GST 2.0: Hotel chains keep room rates stable

Hyatt, ITC Hotels, Radisson Hotel Group, and Sarovar Hotels are among hotel chains opting to abstain from raising their room tariffs and instead passing on the benefits of the goods and services tax (GST) rate cuts to customers, according to hoteliers, and tariffs on booking and travel platforms on Monday.

The Centre has cut the GST rate on rooms costing up to Rs 7,500 per night to 5% (without input tax credit) from Monday, from 12% with input tax credit earlier.

A room at the Hyatt Centric Candolim in Goa will cost Rs 5,670 for Tuesday, after adding the 5% GST rate, per rates published on a popular travel platform, while the Fortune Resort, Benaulim, Goa is charging Rs 4,463, after adding 5% GST for the same date.

“There is no change in our room rates, and we have applied the 5% GST rate on rooms priced up to Rs 7,500 from Monday,” said Ajay Bakaya, chairman of Sarovar Hotels and director at Louvre Hotels India. “Out of 140 hotels, about 80 hotels spanning over 5,000 rooms would be priced in this category in our portfolio. I think it’s a good move, and we need to look at the benefits from a customers’ perspective as well.”

The reduced tax rate would allow Radisson to design ‘competitive’ offerings for its customers, said Nikhil Sharma, MD and COO (South Asia) at Radisson Hotel Group.

“In many cases, the benefit is reflected through attractive packages, promotions, and enhanced experiences for our guests,” he said.

“While the exact manner of passing on benefits may vary across hotels depending on demand cycles and seasonality, the broader impact is clear. Guests today enjoy better value for money, and India as a destination becomes more attractive for both domestic and international travellers,” Sharma noted.

Early evidence suggests published room rates in some cases have already come down, said Abhishek A Rastogi, founder, Rastogi Chambers. “Lower room tariffs make Indian hotels more competitive and attractive to both domestic and international travellers,” he said.

Explaining the government move, industry body Hotel Association of India (HAI) said the reduction in tax on hotel accommodation priced at Rs 7,500 and below, to 5% from 12% will provide relief for travellers to the extent of 7% on the room rate with savings of up to Rs 525 per room per night. “However, the withdrawal of input tax credit risks undermining the very competitiveness of hotel operators, and that is an aspect that needs to be considered,” it said.