A chunk of palaces in Rajasthan have been converted partially and fully into five-star Heritage Hotels.
The high rate of Goods and Services Tax to the hotel industry has brought a chill to Rajastha, the desert state that probably draws the most tourists that come to India. On an average 1.5 million foreign tourists visit Rajasthan every year, that's about 20 per cent of the total number of foreign tourists that visit the country.
GST has placed hotels that charge over Rs. 5,000 a night in the highest tax bracket - 28 per cent. The new rates will push the tourists' bills up by nearly 40 per cent as the existing rates are between 12 and 18 per cent. The new tax slab also applies to restaurants that have air conditioning and serve alcohol.
The move has not gone down well with the hotel industry, which is now extremely apprehensive of a huge drop in footfall.
"Why would somebody not go to Sri Lanka? Why would they come to India?" questioned Randhir Singh Mandawa from the Heritage Hotel owner's association. "It is a very price sensitive industry and it takes a minute to shift the entire business from a country like India to our neighbours".
A chunk of the palaces in Rajasthan have been converted partially and fully into five-star Heritage Hotels. Even without them, the number of hotels that charge above Rs. 5,000 for a night is legion.
The tourism industry is now petitioning the government over the taxes that have almost doubled under GST. They argue that a nation like France, which gets 80 million foreign tourists a year, charges only 5.5 per cent tax. For India, which gets only 1 per cent of that figure, charging 28 per cent tax is just not globally competitive.
Palaces and sand, music and food draw nearly eight million foreign tourists to India - the traffic generates nearly Rs 14 lakh crores a year in revenue. One of the mainstays of the state, tourism employs nearly 37 million people directly and indirectly - a fact that has got the tour operators worried as well.
"India has never been a cheap destination," said Khalid Khan from the Rajasthan Association of Tour Operators.
Having given out rates for this year for the season starting July to March they are now worried about losing business or having to absorb losses. "We have already given rates to the foreign agent so we have to go by our commitments and we will have to absorb the losses."