INDIAN tour operators are bracing themselves for tough negotiations in the months to come over the country’s new proposed taxes on hotel rooms and F&B.
India’s current budget proposal includes a five per cent national service tax on hotel rooms and three per cent on F&B serving alcohol.
If passed, the taxes are expected to have a minimal impact on demand. The real battle though will play out in the B2B arena, with bottomlines as the main casualty, especially where rates have been fixed for brochures and group series.
Creative Travel joint managing director Rajeev Kohli said: “The tax is too small to impact demand – around US$40 on a US$1,000 tour – but bottomlines will suffer.”
Tour operators are examining various ways of minimising the impact on revenues. As Kohli put it: “We either fight with our partners (and get them to help shoulder the tax burden), absorb the tax – an option that will leave us bleeding – or lose business.”
Sanjeev Ticku, general manager inbound tours of Yatra Exotic Routes, said some hotels had agreed to honour agreed rates until the contracts run out. “As for the rest, we will ask them to help us shoulder the tax burden equally until the new rates kick in,” he said.
– Full report in TTG Asia
By Ollie Quiniquini
