Hotels in Karnataka are losing out on business, with the State Government levying 12.5 per cent luxury tax on the rack rate — the highest in India. The Meetings, Incentives, Conferences and Exhibitions (MICE) sector has been the most affected. Hoteliers agree that this luxury tax will prove to be a major deterrent for the conference business.
P K Mohankumar, Area Director - Bangalore, Taj Group of Hotels says, “When hotels across India bid for a particular event, they match up to the organisers’ standards, except for those in Karnataka. In the final bid, hotels in Karnataka prove to be more expensive, which is a put off for the organisers. The city has become non-competitive in this sector, and all conferences are going to cities such as Hyderabad, Chennai and Delhi.” Companies are also opting for cheaper options like wedding halls to fulfill their requirements.
The MICE segment is an incentive-based sector, and organisers look for discounted rates (they will not pay full rate). Also, it is not practical for hotels to levy luxury tax on a rate which is not being used. |