Singapore Follows Other Developed Nations To
Implement Legislation On Short Term Room Rentals;
Hotel Industry In India Pitches For Equality In
Regulations & Taxes
The Parliament of Singapore passed a new law on 6th
February making it illegal for home owners to rent out entire apartments and
rooms for less than six months, unless they have permission from the Urban
Redevelopment Authority (URA) to do so. This move is likely to affect private
home owners renting their houses through hotel aggregators like AirBnb. The
changes to the law come on the back of growing complaints regarding short-term
rentals last year. The URA received 608 complaints in 2016, 61 per cent more
than the 377 complaints in 2015.
Besides Singapore some of the other countries that have regulations in
place include France, Germany, Netherlands, Spain and United States of America
among others. Germany banned unlicensed rentals from May 1, 2016. Since then
40% of Berlin’s Airbnb listings disappeared. Amsterdam, meanwhile, has
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 Homestay $65,000 each for listing apartment without permit. These
measures not only created a level playing field among all parties, but also
netted revenues to the exchequer in the form of taxes.
The Hotel and Restaurant Association of Western India (HRAWI) has
beseeched the Government of India to come up with a policy to cover the
unregulated room rentals that have mushroomed across the nation – a policy that
is fair to all players and one that will allow the tourism industry in India to
take off in a big way.
“We concede that homestays presently offer convenience to all parties
concerned. But we have to view these things in perspective. The apartments are currently
cost effective to tourists only because they do not pay taxes or follow
regulations that hotels need to. This gives them an unfair business advantage
that goes against the concept of fair trade practices. The graver issue is that
a lot of establishments are taking advantage of the ‘Bed & Breakfast
Homestays’ and run full-fledged commercial establishments without any kind of
regulations and taxes. While five star hotels pay a substantial 38 per cent of
the room revenue as direct and indirect taxes, some of the lavish bungalows
listed in hotel aggregator sites like AirBnB 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 a single license. The
regulations that the licensed establishments have to follow are vast and cover fire
safety measures, food safety measure, hygiene parameters and many other
compliances,” says Mr. Dilip Datwani, President, HRAWI. “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.”
“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,” 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 association also pointed out that 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. Homestays 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.
“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 67 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.
