| "The occupancy will be affected because the hotels will be forced to pass on the increase in the tax to consumers," said Lalit Suri, chairman and managing director, the Grand Group of Hotels. The hotel chains have called upon the government to reverse its decision. |
| This decision comes when the central government has called upon the hotel groups not to increase the room rates during peak season. |
| The room rates charged are about 40 per cent lower than the published room rates. |
| For example, when a hotel with a published room rate of $300 offers a room to a consumer at $100, the effective tax the consumer will pay is 37.5 per cent, instead of the 12.5 per cent, as of now. |
| "This decision of the state government to impose an additional luxury tax on hotels will lead to an increase in room rates. As a result, traffic will move to the neighbouring states," said Satish Sood, managing director, Shangri La, Intercontinental Park Royal. |
| Some hoteliers said in cases where bookings had been made, the hotels would have to take the hit. "Some of the packages we offer are all-inclusive. In such a case when the tax rate goes up, the hotel chains will have to absorb the additional cost," said D K Beri, vice-president (business and corporate affairs), Indian Hotels, a Tata-group firm. |
| Hotel companies say they will not be able to fall in line with the government directive not to hike room charges. They want the rates to be determined by the market. |
| No cheap rooms |
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