000 in the year 2022 as per the government records.
“Over the past few years, Kashmir’s tourism industry has experienced substantial growth. The region’s international airport, Sheikh-ul-Alam International Airport, recorded over 2.3 million passengers in 2018, a significant increase from 1.8 million in 2017. This surge in tourist arrivals has consequently led to a growing demand for hotels and lodging options. “
Data from the Jammu and Kashmir Tourism Department highlights the following average daily rates for hotels in the region:
4-star hotels: INR 7,000 – INR 15,000
5-star hotels: INR 15,000 – INR 25,000
Luxury properties: INR 30,000 and above
These figures underscore the substantial market potential for hotel and lodging businesses in Kashmir.
To cater to the upscale segment of the tourist market, the government of Jammu and Kashmir is working to identify land for the development of three additional 5-star hotels in the region according to recent reports. This initiative is expected to significantly bolster the region’s tourism industry, creating new investment opportunities within the hotel and lodging sector.
The abrogation of Article 370 in August 2019, which granted special autonomy to Jammu and Kashmir, initially had a negative impact on the tourism sector, causing a decline in visitor numbers. However, the government’s efforts to promote development and investment in the region post-abrogation have generated fresh opportunities for the hotel and lodging business. The government has introduced various schemes and incentives, including subsidies on land and capital investment, tax exemptions, relaxed land ownership restrictions, and new infrastructure projects like the expansion of the Srinagar airport and the development of new road networks.
“Since my last stint with Kashmir and The Khyber Himalayan Resort & Spa some 7 years ago, I feel and see Kashmir’s hospitality sector has experienced significant growth, with vast improvements, especially in the infrastructure areas. Kashmir has always been a dream destination for international and domestic tourists for very specific reasons – For its natural beauty, ski and gardens. It’s no great surprise hotel occupancies soaring to 82 to 85 percent and room rates trading north of INR 30,000. As tourists’ spending capacity rises, Srinagar stands as one of the most lucrative markets for new hotel investments. This is partly due to government restrictions on new construction in specific parts of Kashmir. The transformation of Kashmir’s tourism is a testament to its resilience and potential in the face of challenges,” Sujith Herbert, Cluster General Manager – Radisson Hotel Group – Jammu & Kashmir told us.
Despite challenges posed by the Covid-19 pandemic, Kashmir’s tourism industry is expected to rebound as the world gradually recovers. With the easing of travel restrictions and the rollout of vaccination programs, both domestic and international tourists are anticipated to return to the region in the coming years.
While speaking to Spectra Hospitality, Vinit Chhabra, General Manager at The Khyber, Gulmarg stated that tourists are now looking for more inclusive and experiential hospitality. He shared, “Almost all the properties in Kashmir go houseful in the peak season. This speaks that there is enough room for more inventory as no major new development has happened in the last few years. However, I have witnessed a shift in demand, for now, travellers seek more of luxury boutique properties when travelling to Kashmir. We are happily sitting on an average yearly occupancy rate of 82 percent.”
There is considerable potential for the development of boutique and eco-friendly hotels that harmonise with the region’s natural beauty and cultural heritage. These hotels can offer tourists a unique and authentic experience while also contributing to the overall growth and development of the region. Investing in specialized hotels and lodging facilities catering to niche tourism segments, such as adventure tourism and wellness tourism can help businesses tap into a burgeoning market.
In terms of hotel investments suited to Kashmir, there is tremendous catering to the diverse preferences and budgets of tourists. Furthermore, investing in hotel and lodging facilities that prioritise sustainability, eco-friendliness and local experiences can help businesses differentiate themselves and appeal to a growing segment of environmentally conscious tourists.
Investors in Kashmir’s hospitality sector can benefit from the government’s focus on infrastructure development and the promotion of tourism in the region. The various schemes and incentives, including subsidies on land and capital investment, tax exemptions, and easing of restrictions on land ownership, aim to attract private investment in the hospitality sector.
The hospitality sector in Kashmir offers immense investment potential. Investors can seize emerging opportunities in this market to help shape the future of the hospitality sector in the region. Our hospitality consultancy firm can assist investors in identifying and evaluating these opportunities while offering tailored solutions to help maximize their returns. With the development of new hotels and resorts, upgrading existing establishments, and targeting niche tourism segments, investors can contribute significantly to the region’s growth and development while also generating attractive returns on investment.
Investing in Kashmir’s hospitality sector has several advantages in terms of income prospects. First, the region’s natural beauty, including breathtaking landscapes, snow-capped mountains, and lush green valleys, makes it a popular tourist destination for both domestic and international tourists, creating a thriving hotel and lodging industry catering to various tourist segments.
Second, the government’s focus on infrastructure development and promotion of tourism, such as the expansion of the Srinagar airport and new road networks, creates new opportunities for investment in the hospitality sector. The government has also introduced various schemes and incentives aimed at attracting private investment, such as subsidies on land and capital investment and tax exemptions.
In addition to the existing opportunities in Kashmir’s hospitality sector, the J&K administration is focusing on exploring the full potential of religious tourism by developing tourist circuits across the union territory. This includes strengthening facilities and infrastructure for the increasing number of devotees visiting the Mata Vaishno Devi shrine. Significant projects include the completed Mantalai wellness center, the final design of the Katra multi-model station, and ongoing work on the Tawi riverfront. Furthermore, Mansar and Surinsar have been added to the tourism map, and the government is working to open the Sanasar tulip garden this year, which highlights the administration’s commitment to diversifying the region’s tourism offerings.
Third, investing in boutique and eco-friendly hotels that blend with the region’s natural beauty and culture can offer tourists a unique and authentic experience, contributing to the overall growth and development of the region.
Fourth, investing in specialised hotels, resorts, and lodging facilities catering to niche tourism segments, such as adventure tourism, wellness tourism, and eco-tourism, can help businesses tap into a growing market and appeal to environmentally conscious tourists. Here are some effective investment strategies to consider when investing in hotels in Kashmir:
1. Location is key: Choose the right location for your hotel. It’s essential to invest in a location that is easily accessible, has scenic beauty, and is in close proximity to major tourist attractions.
2. Focus on sustainability: Eco-friendly hotels are becoming increasingly popular among environmentally conscious tourists. Investing in sustainable hotel practices, such as solar panels, energy-efficient lighting in rooms, and water-saving technologies, can help attract this growing segment of tourists.
3. Diversify your offerings: Diversify your offerings by catering to different segments of tourists, including budget hotels, mid-range hotels, and luxury hotels. You can also consider targeting niche tourism segments such as adventure tourism, wellness tourism, and eco-tourism, as well as offering various activities.
4. Upgrade existing establishments: Investing in the renovation and upgrading of existing hotels and lodging establishments can be a cost-effective way to enhance the quality of services offered to guests while catering to the evolving needs and expectations of tourists.
5. Leverage technology: With the rise of technology in the hospitality industry, investing in hotel technology can help you streamline operations and improve the guest experience. This includes technologies such as mobile check-in, keyless entry, and automated guest services.
Recently, renowned Bollywood actor and entrepreneur Vivek Oberoi emphasised the enormous potential of Kashmir’s hospitality sector. During an event in Srinagar, Oberoi stated that private investment in the hospitality sector could not only create employment opportunities for locals but also help promote the region as a popular tourist destination. This highlights the importance of investing in the hospitality sector in Kashmir and the positive impact it can have on the region’s economy.
Investing in the hospitality sector in Kashmir offers a wealth of opportunities for investors to strengthen their real estate portfolios. With the government’s focus on infrastructure development and the promotion of tourism, the region is poised for significant growth in the coming years. Our hospitality consultancy firm can assist investors in identifying and evaluating investment opportunities in the region and provide tailored solutions to help them maximize their returns. With the development of new hotels and resorts, upgrading existing establishments, and targeting niche tourism segments, investors can play a pivotal role in shaping the future of the hospitality sector in Kashmir.
As investors capitalize on these opportunities, they can not only expect attractive returns on investment but also contribute to the region’s economic growth and development. By providing high-quality accommodations and experiences that cater to the diverse needs and preferences of modern-day travellers, investors can help establish Kashmir as a premier destination on the global tourism map, further solidifying its position as an attractive location for hotel investments.
Investors interested in investing in the hotel and lodging business in Kashmir should be aware of certain restrictions and laws. After the abrogation of Article 370, which granted special status to Jammu and Kashmir, certain provisions that allowed land to be leased to non-residents for up to 90 years were scrapped. As a result, the ownership and leasing of land have become more challenging, especially for non-residents. The state government of Jammu and Kashmir has introduced the Jammu and Kashmir Land Revenue Act 1996, which governs the transfer of land ownership in the region. Investors must navigate this terrain carefully and consider factors such as land ownership, lease agreements, and local regulations before investing in the hospitality sector.
Moreover, investors should also be aware of the various tax and regulatory frameworks that govern the hospitality industry in India. The Goods and Services Tax (GST) introduced in 2017 imposes a variable tax rate on hotel rooms, depending on their tariff rates. Hotels with a room tariff below INR 1,000 are exempt from the GST, while those with tariffs ranging from INR 1,000 to INR 2,499 attract a 12% GST rate, and those with tariffs above INR 2,500 attract an 18% GST rate. Additionally, investors must comply with the Foreign Exchange Management Act (FEMA), which regulates foreign investments in India, including the hotel and lodging business.
Looking ahead, the hospitality sector in Kashmir is expected to evolve and adapt to the changing needs of tourists, emerging trends, and advancements in technology. Investors should stay informed about these changes and be prepared to adjust their investment strategies accordingly. Here are some areas to watch for future growth and development in Kashmir’s hospitality industry:
1. Eco-tourism and sustainable travel: As global awareness of environmental issues increases, eco-tourism and sustainable travel are becoming more popular. Hotels and resorts that prioritize green practices and minimize their environmental footprint will be well-positioned to attract environmentally conscious travellers.
2. Wellness and health tourism: Wellness and health tourism are growing markets, and investments in facilities that cater to this niche, such as spas, yoga retreats, and wellness centers, can generate significant returns.
3. Cultural tourism: Kashmir has a rich cultural heritage that can be leveraged to attract tourists interested in experiencing the region’s history, art, and traditions. Investments in cultural tourism initiatives, such as hosting local festivals or offering immersive cultural experiences, can help to differentiate the region’s offerings and enhance its appeal.
4. Adventure tourism: With its diverse landscape, Kashmir is well-suited for adventure tourism, offering activities such as trekking, skiing, and river rafting. Developing facilities and infrastructure to support these activities can create additional revenue streams for hotel investors.
5. Technology integration: As technology continues to advance and become increasingly integrated into the hospitality sectors, hotels that embrace new technologies and incorporate them into their operations will be better equipped to meet the evolving needs and expectations of guests. This includes technologies such as artificial intelligence, virtual reality, and personalized guest experiences.
6. Local partnerships and community engagement: Establishing strong partnerships with local businesses and engaging with the local community can help create a more authentic and immersive experience for guests while also supporting the local economy. Investing in initiatives that promote local culture, craftsmanship, and culinary traditions can further enhance the region’s appeal.
7. Flexible accommodation options: Catering to the diverse needs of tourists, from solo travellers to large groups and families, requires a variety of accommodation options. Providing flexible room configurations and offering options such as self-catering apartments or vacation rentals can help meet the changing demands of travellers.
The hospitality sector in Kashmir offers significant investment potential, with a wide range of opportunities to cater to the diverse needs of tourists. By staying informed about emerging trends and adapting to the changing landscape, investors can maximize their returns while contributing to the region’s growth and development. As the world continues to recover from the COVID-19 pandemic and travel restrictions ease, Kashmir is poised to experience a resurgence in tourism, making it an ideal time for investors to consider the many opportunities available in this beautiful and diverse region.