GST Rejig: Will Hotel Bookings See New Wave Of Demand? Kamat Hotels Weighs In

The hospitality industry is betting on a fresh wave of demand as simplification and rationalisation of the goods and services tax are set to kick in.

The rejig will not only encourage customers to spend more but also strengthen India’s positioning as a tourism hub, according to Vishal Vithal Kamat, executive director of Kamat Hotels India Ltd.

Kamat said lower GST rates would change customer behaviour, especially among repeat travellers and diners. "With taxes rationalised, second-time buyers may upgrade to better products. Premiumisation, which took off after Covid, will get a further push," he explained.

While restaurants already benefit from a 5% slab, Kamat stressed that the 18% GST rate on hotels makes India less attractive compared to destinations like Thailand and Taiwan. "We are losing foreign tourists to countries with friendlier tax and visa policies. Rationalising the higher bracket is critical to draw travellers and increase forex inflows," he noted.

"If the volume of business goes up, GST collections will also rise. Rationalisation helps both industry and government revenues," Kamat said.

Reflecting on performance, Kamat said the first quarter was soft — a crucial month for corporate movement. But he is upbeat about the coming months. "We expect buoyant growth through September, October and November. People will continue to dine out, holiday and celebrate, only now with a little more money in hand thanks to the GST cuts," he said.

The GST Council is all set to take a final call during its crucial two-day meeting on Sept. 3-4 on the Centre’s proposal to slash GST rates on more than 150 items as part of its comprehensive rate rejig exercise. The move aims to ease the tax burden on households and spur consumption ahead of the festive season.

The proposals include shifting several items from the higher 12% and 18% GST slabs to the 5% slab or even to the Nil GST category, which means complete exemption.