Shimla hotels feel the heat of higher taxes, falling tourism

Tribune News Service

Shimla, June 17

Refuting claims of the state government that the tourist inflow has increased, the Tourism Industry Stakeholders’ Association on Sunday said the occupancy had dropped by 60 per cent to 70 per cent.

Seeking the state government’s intervention to save hotels, MK Seth, president of the association, said due to the heavy burden of operating costs, mushrooming growth of unregistered illegal homes and flats in and around Shimla and heavy tax charged by the Shimla Municipal Corporation (SMC), hoteliers in Shimla were losing interests in running the business which was an ominous sign for the tourism industry.

He said: “Around 21 hotels in Shimla have closed down during the last five years as per records gathered from the Tourism Department, while 50 to 60 per cent of the hoteliers have leased their hotels due to non-viability of business.”

Accusing the Shimla Municipal Corporation (SMC) of burdening the hotel industry with heavy tariff, he said the SMC had carved out a separate category of water tariff for hotels which was 28 per cent higher than the commercial tariff. Besides, 50 per cent sewerage cess was added to it. The number of registered hotels in Shimla are 253.

He said the garbage collection fee had been increased from Rs 500 to Rs 1,000 from April 2018 for small hotels having 10 or less rooms.

“Despite an increase of 100 per cent, the SMC again increased the rate from Rs 1,000 to Rs 1,300 within three months and this fee will be charged from July 1,” he said.

The Municipal Corporation is charging 43 per cent to 72 per cent higher rate on property tax from the hoteliers by making unjustified slabs and charging highest factor rates.

The members of the association said if the corporation failed to rationalise things, which were hitting the viability of the hotel industry, the industry would collapse any time.

What hoteliers say

• The SMC has carved out a separate category of water tariff for hotels which is 28 per cent higher than the commercial tariff. 
• Besides, 50 per cent sewerage cess is added to it.
• The garbage collection fee had been increased from  Rs 500 to Rs 1,000 from April 2018 for small hotels having 10 or less rooms
• Despite an increase of 100 per cent, the SMC again increased the rate from  Rs 1,000 to Rs 1,300 within three months and this fee will be charged from July 1.
• The MC is charging 43% to 72% higher rate on property tax from the hoteliers.