Hoteliers in Andhra Pradesh are upbeat, as they are hopeful that the “period of decline and stagnation” would end now with the government initiating major steps to provide the much-needed boost to the tourism and hospitality sectors. They are also positive about an early solution to the issue of ‘excessive’ bar licence fees being collected from classified (3 star and above) hotels in the State.

“Over the past five years, no major star hotels have been set up in the State, primarily due to the lack of incentives and the exorbitant bar licence fees introduced by the previous YSR Congress government,” said R.V. Swamy, president of the Andhra Pradesh Hotels’ Association (APHA).

Speaking to The Hindu on January 18 (Saturday), Mr. Swamy said collection of ₹67 lakh per year towards licence fees for a bar and restaurant from owners of classified hotels, the highest in the country, was a burden and a deterrent for potential investors. “Currently only 18-20 of the 47 star category hotels in Andhra Pradesh have bar facility and these hotels are incurring losses on the bar,” he said, explaining that the value of the liquor purchased was lower than the annual bar fees in most cases.

“At least six to seven classified hotels in the State have withdrawn their licences due to the prohibitive costs and some of the newly established hotels are not opting for a bar facility or classified status,” said Muthavarapu Murali Krishna, managing director, Hotel Fortune Murali in Vijayawada.

Pointing to the fact that the hospitality industry was crucial for the growth of all sectors, the hoteliers had urged the government to slash the bar licence fee on a par with States like Tamil Nadu, Maharashtra, Karnataka, West Bengal and New Delhi. They said a comparative study revealed that the States with lower bar licence fees for classified hotels had a higher number of classified hotels, thus creating a conducive environment for better business, more MICE (Meetings, Incentives, Conferences and Exhibitions) events and higher GST collections, resulting in growth in Gross State Domestic Product (GSDP). “Superior facilities also attract more international visitors, contributing to higher Foreign Direct Investments (FDI),” said Mr. Swamy, adding that the presence of star hotels and bars in the hotels had been a silent contributor towards growth in other States.

“There is a clear correlation between FDI investments, bar fees and the number of classified hotels,” said Mallineni Rajaiah of Hotel Gateway. He cited the case of Tamil Nadu, Karnataka, Gujarat, Maharashtra and New Delhi which account for 87.92% of the total FDI received. ‘‘These States attract over 50% of the total foreign visitors to the country and have around 50% of the star hotels in the country,” he said.

The hoteliers asserted that reducing the licence fee would lower recurrent costs and facilitate earlier achievement of breakeven points and foster a suitable environment for a category of new star hotels, thus catering to the elite MICE delegates and leisure travellers who look for entertainment options at their hotels and availability of bars in them.

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