Hotels call for simplification of taxes and licensing procedures

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NEW DELHI: With the omicron wave hurting the recovery, the hospitality industry is seeking lower interest rates on loans, reduced property taxes, partial or even full waiver of other license fees, including alcohol licenses, and lower electricity rates, among others the government before the Union budget.

The industry also requires infrastructure status for hotel projects that are underway 200 crore and are currently out of reach. Several associations that represent the interests of hotel businesses have said it is essential to protect the industry hard hit by the pandemic. “The support required from the government at present cannot be overemphasized. Policy interventions are imperative for the survival of the sector and its quick and speedy return to normalcy,” said a statement from the Hospitality Association of India (HAI ).

Hospitality companies said obtaining “infrastructure” status would solve many of the problems facing hotels and other hospitality businesses. While infrastructure industry status is available for above hotel projects 200 crore, several smaller hotel projects done at lower cost do not enjoy the benefits of having the status.

HAI said the sector’s cascading effect on the economy is well documented. “Infrastructure status will also allow hotels to reap the benefits of reduced taxation, utility rates and a streamlined approval process for projects,” he said.

Industry body Assocham added that the government must also endorse the ease of doing business by establishing a one-stop shop for licensing and approvals required for new hotels.

Currently, there are more than 20 key licenses and about 100 licenses and approvals in total that are required to establish a hotel. These include licenses and approvals from Ministry of Tourism, Food Safety and Standards Authority of India, Fire Department, Pollution Control Board, Municipalities, Police, Department of Labor among others.

“A delay in receiving licenses delays the launch of a hotel, further straining cash flow and financing for hotel projects. If there was a one-stop clearance mechanism that could be established in each state to make it easier to conduct business for new hotels, improve transparency and grant quick approval would be better,” said Kush Kapoor, Chairman of the National Board of Tourism and Hospitality Assocham and CEO of Roseate Hotels & Resorts.

He also called for a simplification of the tax structure for hotels.

Manbeer Choudhary, Chairman and Managing Director of Jewels Group of Hotels which manages the heritage luxury hotel brand, Noor Mahal Palace in Haryana, said the industry is looking at the next Union budget for aid and support on recovery. He said the industry was not just looking for big reforms and special packages. “There is an urgent need to reconsider the restrictions imposed every time a pandemic wave hits and this time the industry needs more protection and support to survive and stay afloat,” he said. he declares.

The hotels are also asking for a revision of the GST rates. Any hotel room with the rates declared above 7500 per night invites 28% GST while those between 2500 and 7499 invite 18% GST rate.

“Revisiting the structure of the GST to reduce complexities would be a welcome move. Varying GST rates for different goods and services create confusion. Also, easier loan facilities for MSMEs and grants would help domestic businesses recover,” Choudhary said.

Vineet Verma, executive director and CEO of Brigade Hospitality, which has 10 hotels including Sheraton Grand Bangalore and Holiday Inn Chennai OMR, said the impact on hospitality and tourism has been widespread and is expected to last for a long time. “While central and state governments have tried to extend support to some extent, sectors need longer-term resuscitation measures in order to get back on track. A reduction in GST rates will help increase spending, the state of hotel infrastructure, lower interest rates on loans and lower property taxes would help,” he said.

In its memo to the Ministry of Finance last week, HAI said that before the pandemic, the hospitality industry contributed 9% to the country’s GDP and employed nearly 4.5 crore people and provided livelihoods to around 16 crore people.

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