About 130 three-, four-star hotels to gain from Kerala's liquor law: Icra

Two-star hotels can run beer/wine parlours, liquor allowed in hotel banquet halls for a fee

The Kerala government's decision to allow liquor to be served in three- and four-star hotels across the state is likely to benefit over 130 such establishments, according to rating agency Icra. The state has over 9,000 premium hotel rooms across 17 of its key business/tourist destinations.

Earlier this week, the Communist Party of India (Marxist)-led Left Democratic Front (LDF) government announced a new liquor policy that grants bar licences to three- and four-star hotels in Kerala, allowing them to serve Indian Made Foreign Liquor (IMFL) and toddy from July. The new policy effectively overturns a decision by the previous Congress-led government, taken on August 2014, that restricted the sale of liquor to only 24 five-star hotels in the State.

While two-star hotels have been allowed to run beer/wine parlours, the government has also permitted 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 three- and four-star hotels in the state stopped serving liquor, impacting their income streams from the Food and Beverage (F&B) and Meetings, Incentives, Conventions and Exhibitions (MICE) segments. A few four-star and heritage properties invested in upgrading their properties in order to apply for a five-star accreditation. Most new hotel projects in the state were also applying for five-star status, Ponniah added.

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

The liquor ban on establishments located within 250-500 metres of state and national highways had impacted several hotels in Kerala, irrespective of their star-accreditation. The impact of the ban was particularly felt in the commercial capital of Kochi. Of the 9,000 premium hotel rooms in the state, 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 grant licences to those shops situated within the 500-metre limit of state and national highways that relocate within the same Taluk to a site beyond the 500-metre limit.