Hotel industry demands policy for unregulated room rentals

Industry also demand actions to increase tax compliance from these rentals

Hotel and restaurant owners on Friday urged the government to come up with a policy to cover the unregulated room rentals that have mushroomed across the country.

A policy that is fair to all players and one that will allow the tourism industry in the country to take off should be drafted, the Hotel and Restaurant Association of Western India (HRAWI) said in a release in Mumbai.

"We concede homestays offer convenience to all parties concerned. But we have to view these things in perspective. The apartments are currently cost effective to tourists only because they do not pay taxes or follow regulations that hotels need to. This gives them an unfair business advantage that goes against the concept of fair trade practices," HRAWI President Dilip Datwani said.

He alleged a lot of establishments are taking advantage of the 'Bed and Breakfast Homestays' and running full-fledged commercial establishments without any kind of regulations and taxes.

"While five-star hotels pay a substantial 38 per cent of the room revenue as direct and indirect taxes, some of the lavish bungalows listed in hotel aggregator sites do not pay a single rupee as taxes," he added.

Further, he said, over 42 licences are needed to start and operate an organised sector hotel, while the unregulated segment operates without a single approval.

"The regulations that the licensed establishments have to follow are vast and cover fire safety measures, food safety measure, hygiene parameters and many other compliances."

HRAWI questioned the relevance of subjecting hotels to administrative clearances, liquor permits and other licenses while unorganised accommodations, providing the very same services, are exempted.

The association pointed out that hotels are required by law to send details of foreign guests to the nearest police station, but homestays don't follow this rule.

"This is a security requirement from the Ministry of Home Affairs. Homestays are not required to be compliant and the industry fears this will become the de facto accommodation for those foreigners that seek anonymity from the police."

Countries like Singapore, France, Netherlands, Spain, Germany and the US, among others, have regulations in place, which makes it illegal for homeowners to rent out entire apartments and rooms for less than six months, unless they have permission from authorities concerned, HRAWI said.