Kerala liquor policy would benefit three- and four-star hotels, says Icra

At present, 3 and 4-star hotel bars in Kerala are allowed to serve only beer and wine

The Communist Party of India (Marxist)-led Left Democratic Front (LDF) government  announced its new liquor policy allowing bar licences to three- and four-star hotels in Kerala, allowing them to serve Indian Made Foreign Liquor (IMFL) toddy from the beginning of July, earlier this week. The decision overturned the verdict of the previous Congress-led government in August 2014, which restricted liquor sale to only around 24 hotels with five-star accreditation in the state.

Two-star hotels will be allowed to run beer/wine parlours and the government has also allowed the serving of liquor in banquet halls of hotels, for a fee. This ruling is expected to benefit over 130 three- and four-star hotels in Kerala, said Pavethra Ponniah, vice president and sector-head, Corporate Ratings, Icra.

Following the August 2014 ban, all the three- and four-star hotels stopped serving liquor, impacting income from Food and Beverage (F&B) and Meetings, Incentives, Conventions and Exhibitions (MICE). Few of the four-star hotels and heritage properties invested in upgrading their properties, and applied for a five-star accreditation. New supply additions being planned were also skewed in favour of five-star hotels, she added.

At present, three- and four-star hotel bars in Kerala operate under the FL-11 licence, which allows them to serve only beer and wine, as opposed to the FL-3 licence that allows IMFL also to be served.

The liquor ban within 250-500 metres from the highway had impacted several hotels —irrespective of their star-accreditation in the State, particularly in the commercial capital of Kochi. Of the 9,000 premium hotel rooms, 29 per cent are located in Kochi, 10 per cent in Thiruvananthapuram and nine per cent each in Alleppey and Kovalam.

The government has also decided to allow licences for those shops that were situated within the 500 m limit of the state and national highways to relocate the outlets in the same Taluk, beyond 500 m from these roads.