Hotel Industry in Manali and Himachal Pradesh Struggles with New Tax Hike Amid Disasters—Here’s What It Means for Tourism in India

Published on November 23, 2025

In a move that has left hoteliers in Manali reeling, the local Municipal Council recently imposed a 30% house tax hike, a decision that has added to the financial distress of a tourism sector already grappling with the aftermath of natural disasters. While the Himachal Pradesh government maintains that this increase is part of a broader uniform policy across the state, many business owners in Manali argue that the timing could not be worse. The tax hike comes on the back of floods, landslides, and road blockages that have kept tourism numbers low, leaving small and medium-sized establishments on the verge of collapse. With the industry’s recovery still sluggish, this abrupt change has sparked fierce opposition, forcing local hoteliers to rally together in a bid to have the decision either rolled back or implemented more gradually.

The Weight of a Sudden 30% Tax Increase on Manali’s Hoteliers

The recent decision to increase the house tax by 30% has caught many hotel owners off guard, and the impact has been severe, especially for businesses still trying to recover from the devastating natural disasters of the past few years. For Manali’s hoteliers, who rely heavily on seasonal tourism, this move has only added to an already overburdened sector. While the state’s uniform tax policy has been presented as a fair approach, those in Manali argue that the unique circumstances of the town, particularly its ongoing recovery from environmental calamities, should have been considered more carefully.

Tourism in Manali has been slow to bounce back, with damaged infrastructure, frequent road closures, and unpredictable weather patterns all contributing to a sluggish recovery. The hotel industry has borne the brunt of these disruptions, and many business owners have spent the last few years in a constant state of repair.

Why the Timing of the Tax Hike Matters

Given the current state of the tourism sector, Manali’s hoteliers believe that the timing of this house tax hike could not have been worse. After enduring multiple setbacks caused by floods, landslides, and prolonged road closures, the industry is only beginning to show signs of recovery. Many hotel owners are still burdened with loans, struggling to pay staff, and making ends meet as visitors remain hesitant to return to the region. The abrupt increase in taxes has further strained their already fragile businesses.

Manali’s Special Circumstances: A Call for Relief Measures

The municipal council’s decision to implement a uniform tax hike across the state has been met with frustration by many hotel owners in Manali, who argue that their situation is unlike that of other parts of Himachal Pradesh. Unlike other towns that may have recovered more quickly, Manali’s tourism has been erratic, with weather-related disruptions frequently causing seasonal shifts. The lack of a steady stream of visitors has left businesses dependent on a small, often unpredictable tourist base. For these reasons, local hoteliers have called for more considerate action by the authorities, such as phased tax increases or exemptions for disaster-hit businesses.

The local government’s response has been to assure business owners that the increased tax will contribute to a more streamlined online billing system, aimed at simplifying the process. However, many remain skeptical, pointing out that such measures are of little comfort to those already struggling to stay afloat.

Struggling to Keep the Doors Open: How the Tax Hike Affects Small Businesses

The effects of the house tax hike are being felt most acutely by small and medium-sized hotels in Manali, which make up a significant portion of the area’s hospitality sector. Many of these businesses are owned by families who have invested everything in keeping their hotels running, and the 30% hike presents a huge financial burden. Several hotel owners have reported having to dip into their personal savings just to cover basic operational costs, with little hope for immediate relief.

Furthermore, those who have taken loans to rebuild their hotels after the devastating natural disasters of recent years now find themselves caught between the need to service their debts and the pressure of higher taxes. It is clear that the financial health of Manali’s hotels is hanging by a thread, and with the tourism sector still volatile, this new policy could prove to be the tipping point for many businesses.

Is There a Way Forward for Manali’s Hotel Industry?

In the face of such challenges, hoteliers in Manali have joined forces to demand a review of the tax hike. Some are calling for the decision to be rolled back entirely, while others are pushing for a phased approach to give businesses time to adapt. The group has also requested more targeted relief measures for those establishments most affected by natural disasters.

The key, according to these hotel owners, is for the government to show greater sensitivity to the challenges faced by businesses in disaster-stricken areas like Manali. Instead of applying blanket policies, they argue, it would be more effective to tailor tax rates to the specific needs of each region. Given the reliance on tourism, there is an argument that tax relief or exemptions could help restore business confidence in the area, especially if the tourism season remains unpredictable.

Travel Tips for Visiting Manali Amidst the Crisis

While Manali may face a difficult period of transition, visitors can still enjoy the beauty of the region. Here are a few tips to help travelers navigate the situation:

• Check for Road Conditions: Before visiting, make sure to check local news for any disruptions to road access due to weather.
• Book in Advance: While many hotels are recovering, booking your stay in advance can help ensure availability, especially during the peak season.
• Support Local Businesses: Consider staying in smaller, family-owned hotels that rely on tourism for their livelihood.
• Respect Local Challenges: Be understanding of the hardships faced by local businesses and consider visiting during off-peak times to avoid overcrowding.