Leh (Ladakh) [India], May 20 : In another historic decision aimed at strengthening the tourism and hospitality sector in Ladakh, Lieutenant Governor, Vinai Kumar Saxena, today accorded sanction for granting the registered hotels and guest houses in Ladakh, the status of "Industry", a move that would provide these tourism units with incentives, concessions and infrastructure support, at par with other Industries in the Union Territory.
According to a press release, this order shall apply with effect from June 1.
The "Industry" status to hotels and guest houses would make them eligible for electricity & water tariff at industrial rates, which is cheaper than the commercial rates, which is at present applicable to these units. This would also make them eligible for availing concessional bank loans, under the State/ Central Govt industrial policies.
Further, these hotels and guest houses would also be exempted from Property Tax. These hotels and guest houses will also be able to access capital incentives, subsidies and support schemes, as applicable to other eligible units, under any Government of India incentive schemes, said the release.
At present, hotels, guest houses, resorts and homestays in Ladakh are charged commercial electricity tariffs, that is, at the rate of Rs 5.49 per unit. But with the "Industry status", the eligible units will now be entitled to an industrial electricity tariff of Rs 4.10 per unit.
Similarly, commercial water tariffs, currently applicable to tourism establishments, range between Rs 28 to Rs 46 per kilolitre, depending upon the consumption slabs, whereas industrial water tariffs range from Rs 26 to Rs 29 per kilolitre, offering substantial relief to tourism units. Significant reductions will also apply to flat-rate water connections.
As per the release, in effect, these incentives and concessions would reduce the operational cost of these lodging/boarding establishments, enhance investor confidence, improve project viability, facilitate access to institutional finance and enable tourism enterprises to avail benefits under the industrial policies and infrastructure support mechanism.
"Granting "Industry" status to hotels & guest houses will significantly strengthen the hospitality sector in Ladakh. Apart from reducing operational costs and improving investment potential, this historic reform will play a vital role in local employment and livelihood creation and regional development.
The hospitality and tourism sector has significant potential to catalyse sustainable economic development and tourism promotion in Ladakh," LG, Saxena said. This reform will also enhance visitor experience and further establish Ladakh as a world-class tourism destination rooted in sustainability, culture and hospitality, Saxena added.
It is noteworthy that this decision would benefit 1257 hotels or guest houses in Ladakh - 1078 in Leh and 179 in Kargil - that employ thousands of staff. However, barring a few, most of these hotels remain operational for just 6 months a year, and they shut down during the winter. This results in high maintenance costs, often making the business unsustainable, said the release.
The decision is also aligned with Prime Minister Narendra Modi's push for strengthening the domestic tourism and hospitality sector by granting them "Industry" status and creating an enabling environment through suitable policy guidelines and incentives, such as capital subsidies, in order to encourage investment.
The decision comes following several representations from tourism stakeholders, particularly the All Ladakh Hotel and Guest House Association, seeking extension of industrial electricity and water tariffs to hotels and guest houses operating in Ladakh.
Stakeholders had highlighted the increasing operational burden on tourism establishments due to high commercial utility tariffs, especially during the harsh winter months, when heating and water requirements substantially increase.
The Department of Tourism & Culture, UT Ladakh, shall function as the nodal department for certification of eligible units and implementation of the notification.