Tuesday, May 1, 2018
The Hotel and Restaurant Association of Western India (HRAWI) is a 68-year-old association of hotels and restaurants in Western India.
The association, founded by the late J R D Tata in Mumbai in 1950, is a part of the Federation of the Hotels and Restaurants Associations of India (FHRAI).
With its membership base spread across Western India, HRAWI covers Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Goa and the Union Territories of Daman and Diu and Dadra and Nagar Haveli, and is considered to be the voice of the hotel industry.
In a freewheeling chat about the various issues in an e-mail interaction with the media, Dilip Datwani, president, HRAWI, threw light on the current scenario of the hotel industry.
How will the hospitality industry benefit from the Maharashtra government’s decision to allow shops and retail establishments in the state to remain open 24X7?
By allowing shops and retail establishments in the state to remain open 24X7, not only will the city attract more tourists, but it will also improve employment numbers, become a safer place, and increase tax revenues for the government.
There are over one lakh restaurants in the state, and even if just the restaurants in the tourism hotspots decide to operate 24X7, then it could easily create additional employment opportunities for at least two lakh people.
This is a definite boost to tourism and the economy, and will help the hospitality sector to emerge even stronger.
How has demonetisation and the ban on liquor sales within 500m of highways affected the hospitality sector?
The Christmas and New Year celebrations of 2016 suffered a major setback following the announcement of demonetisation.
There were several cancellations and F&B units witnessed a sharp drop in footfalls. Around that period, the state registered a 20 per cent cancellation in bookings by international travellers after demonetisation.
Also the ban on the sale of liquor along the highways came right after demonetisation. An estimated approximately 35,000 restaurants and bars faced the possibility of closure in the Western region alone.
The decision led to temporary job losses across India, which fortunately was reversed. So while the potential damage was massive, the decision to de-notify the highways saved the day for the industry.
What are your views on the Goods and Service Tax (GST) rate levied on the hospitality industry? In the recent Budget, the sector was ignored. What are the industry’s views?
One of the reasons our tourism industry has failed to attract as many foreign tourists as it should, is the heavy tax on tourism. While many neighbouring countries levy a tourism GST of five per cent, our GST is roughly approximately 23 per cent.
With our hotel rates at approximately 18 per cent and tour operators at an additional 5 per cent, at a minimum rate of 23 per cent, we are the most highly-taxed tourism country. This has been one of our biggest concerns with reference to GST.
Also a GST rate of 28 per cent for room tariffs of Rs 7,500 and above again is phenomenally high and will only widen the gap between demand and supply.
The hospitality industry was very disappointed with the Budget. Hospitality is the single biggest contributor to Indian tourism’s gross domestic product (GDP) and its growth or decline or stagnancy directly reflects on the health of tourism in the country.
The foreign exchange earnings (FEE) from tourism amounts to roughly $23 billion, and once again, a large chunk of this earning is generated by the hospitality industry.
Employment generation, which is one of the focus areas for the government, has the biggest support of the hospitality sector. It directly employs over 12 per cent of the Indian workforce and is one of the biggest employers of unskilled and semi-skilled labour.
As HRAWI president, how have you seen the growth of the hospitality industry in India? What are the issues that need to be addressed for the growth of the hospitality sector?
Incredible India will be a success only when the hospitality industry, which is a key driver of our economic growth, gets the right attention.
One of the long-standing demands of the hospitality sector has been for it to be accorded infrastructure status, which would give a boost to investments in the sector.
Presently, the minimum project cost for qualifying for a soft loan is Rs 250 crore. However, if this were to be reduced to Rs 25 crore, the sector could see a dramatic increase in investments, leading to an increase in the hotel room inventories.
Aggressively promoting and encouraging investments in hospitality can place India on the map of tourism destinations of the world.
The government should also compare the tourism taxes levied by neighbouring countries with ours and understand that the high tax rate of 28 per cent works against our objective of attracting foreign tourists to the country.
What are the prominent issues in the hospitality sector that are being tackled by HRAWI? What steps is the association taking to overcome the same?
There is ambiguity on GST rates for packages inclusive of stay and food. GST is being charged on the published tariffs and not on the actual rates of booking, and this has created confusion between hotels and customers.
One of the other issues affecting the hospitality industry has been the unavailability of integrated GST (IGST) for meetings, incentives, conferencing and exhibitions (MICE). We have put forth this particular concern as one of the biggest threats to the emerging Indian MICE market.
The unavailability of IGST credit for immovable properties for tourism purposes such as for hotels and related establishments is negatively impacting a huge business tourism movement in the country.
Barring some companies in the business of fast-moving consumer goods (FMCG) or services, not all corporate houses are registered across all states in India and are reconsidering conducting their MICE-related activities. A consequence of this is evident in the pattern of cancellations and the sharp drop in booking for MICE across the country.
The HRAWI has requested and suggested that Place of Supply Rules and IGST Act be accordingly amended to incorporate, in case of supply, to a registered person as a location of service recipient or as the place of hotel, in case of an unregistered person.
We have also asked the government to treat the foreign exchange earnings in tourism services as either exports or deemed exports.
HRAWI has brought up such issues among others to the notice of the authorities to put forth the point of view of the hospitality industry.
The association is also engaging with hotel members to resolve their queries. It organises seminars on such topics where subject experts provide logical advises to business operators.
As mentioned earlier, hospitality is the single biggest contributor to India’s tourism GDP and its growth or decline or stagnancy directly reflects on the health of tourism in the country.
Employment generation, which is one of the focus areas for the government, has the biggest support of the hospitality sector.
It directly employs over 12 per cent of the Indian workforce and is one of the biggest employers of unskilled and semi-skilled labour.
Unfortunately, the real potential of the hospitality industry in India remains undiscovered.
Thursday, April 18, 2024
Thursday, April 18, 2024
Thursday, April 18, 2024
