GST: Traders expressed concern over high GST in hotel restaurants, said this regarding tourism sector
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GST: Hotel-restaurant business in India has grown very rapidly in the year 2023. This year, the successful organization of two big events in the country – G20 meeting and World Cup – has given a new height to the hospitality sector. Which has reached above the level before the Covid period. However, owners of hotels which also have restaurant services are now worried. Actually, the government has added the GST rate to the hotel rooms. This means that if you eat food in a stand-alone hotel, you will have to pay 5 percent GST. Whereas, in hotels where accommodation is provided, customers have to pay 18 percent GST on restaurant services. The problem is that even those customers who are not staying in the hotel and only use the restaurant service are obliged to pay 18 percent GST. This has had a big impact on the restaurant business in the hotel. Pradeep Shetty, president of the Federation of Hotel and Restaurant Associations of India, says the current system, where GST rates for restaurants are linked to hotel rooms, is unfair, uncertain and loss-making. This may affect the tourism sector.
Impact on restaurant business
Arvind Petwal, owner of Hill View Hotel restaurant in Mussoorie, says that the government’s decision has affected the restaurant business. It is not possible to do business only by renting hotel rooms. Tourists staying in hotels go out to eat. Hence the impact falls on business. The income in hotel business is approximately 50-50 ratio of room rent and restaurant revenue. The other part is being affected due to GST. At the same time, Pradeep Shetty says that the perception of 18 percent GST in the hotel restaurant is in the minds of the customers. This discourages them, even if the menu items in hotel restaurants are cheaper than standalone restaurants. In other Asian countries like Thailand, Malaysia and Singapore where the number of tourists is very high, the tax rate is very low. In such a situation, its impact can be seen in global market competition. However, in the new year in hospitality, issues like long-term fund access, high GST rates, talent acquisition and complex business processes may become a matter of concern.
Revenue increased by 15-20 percent
Hotel Association of India (HAI) President Punit Chhatwal The sector has recorded a 14 percent growth in revenue per available room (RevPAR) in the first half of the current financial year 2023-24. It is expected to grow by 15-20 percent in the second half of the financial year. Pradeep Shetty, president-elect of the Federation of Hotel and Restaurant Associations of India (FHRAI) said the past year has demonstrated the sector’s resilience in dealing with unprecedented challenges, especially as the G20 events have provided a boost to the Indian tourism sector in the revival of travel trade. Which is one of the biggest attractions of 2023. Sameer MC, Managing Director, Fortune Hotels, said that we see huge potential in small towns and cities which offer exciting opportunities. We have seen a resurgence in the tourism sector in 2023, driven by the gradual return of domestic travel and international visitors. After the global pandemic, the industry has been prepared for every challenge that may arise in the future. This positive momentum inspires us to move forward.
Number of people traveling increased
Kavinder Singh, Managing Director and CEO, Mahindra Holidays and Resorts India Limited, said that the desire for comfortable travel, environmental awareness, weekend holidays and spending quality time with family has increased the number of people traveling. On the long-term prospects of the area, Ashawan Singh said that as per our strategic objective, we aim to double the number of rooms from about 5,000 to 10,000 by the financial year 2030. Similarly, Devinder Juz, General Manager of Eros Hotel (New Delhi) said that the company is optimistic about the growth prospects in 2024 based on the success of 2023. India’s hospitality sector is expected to reach new heights in 2024 and move forward to capitalize on the upcoming opportunities.
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