Mumbai , Aug. 29, 2005
Tunia Cherian George
Business Line
THE recent RBI notification preventing hotels
and restaurants from insisting on dollar payments
by NRIs and foreign customers is unlikely to
have any impact on their margins.
According to hotel industry sources, the RBI
directive does not prevent hoteliers from following
a dual pricing policy.
Under the pricing policy, hotels charge
their non-resident or foreign guests a dollar
tariff, which is usually pegged 10-15 per cent
higher than the rupee tariff applicable to their
Indian guests.
The higher tariff structure is significant
given that the majority of guests at five-star
hotels are from abroad.
"The hotel industry has no issue with
the recent RBI statement advising hotels not
to insist on dollar payments from their foreign
customers and NRIs," says Mr Shyam Suri,
Secretary-General, Federation of Hotels and
Restaurants Association of India.
The RBI release had said that the practice
of quoting a differential tariff in dollars
and insisting that the payment is made in dollars
was inconsistent with the Foreign Exchange Management
Act, 1999.
According to Mr Suri, the RBI release only
says that under FEMA 1999, even if a hotel quotes
in dollars, guests have the facility to pay
in local currency. The rule did not, however,
restrict hotels from maintaining a dual pricing
policy, he said.
"None of our members have any objection
to the above rule. In fact, we notified them
of the change back in 2002 and they have adhered
to the rule since then," said Mr Suri.
Most five-star hotels quote a dollar tariff
to their foreign and non-resident Indian guests,
and a rupee tariff to their Indian guests.
According to Mr Sanjoy Pasricha, Corporate
Head, Sales and Marketing, The Leela, the dollar
tariff quoted to their foreign guests is the
right rate, and Indian guests were being given
a discount to the standard rate.
The Hyatt group in India shifted from a dual
to a single tariff structure in January this
year.
According to Mr Ratnesh Verma, Area Director
for South Asia, Hyatt, the shift to a single
tariff rate was in line with the pricing policy
followed in the developed economies. The single
tariff rate, he added, was decided by the demand-supply
dynamics of the particular hotel.
