Hotel
Aggregators Not Only Cause Revenue Losses To The Exchequer But Will Harm
Tourism & Hospitality Industry In the Long Term
Hotel Industry Seeks Uniformity
In Regulations; Highlights Unfair Business Advantages Enjoyed By Unregulated
Players
Highlighting the unfair advantages enjoyed by unregulated
players and aggregators from the unorganized sector like Airbnb, Bed &
Breakfast and Home-stays, the Hotel and Restaurant Association of Western India
(HRAWI) has announced that it will petition the Governments of its western
region, to create a level playing field and bring uniformity in regulations for
all hospitality players in the market. It has pointed out that while five star
hotels pay a substantial amount 38 per cent of the room revenue as direct and
indirect taxes, some of the lavish bungalows listed in sites of these illicit hotel
aggregators do not pay a single rupee as taxes. Further, over 42 licenses are
needed to start and operate an organized sector hotel, while the unregulated
sector operates without undergoing any such process.
“We welcome competition in any and
every form, but this kind of disparity is unhealthy for the industry. It is
almost as if we are doing our businesses with our hands tied,” says Mr. Dilip
Datwani, President, HRAWI. “Disruptions are healthy, as it allows customers to
enjoy best services at the cheapest rates. But the disruptors cannot be allowed
to disrupt and proliferate simply on the basis of avoiding regulations and
taxes. Today a hotel, let’s say charges Rs. 1500/- for a room, then it has to
pay 10% as luxury tax beside other taxes, but a bungalow listed in Airbnb, for
over Rs. 10,000/- a day, ends up paying nothing. If nothing else, this is a
loss of revenue to the exchequer also.”
“Clearly the big ticket concerns
are the security issues and the loss of revenue to the exchequer. HRAWI
recently compiled a document on how other major cities in the world have dealt
with this issue. Some of the findings were revealing. After licenses were made
mandatory in Germany, forty percent of Berlin’s Airbnb listings disappeared.
Amsterdam, meanwhile, banned apartments rented out for more than 60 days per
year, or to more than four people at a time. It has also allocated $1.1 million
to identify apartments that are being offered for short term rentals or don’t
have landlords living in them. Barcelona has slapped Airbnb and Home-stay
$65,000 each for listing apartment without permit,” says Mr. Sanjay Sethi,
CEO & Managing Director of
Chalet Hotels Pvt Ltd (Chalet Hotels owns several Marriott properties in India)
“In a country like India where
tourism is at a nascent stage the unorganized, illicit accommodation could
spell doom. The primary problem is that there are no standardization or
categorizations. There have been multiple cases of exaggerated promises,
misrepresentations, disagreements and conflicts with guests, hygiene issues and
intimidation among others. Because the stays are unregulated, there are no
redressal systems in place,” says Mr. Dilip Datwani. “Hotels are required by
law to send details of foreign guests to the police station by submission of a
C Form. This is a security requirement from the Ministry of Home Affairs.
Home-stays are not required to be compliant and the industry fears that this
will become the de facto accommodation for those foreigners that seek anonymity
from the Police,” he adds.
HRAWI also questioned the relevance
of subjecting hotels to administrative clearances, liquor permits and other
licenses while these unorganized accommodations, providing the very same
services are exempted. Homestays, functioning just like hotels do, are
prevalent even today in a lot of States of India.
“The hospitality industry without these
illicit accommodations in Maharashtra today, can generate almost Rs.600 crores
per extra night that a foreign tourist stays back, to the Government as foreign
exchange earnings, besides being the highest employment generator. Almost all
tourist towns across the world have grown on the back of strong hospitality
infrastructure and not unregulated homestays. The Government will have to
consider, either allowing hotels to operate with the same relaxations as would
be given to these aggregators and such unregulated homestays as they are not
treated equally, there can’t be a first among equals,” concludes Mr. Kamlesh Barot,
past President, Federation of Hotel and Restaurant Associations of India (FHRAI).
About Hotel &
Restaurant Association Western India (HRAWI)
The Hotel and Restaurant Association
(Western India) is a 66 years old Association of Hotels and Restaurants in
Western India. Its members include smaller Hotels up to 5-Star Deluxe
categories. The bulk of its members like any growth economy are made up of
budget hotels. With membership base spread across Western India, HRAWI covers
Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Goa and the Union
Territories of Daman, Diu & Silvassa, and is considered to be the voice of
the Hotel Industry. The association is part of the national body of Federation
of the Hotels & Restaurants Associations of India (FHRAI), located in New
Delhi, which was originally founded in Mumbai in 1950 by the late Mr. J.R.D.
Tata.
