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The rise in cost of construction and negligible Input Tax Credit (ITC) have been the major drawbacks for the Indian hotel industry after the implementation of GST (Goods and Services Tax), according to JB Singh, President and CEO, InterGlobe hotels.
“Before GST, the estimated cost of our room without the land cost stood at around ₹35 lakh, which has now gone up to ₹38 lakh. Also, we do not get the input tax credit — unlike the real estate industry, which builds residential dwellings. The ITC that we get is only on movable furniture,” said Singh.
He added that changes in tax regimes such as GST create constraints in adding more capacity and, therefore, lead to inflationary trends.
InterGlobe Hotels Pvt Ltd (IGH) is a joint venture between InterGlobe Enterprises and Accor Asia Pacific (AAPC).
Since 2008, the group has come up with total 2,870 operational keys. On the other hand, the total keys under construction are 741, while the keys under planning are 449.
The company will soon launch a hotel in Kolkata next month with a capacity of 190 rooms.
Expansion plans
Meanwhile, the hospitality firm is also planning to expand their base in Tier 2 cities. “Patna, Nagpur, Bhopal and Jaipur are some of the markets under evaluation currently,” said Singh.
Around 75 per cent of InterGlobe’s revenue comes from rooms and the rest from the food and beverages business. “The company’s footfall has increased by 15 per cent in 2018 compared to last year,” he said.
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