The Central government’s proposal to give sops — like exemption from service tax and commercial tariffs, and concession on power and water bills — to homestays has irked hotel and restaurant owners as they warned that the plan would spell doom for the hospitality sector.
The aim to open up homestays, part of the Modi government’s ambitious ‘Start UP India’ campaign, is to encourage tourism by bridging a shortage of 1.9 lakh hotel rooms across the country, the Centre has claimed.
The Central government has proposed to offer various concessions to boost homestays not only at tourist places but even in cities. It will exempt them from service tax and also give concessions on power and water charges. In addition, it will charge residential tax rates and hasten online licences. Owners of homestays with at least five rentable properties are given licences by state governments.
Expressing strong objection against such incentives, the Hotel and Restaurant Association of Western India (HRAWI) has warned that such steps will be counter-productive especially when tourism in India is at the nascent stage. “If the homestays concept does go into execution then hotels are bound to be doomed,” warned HRAWI president Bharat Malkani.
The director of Vie Hospitality Group, Kamlesh Barot, said it was an indirect encouragement to the unorganised sector. “If the government is serious to promote tourism, it should free the hospitality sector from red-tapism and have a pragmatic taxation policy. Tourism across the world has grown on the back of a strong hospitality infrastructure and not homestays. These homestays will, in fact, be misused due to the undue concessions,” said Barot.
The state government has, however, defended the new policy, calling it a part of experiential tourism. “This practice is prevalent across the world and will give boost to the tourism sector,” said Paraag Jaiin Nainuttia, managing director, Maharashtra Tourism Development Corporation. He said that homestays will not compete with the hotels. “Those who stay in the hotels will continue to do so,” he added.
The MTDC has been vigorously promoting homestays in rural Maharashtra in places like Alibaug, Ratnagiri, Malvan, Shahapur and Sindhadurga.
The concept of homestay was earlier experimented during the Commonwealth Games 2010 in Delhi to overcome the shortfall in hotel rooms.