Shell out more to holiday in state from October

Jul 23, 2012, 07:04 IST | Urvashi Seth

Service tax on hotel rooms to rise from 10% to 12% for the winter season, though raise was applicable from July 1, as announced in this Union budget

Planning a holiday in the state after September, be prepared to shell out 12 per cent instead of 10 per cent to stay at hotels and resorts, as the room tariff is all set to be raised for the winter holiday season. If that wasn’t bad enough, food and beverage (F&B) served at these establishments will also tug more at your purse strings.

No room for bargain: Following the increase in service tax, the average room rates are expected to rise from Rs 500 to Rs 1,000 per day. Representation Pic

The cost of holidaying upto September end however will be cheaper and will not be revised until October. The increase in service tax from 10 per cent to 12 per cent was announced in this Union budget, which was applicable since July 1, but since the hotel and resort owners have already prepared tariff cards, this increase will not affect consumers right away.

The winter vacation begins from October onwards and the service tax on hotel rooms will increase from 10 per cent to 12 per cent as announced in this Union budget, which is applicable since July 1. At the same time, the Centre has slashed the concession provided for hotel rooms and the food and beverage sector by 10 per cent.

Revised rates
The average room rates are expected to rise from Rs 500 to Rs 1,000 per day, depending on the amenities and luxuries offered by the hotels.

“The percentage of abatement provided on hotel rooms was 50 per cent, and 70 per cent on F&B until last year. This has now been reduced by 10 per cent and is applicable from July 1. Now, consumers will be paying a part of the 10 per cent that the hospitality industry is losing on food and beverage and on rooms, which could vary according to the establishment. Also, the rise in service tax on hotel rooms from 10 per cent to 12 per cent is acting as a dampener for the industry and the effect of the hike will be felt from October. Currently, the rates are already outlined, but those planning to make bookings from October onwards will have to shell out more,” Kamlesh Barot, president of Hotel and Restaurant Association, said.

A hotel manager from a leading hotel in Cuffe Parade said that July is an off-season month in the state and hence rack rates are generally fixed.

“The effects of the new tariff will be felt from October when the holiday season picks up. Since input costs are rising and margins are thin, establishments will have to pass on the burden to consumers. By doing so, we are making India increasingly expensive and making the city one of the most expensive cities in Asia, as compared to other destinations like Bangkok and Singapore,” he said.

Ravi Sahai, Human Resource head at an MNC, said that the common man is certainly gong to feel the pinch.

“Maharashtra is already one of the most expensive states as compared to any other state when it comes to food and beverage. Any further hike is going to pinch us more. I don’t understand why the government is targeting people out to enjoy themselves,” Sahai said. 

Go to top