Liquor policy shift offers Kerala hoteliers a second wind

Already on the warpath demanding a reduction in tax rates proposed under GST, hotels in the State have heaved a huge sigh of relief following the announcement of the new liquor policy.

Published: 11th June 2017 03:48 AM  |   Last Updated: 11th June 2017 03:48 AM   |  A+A-

Illustration | Saai

Express News Service

KOCHI: Already on the warpath demanding a reduction in tax rates proposed under the Goods and Services Tax (GST), hotels in the state have heaved a huge sigh of relief following the announcement of the new liquor policy.

Hoteliers expect the industry to benefit from tourism centred around Meetings, Incentives, Conferences and Events (MICE) finding its way back into God’s Own Country. However, the Supreme Court verdict banning bars near national and state highways remains a hurdle. 

Though the new liquor policy allows closed down bars in three and four-star hotels to open, over half of around 800 such hotels will not benefit, given the apex court’s guideline bars liquor vends within 500 metres of state or national highways. “The new liquor policy is a relief for us,” Jose Pradeep, Kerala Bar Hotels Association Ernakulam district president, told Express.

“We expect Kerala will again become a favourite destination for MICE tourism. But the SC order remains a blow to the industry, mainly because every place in Kerala is related to tourism in some way or the other. If a conference happens in a major hotel in the city, small hotels and restaurants in the area will also benefit. 

But a major concern for the industry now is the new tax rates under GST. The room rent in five-star hotels will attract a tax of 28 per cent from the existing 14.5 per cent,” Pradeep said. 

There are around 50,000 hotels across the state, with about 75 per cent of them being small hotels. 
As per the latest statistics, of the 815 such star-rated hotels (three and four-star), 474 will be unable to open bars following the apex court’s guideline.

“We welcome the new liquor policy of the LDF government as it will increase business,” said Kerala Hotel and Restaurant Association (KHRA) secretary Azeez. “Besides the SC order, there is the unfavourable GST rates which will kill a majority of the state’s hotels. Normally, small hotels get business when a conference happens in a star hotel nearby. After the roll out of GST, most of the small hotels will be forced to pull down their shutters. 

The GST Council has proposed an increased rate of five per cent for small hotels from the existing 0.5 per cent. We have to collect the tax from customers, which will eventually result in price hike.” 

K Kiran, general manager, Keys Hotels, said the tourism sector in Kerala is in deep crisis. “Even though the new policy is a breather, the SC order is a smack across the face of the entire industry. Smaller players are literally struggling,” he said.

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