Newstrack

HRAWI hopes to pique state govt's interest in industry

EH Staff - Mumbai

(L-R) Kamlesh Barot, executive committee member, HRAWI; Nikhil Shetty, jt honorary secretary, HRAWI; S P Jain, senior vice president, HRAWI; Dinesh Khanna, President, FHRAI & HRAWI; Ranjan Kapur, advisor HRAWI, and Sunit Kothari, executive committee member, HRAWI and chairman, Madhya Pradesh, Co-ordination Sub- Committee

The Hotel & Restaurant Association Western India (HRAWI) recently met with members of the association and press persons to highlight concerns of the industry in the western region and spell out initiatives taken by the body. Present at the meeting were Dinesh Khanna, president, FHRAI & HRAWI; S P Jain, senior vice president, HRAWI; Kamlesh Barot, executive committee member, HRAWI; Nikhil Shetty, Jt honorary secretary, HRAWI; Ranjan Kapur, advisor HRAWI, and Sunit Kothari, executive committee member, HRAWI and chairman, Madhya Pradesh, Co-ordination Sub-Committee. Also present was Anil Malik, general manager of ITC Hotel, The Grand Central, Mumbai.

HRAWI has appreciated the central government's initiative to lease out land to private hotel developers in a revenue-sharing agreement. The bidder who offers the government the highest ratio will bag the project. However, before finalising the project, the centre would discuss it with the states, as land is a state subject. The revenue share agreement will also depend on the location of the project and may range from 20-30 years depending on the project.

Speaking about the initiative Dinesh Khanna, president-FHRAI & HRAWI said, "The tourism sector has immense potential and the major hindrance to the inbound tourist besides the lack of infrastructure is insufficient hotel rooms. This initiative by the centre will not just give room for five-star projects but also to mid-segment hotels." He added that the centre and the state government should make the policy foolproof and mark the auction land exclusively for the hotel developers. Khanna also pointed out five major challenges faced by the hospitality industry:

• Creating additional rooms stock to cater to the increasing demand.
• Planning for manning the hotels and restaurants and increasing productivity and skills of employees.
• Facing the challenges of increasing power and fuel cost.
• Realignment in the market place, with the growing interest of international hotel chains in India; and
• Prevailing upon the government to introduce a user friendly and rational tax and licensing structure.

HRAWI also appreciated the state government's initiative to reduce the state excise license fee to Rs 3 lakh. But it is planning to appeal to the government to rationalise this fee structure, since according to the revised structure the beer bar license fee is Rs 1,60,100 which is more than the permit room license fee of Rs 1,00,000 at places with a population up to 3,00,000.

Jain also discussed the issue of VAT. He said, "VAT was introduced to bring standardisation in the taxation however now states impose VAT at various rates." Maharashtra state has adopted the uniform rate of 12.5 per cent on F&B turnover and 20 per cent on liquor turnover; with a rate at eight per cent on F&B turnover under the composition scheme. The rate under the composition scheme in the other states is four per cent.

HRAWI had requested the Finance Minister of Maharashtra that in accord with the rate prevailing in neighbouring states of Gujarat, Madhya Pradesh, Chattisgarh, Maharashtra too should adopt the rate of four per cent instead of eight per cent VAT on the F&B turnover under the composition scheme. "Such differences will only create confusion in the minds of the consumer," he further added.

Jain carried on with the discussion bringing to the fore that at present, hotels and restaurants are levied an electricity duty at 13 per cent, despite the fact that hotels have been notified since April 1999 as an industry. In terms of the MERC tariff, hotels and restaurants, who are mainly LT consumers, are charged with a tariff of Rs 8.32 per unit as against Rs 6.57 per unit applicable to an HT consumer. It is estimated that the state is earning over Rs 100 crore by way of electricity duty levied on hotels and restaurants at the commercial rate of 13 per cent. The association has requested that all hotels and restaurants be charged electricity duty at the industrial rate of six per cent with immediate effect.

Discussion on the industry status also raised the issue of clearances. A hospitality institution during its initial set up requires more than 140 licenses and there is no single window system to facilitate fast clearances. Sunit Kothari executive committee member of HRAWI, hoped that this matter too would be brought to light and be dealt with by the government. He also brought up the issue of the human resource crunch. He said, "There are 25 IHMs, but there has to be more importance given to this, and the government needs to set up more of such institutes. Right now there are only 15000 to 20000 graduating from these institutes but with high attrition rates we need more fresh graduates in the industry." Keeping in mind the potential for employment that the hospitality industry provides to the nation, it is about time there was clear focus on training for industry professionals. Kamlesh Barot of Encore Hospitality who is also the joint honorary secretary of HRAWI further added that the course structure should be decided by the prevalent trend in the industry.