Unregistered guest houses in HP eating into hotel business

Unregistered villas, flats and apartments that are being pitched to tourists as affordable accommodation across the state have become a thorn in the side for legitimate hoteliers, homestays and bed and breakfasts across the state as they have been losing considerable business to these illegal ventures.

These unregistered guest houses are being rented through online travel companies and through touts. Tourists, too, prefer to put up at these accommodations due to the cheap tariff. Most of these accommodations only charge ₹500 to ₹1,000 per room during the off season. Registered hoteliers cannot hope to compete with the prices as the illegal ventures do not pay tax and use domestic water and power connections.

With business being encroached, occupancy in registered businesses is around 10% during weekdays and increases to 15%-20% during the weekends. A large number of illegal guest houses have mushroomed around the state capital.

The tourism department says there are around 3,350 registered hotels and 1,656 registered homestays in the state. Tourism Industry Stakeholders Association president Mohinder Seth says , “Due to these unregistered accommodations, tourists are unwilling to pay even 50% tariff in the off season. This is a big blow for budget-class hotels, bread and breakfasts and home stays. It has become difficult to sustain hotels due to low- occupancy in hotels.”

“The government does not get any tax from these unregistered accommodations, which causes losses to the government also,” he said.

Hoteliers claim that it has become difficult for them to meet fixed expenditures such as staff salaries, electricity bills, water bills and garbage-collection fee.

The industry is already reeling in the aftermath of the Covid crisis. Apart from a six-month waiver on fixed demand charges levied on hotels by Himachal Pradesh State Electricity Board Limited no other financial help has been extended to the hotel industry.

The government has also announced an interest subvention scheme for the hotel industry, under which working capital will be provided to hotels but this has proved to be an eye wash as none of the hotelier benefitted from the scheme due to stringent norms. Banks are reluctant to sanction loans to hoteliers under the scheme.Rebate in property tax and waiver of garbage fee for the period when the hotels were completely closed is still awaited.

Travel agents out of job

Travel Chapter Anil Bhardwaj senior vice-president said travel agents were not getting any business. “Unless Volvo bus service and flights are not resumed and train connectivity from Bengal, Maharashtra ,Delhi and Gujarat is not streamlined. Travel agents cannot expect any business. Moreover, online travel companies are also eating into travel agents’ business.”

“The government should restart Volvos and ask the railways to restore of all train routes up to Kalka and Chandigarh at the earliest to save the travel and tourism industry,” he said.

Hoteliers and tourism stakeholders do not expect the tourism and hospitality sectors to normalise before the summer and are seeking financial aid from the government. They have demanded that the government announce a special package, which includes domestic tariff for water, garbage-collection fee, property tax, waiver of fixed demand charges on electricity bills for at least one year and unconditional and collateral-free financial assistance in the shape of working capital loan to all hotels through state cooperative banks.