Mumbai: The Hotel and Restaurant Association of Western India (HRA) has appreciated the Central Government's initiative to lease out land to private hotel developer and enter into revenue-sharing agreement.

Under the scheme, the bidder who offers the government the highest ratio will bag the project. However, before finalising the project, the Centre would discuss it with the states as land is a state subject.

The revenue share arrangement will also depend on the location of the project, and may range from 20-30 years depending on the project.

In a statement HRA president  Dinesh Khanna, said, "Tourism sector has immense growth potential and the major hindrance to the inbound tourist besides the lack of infrastructure is the insufficient hotel rooms. This initiative of the Centre Government will not just give room for 5-star projects but also to mid-segment hotels.''

He further said that the centre and the state governments should make the policy foolproof, and mark the auction land exclusively for the hotel developers.

Khanna also pointed out five major challenges faced by the hospitality industry, as:

Creating additional Rooms stock to cater to the increasing demand.

Planning for manning the hotels and restaurants and to increase productivity and skills of employees.

Facing the challenges of increasing power and fuel cost.

Realignment in the market place, with the growing interest of international hotel chains in India; and Prevailing upon the government to introduce a user friendly and rational tax and licensing structure.

The association also appreciated the state government's initiative to reduce the state excise license fee to Rs3 lakh, but is still planning to appeal to the government to further rationalise this fee structure. 

According to the revised structure, the beer bar license fee is Rs1,60,100, which is more than the permit room licence fee of Rs1 lakh at places with a population up to 3,00,000.

The association also protested the higher VAT regime in the state, saying that in Maharashtra, a rate of eight per cent on food and beverage turnover is charged under the composition scheme. Under the same scheme, neighbouring states levy VAT at four per cent. The association requested the finance minister of Maharashtra to synchronise the rate with that prevailing in neighbouring states of Gujarat, Madhya Pradesh, and Chattisgarh.

The association has also requested all hotels and restaurants be charged electricity duty at the industrial rate of 6 per cent, instead of the prevailing 13 per cent, with immediate effect.