Hotels: The taller, the better they function!
it. Malkani explains, “A lot of tourists visiting Indian cities want to stay in the city centre, where land costs are extremely high. But when you have an FSI of between one and two, it means that hotels can build only double of the total land area forcing them to increase their room rates. New York gives a minimum of 40 FSI, which means that hoteliers can build 40 times the area of construction land even in the city centre giving them more rooms to sell. The capital costs come down dramatically.”
He goes on to the string of indirect taxes in India levied on hotel – VAT on food at 12.5 per cent, VAT on foreign liquor, entertainment duty if a hotel has a bar with music, property tax that are unbelievably disconnected with reality, etc. “Hotel have to pay 100,000 per month in tax just as entertainment duty and this is all coming from the end consumers. You add up all these costs and the final bill shoots up. We have reached critical mass where taxes now form almost as third of the total bill,” Malkani adds.
To address all these issues, the association headed by Malkani will be talking to the various ministries, including the Ministry of Tourism, Ministry of Finance as well as the Ministry of Industry & Commerce. HRAWI will also be engaging with the new Chief Minister of Maharashtra. He adds, “Our PM Narendra Modi has already started talking about doing away with archaic laws. After the state elections, we will have new people in place and maybe we will have a different point of view.”
We will all agree that running a business today, is more complicated and requires more resources than in the past. Technology today plays a major role in almost all aspects of hospitality. We need to be receptive to change, and extremely willing to acquire new skills. And in these times of rapid change, strategies must be formulated and implemented quickly and swiftly.
What are the occupancies like?
In our kind of business, hotels occupancies are affected by a lot of external factors such as seasonality, conferences and symposiums being held in the city, shift in government policies and of course the very essential competitive set. These days, the guests are spoilt for choice. They have a plethora of hotels to choose from in each segment. Therefore, even in the capital city of Delhi, our occupancies fluctuate from 25% during lean seasons, to 80-90% during peak seasons.
How much business is generated by travel agents and OTAs?
Today, our business partners work hand-in-hand with us. In fact, they enjoy a very dominant position in our business module. For rooms, I can comfortably state that our 50% business comes through TAs/OTAs and counting.
How relevant is the travel trade in this day and age?
Travel is indispensable to hospitality industry. What is the point of having a beautiful property at a scenic locale, if there is no accessibility? Today, guests are spending lesser number of nights outside their homes, and this is made possible with the constant endeavor to improve connectivity, infrastructure and conscious effort to built hotels closer to the airports.
How do you think the implementation of VoA will help boost tourism?
I most definitely will vouch for Modi Government’s VoA policy. It will provide a major boost to India’s push to develop into one of the world’s noteworthy tourist destinations — a position that it rightly deserves. But with increased inbound tourists, we need to focus on India as a brand. India seems to offer everything, from deserts to evergreen forests, beaches to snow-clad mountains, ancient historical sites and pilgrim centres to modernday urban hotspots. We also need to improve our infrastructure, cleanliness and upkeep. Tourists do not only see monuments. They are also exposed to various other things, which make a deep impression on their minds and contribute to the overall experience.