Introduction
A hotel sector is a crucial component of the overall hospitality industry. The hospitality sector encompasses a wide range of fields, including housing, restaurants, event management, amusement parks, cruise lines, and so on. The hospitality sector is a multimillion-dollar business that relies largely on the availability of free time and discretionary income. Quality management, frontline services (data centers, house cleaners, couriers, kitchen staff, waiters, and so forth), management, marketing, and personnel are all part of a hospitality unit like a restaurant, hotel, cafe, or even an entertainment complex.
The present article presents an insight for the hospitality industry in India, how frequently it is growing and then in the next sections how it is governed with number of laws, providing for requirement of number of license while running a hotel, various kinds of associations governing this major industry of India. In addition, different tax laws relating to this industry. Overall, a comprehensive and exhaustive picture is presented for the pupils to get in contact with the laws of hospitality industry.
Outline of the Hospitality industry in India
The hospitality and travel business in India alone has been valued at USD 117.7 billion in 2011 and is expected to reach USD 418.9 billion by 2022. In the Asia Pacific region, India’s hotel business is second only to China, in terms of success. In addition, India is a growing global commercial Centre with appealing opportunities to invest for both luxury and mid-tier hotels. Within next five years, India is expected to lead the world in development in the health and wellbeing tourism sector, with annual gains of more than 20% through 2017. The hotel sector in India has a bright future ahead of it, with plenty of chances.[1]
Foreign visitor arrivals (FTAs) in India totaled 10.56 million in 2018, an increase of 5.20 percent year on year. FTAs totaled 1.10 million in January 2019, up 5.30 percent from 1.05 million the previous year.[2]
In 2017, the travel and tourism business in India accounted for 8% of overall employment opportunities in the country, employing roughly 41.6 million people. By 2028, the number is predicted to increase by 2% every year, to 52.3 million jobs.[3]
An increasing number of firms are considering investing in India’s hotel industry. Investment in Travel & Tourism is estimated at INR. 2.8 trillion with the current year, 2021 (presupposes 8.7% CAGR), as per estimation of the World Travel and Tourism Committee (WTCC).[4]
Governing Bodies for the Hotel Sector
Hotels in India are governed by a blend of legislation and government associations, which are mentioned below[5]:
- The Federation of Hotels and Restaurants Association of India.
- Hotel Association of India.
- The Hotel and Restaurant Association of Eastern India.
- The Southern India Hotel and Restaurant Association.
- The Hotel and Restaurant Association of Northern India.
- The Hotels and Restaurant Association (for Western India).
Obtaining the Necessary License
To open a hotel, there are various licenses that are required to be obtained. The below provided list is exhaustive list of registrations and licenses required:[6]
- Police License / Registration.
- A license under Shops & Establishments Act.
- A license under Prevention of Food Adulteration Act.
- Factory License for Laundry.
- Entertainment License on Festival Occasions.
- License for Chimney under the Smoke Nuisance Act.
- Central Excise License for Bakery Products.
- Eating House License.
- Municipal Beer Bar License.
- License for storage of Diesel Oil.
- License for storage of Kerosene & Compressed Gas (LPG).
- License dealing with Foreign Exchange under FEMA.
- Cold Storage License, (if over 25 cubic ft.).
- License for Boiler & Generators and Mixers and Grinders.
- Bar License (Foreign Liquor).
- Dance License
- Mild Liquor License.
- Temporary License for Awnings & covering of Terrace during monsoon.
- Copy Right License for Playing of Music.
- Lodging House License
- Registration under the Luxury Tax Act.
- Registration under the Sales Tax Act.
- Registration under the Contract Labor Act.
- Registration under the Pollution Control Act.
- Registration under the Apprentices Act.
- Registration under the Provident Fund Act.
- Registration under the ESI Act.
- Registration under the Weights & Measures Act.
- Registration & Permits under the Motor Vehicle Act for Tourist Coaches / Taxies.
- Registration from GTDC for new projects under the Package Scheme of Incentives.
- Building Completion Certificate.
- Sign Board Directions, Neon Signs.
- Approval from the Department of Tourism, Government of India.
Laws Governing Hospitality Industry
Creation of Hotels & Its Commissioning
The rules governing the hotel sector begin with those governing the design and construction and building of hotels, restaurants, guest homes, and other accommodation types. Laws such as that of the Foreign Exchange Management Act, Industrial Licensing Policies, and Land Laws, among many others, are included in this category. Hotel insurance coverage, particularly customized ones, can meet the industry’s rising needs. This can include everything from spas to guests’ apartments and houses, as well as beds & breakfast and dinner. Additional insurance policies, such as a normal insurance policy, could very well cover threats and damage of property caused by accidents, fire, environmental catastrophes, and so on.
Management and Operation of Hotels
The secondary set of rules and regulations that control the hotel industry’s operations is concerned with administration, maintenance, and operational activities. Insurance laws, rules concerning worker safety and security, food and hygiene requirements, obtaining permits, the Food and Drug Administration Act, the Shops and Establishment Act, and so on are examples of such legislation. Acts such as the Food Adulteration Act, for example, would restrict the sale of substandard food items, safeguarding customers from the possible harm caused by dangerous food while also eradicating fraudulent acts.[7] The Food Safety and Standards Act would establish requirements for the manufacturing, preservation, circulation, selling, and exchange of food stuffs to ensure that they are safe to eat for a long time. The Legal Metrology Act would govern the usage of weights and measurements criteria. The Copyright Act will safeguard expressive rights in the genre of literature, theatre, music, artwork, and architectural designs. In actuality, hotels are obliged to get copyright rights prior to actually hosting any function, including such dramas or musical performances, among other things.
Accounting for Hotel Taxes, Employment, and Contracts
The third set of rules that control a hotel’s operations are those that govern its contracts with other businesses or employment contracts, such as the Apprentice Act, Employees State Insurance Act, and so on. The way in which such entities are taxed is also governed by these laws. Income tax, service tax, expenditure tax, excise duty, luxury tax, entertainment tax, and value added tax are examples of taxes. The Shops and Establishment Act and the Employees State Insurance Act, for example, aim to regulate the interactions among both hotel employers and employees. The aforementioned will indeed impose specific legislative duties upon companies regarding areas such as salary, working hours, vacations, paid time off, overtime pay, and so on.[8] The latter is a social security program that will also require businesses to defend workers’ interests in the event of unforeseen events which including illnesses, maternity benefits, physical disabilities or industrial traumas, and accompanying medical treatment. The Provident Fund Act requires that provident fund programs be established for employees. New recruits in the hotel industry will be governed by the Apprentices Act.
Some more Regulations that apply to this Hotel Business
Other legal guidelines that can govern the running of motels may also consist of neighborhood regulation norms or different neighborhood land norms or hints issued through the tourism enterprise including approval of motels at task level and class & reclassification of motels, hints for class of historical past motels, Time Share Resorts (TSR), Stand Alone Restaurants, hints for rental motels, hints for approval of visitor houses, Hospitality Development and Promotion Board, imposing a obvious gadget for the powerful tracking of motel initiatives, making sure well timed accrual of approvals / clearances / NOCs through the more than one companies and facilitating the implementation of motel initiatives, expeditious clearances, etc. will permit finishing touch of motel initiatives in time main to enhancement of room availability for the tourists.
Committee for the Approval and Classification of Hotels and Restaurants
The Restaurant and Hotel Accreditation and Categorization Commission scrutinizes and grades hotels depending on the services that they offer. Investigators examine two main types of hotels: firstly, hotel initiatives that have been permitted for execution, and secondly, functioning hotels some of which are divided into several categories. In the case of the former, the Ministry of Tourism issues projects permissions that are valid for five years provided necessary documentation is submitted. Within three months of the hotel becoming operational, the authorization will expire. Throughout these three months, the relevant hotel should always apply seeking characterization. The categorization is valid for 5 years after it is received.[9]
Conclusion
The hospitality industry appears to have a bright future. Competition for the industry has become increasingly important for enhancing as when the economic situation improves and businesses raise their trip expenditures. With the growth in corporate salaries, leisure travel and discretionary income are projected to climb as well.
The hospitality industry’s demand is continuing to rise as a result of increased business and tourism business activity; an increase in disposable money; a more diverse assortment more time for leisure; enhanced transportation amenities; and regional and global tourism industry. Distant excursion management is now possible thanks to the technological improvements.
Overall, the Hotel Market in India is expected to make significant growth over the coming years, both with the government and private sector trying to expand the industry significantly.
[1] Subharti, http://hotelmanagement.subharti.org/pdf/Hotel%20Law.pdf (last visited September 10, 2021).
[2] Garima Khare, Laws Governing Hotel Industry in India, Desire (June 26, 2019), https://legaldesire.com/laws-governing-hotel-industry-in-india/.
[3] Id.
[4] Hotels Sector Analysis Report, http://www.equitymaster.com/researchit/sector-info/hotels/Hotels-Sector-Analysis-Report.asp (last visited September 10, 2021).
[5] Advocatetanmoy Law Library, https://advocatetanmoy.com/hospitality-law-in-india/ (last visited September 11, 2021).
[6] Sylvine, What are the Laws Governing Hotel Industry in India, IPleaders (December 22, 2016), https://blog.ipleaders.in/laws-governing-hotel-industry-india/.
[7] Advocatetanmoy Law Library, https://advocatetanmoy.com/hospitality-law-in-india/ (last visited September 10, 2021).
[8] National Judicial Academy India, http://nja.gov.in/P-948_Reading_Material/P-948_Audit_of_Fraud_in_economic_crimes/Hospitality%20Sector.pdf (last visited September 11, 2021).
[9] Sylvine, What are the Laws Governing Hotel Industry in India, IPleaders(December 22, 2016), https://blog.ipleaders.in/laws-governing-hotel-industry-india/.
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