Answering questions of reporters, Chandy also said there was nothing unusual in it.
"Kerala's liquor policy stated that bar hotels would not be allowed in hotels below five-star status," he said at a meet-the-press programme here.
"Sanctioning of bar licence to five star hotels is (done) by Centre. It is part of tourism policy," Chandy said, adding the state government has no role in it.
KPCC President V M Sudheeran, who has been at the forefront of the anti-liquor campaign, said UDF will not dilute its liquor policy.
"The issue related to granting of licence will be examined," he said, adding that he was not aware of details as he was electioneering.
The issue has triggered a row with CPI(M) veteran V S Achuthanandan attacking the UDF government, saying it has exposed the government's "fake (liquor) policy" to dupe the public.