PRS Oberoi frowns on 28% GST on hospitality, says it'll hit employment

The Oberois of EIH Ltd, one of the most reputed names in the hospitality industry, have raised concern over the impact of goods and services tax (GST) on the travel and tourism sector.

A 28% GST will be detrimental to tourism and employment in the hospitality industry, chairman P R S Oberoi has said in his message to the shareholders in the annual report of the company released on Monday.

Even a partial relief received by the industry from the GST Council – rise in the price slab for hotel rooms falling under 28% tax bracket – just before the implementation of the new indirect tax system has failed to enthuse Oberoi, the hospitality industry veteran who started his journey with his Grand Hotel in Kolkata.

"The introduction of GST will have an adverse impact on the travel and tourism industry. The announcement that hotels charging over Rs 7,500 in room charges will attract 28% GST will be detrimental to tourism and employment in the hospitality industry," the executive chairman said in the report.

Earlier, GST rate of 28% was suggested for hotel rooms priced above Rs 5,000. Following a hectic lobbying by the Federation of Hotel & Restaurant Associations of India (FHRAI), the slab was increased to Rs 7,500.

"It is expected that this measure will benefit a majority of our hotel members," Amitabh Devendra, secretary general of FHRAI had said on the revision of the rates.

Oberois, who operate some of the finest hotels of the world, aren't happy though.

"The application of the highest rate of 28% to a significant part of the hospitality industry will make the destination more expensive and will adversely affect its capability to generate revenue and employment. We hope that the tax rate of 28% will be reviewed and revised in the interest of the hospitality industry and the nation," the annual report says in its management analysis section.

GST has come at a time when the tourism industry is witnessing a revival in the arrival of overseas tourists as well as domestic travel.

"Domestic tourism, driven by India's expanding middle class and increasing disposable incomes, has emerged as a key driver for the growth of travel and tourism. Domestic tourist visits grew by 15.5% annually to 1.65 billion in 2016. Foreign tourist arrivals in 2016 grew by 10.7% to reach nearly 9 million. Arrivals on e-visas more than doubled to 1 million as the e-visa facility was extended to 161 countries from 113 previously," the report said.

NO RED CARPET

• GST rate of 28% to a significant part of hospitality industry will make the destination more expensive
   
• This has come when tourism industry is witnessing a revival in overseas and domestic travel