In the wake of the Supreme Court’s upholding of the Kerala government’s policy of restricting liquor bar licences to five-star hotels, three- and four-star hotels are lining up to upgrade to five-star status so that they can grab a slice of the lucrative liquor business.

According to sources, there are around 50 hotels that have applied for being rated as five-star. “Most of these applications were made in the past six months, and not after the Supreme Court verdict,” a source in the Hotel and Restaurant Approval and Classification Committee of the Tourism Ministry, told BusinessLine .

“It seems their managements had sensed before the verdict that the policy of restricting liquor to bars attached to five star hotels would be okayed by the court.”

Many hotels have already carried out basic mandatory facilities for being considered for five-star status.

A four-star hotel owner in Kochi pointed out that there are several three-star and four-star hotels which have not yet made the applications as they hope that a change of government after the Assembly elections due in April might lead to a change in policy.

D Rajkumar Unni, President of the Kerala Bar Hotels Association, noted that since the liquor policy is a State subject, a new government at Thiruvananthapuram could change the current policy and opt to let lower-starred hotels to serve liquor as well.

‘Five-star only’ policy After a long legal battle by the bar owners, the Supreme Court on December 29 upheld the government’s liquor policy, which had been announced in August 2014. This meant that only the 27 five-star hotels in the State, mainly in Kochi and at major tourist destinations, could serve hard liquor in their bars.

The bars earlier attached to lower rated hotels could only serve wine and beer. The policy had forced the closure of nearly 730 bars, mostly attached to lower star hotels, across the State.

Most of these bars later transformed into wine-and-beer parlours. Hard liquor is now served only at the bars in the five-star hotels. Of course, there are 270 retail outlets of the government-owned Beverages Corporation and 36 outlets of the government-controlled Consumerfed that sell liquor direct to the consumers.

Earlier, bars used to be the major source of revenue for two- and three-star hotels. The bar licences were expensive — the annual fee was ₹23 lakh — and hotel owners had to grease the palms of government officials, politicians and union leaders and also had to pay hefty contributions to political parties’ funds.

Many bars used to have two types — an expensive, comfortable one for guests and well-off customers and a cheap ‘side bar’ for ordinary drinkers. The ‘side bars,’ which used to be crowded, raked in revenues for the bar hotels. “It was not the rents paid by our guests, but the food bills and liquor bills at the bars that kept the business afloat,” a hotel owner at Munnar said.

Easier for four-starrers The owner of a hotel at Thrissur pointed out that it is relatively easy for four-star hotels to get upgraded because they already have most of the basic requirements. For instance, while a swimming pool is not mandatory for four-star, almost all four stars do have one. And, many have the same room sizes as required for five stars. But, they will have to make investments in modernising their kitchens, lobbies, access for the physically challenged, and common areas.

The owner of a Kochi four-star hotel, who said he would apply for five-star status to make his property more attractive to conference organisers, pointed out that an investment of ₹2 crore to ₹3 crore would be needed to satisfy the HRACC conditions.

Aneesh Kumar, State president of Association of Tourism Trade Organisations India, said it is usually the domestic tourists, not foreign tourists, who have a preference for bar-attached hotels. “Most foreign tourists are fine with beer and wine,” he said. Of course, for convention tourists (those attending major conferences and seminars), hotels serving liquor would definitely be an attraction.

Rajkumar Unni suggested that some of the four-starrers now seeking to be upgraded could well have earlier under-rated themselves to save on taxes and other costs.

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