The row between the hoteliers and trade unions is going to hit the tourism sector hard, if the government does not intervene immediately, Hotel Association of Nepal (HAN) has warned.
Organising a press meet in Kathmandu today, HAN said that the trade unions have given ultimatum to provide them entire 10 per cent service charge amount.
Claiming that the agreement between HAN and unions – some 11 years ago – to share the service charge was not in favour of the workers, the trade unions – Nepal Tourism and Hotel Labourers Association joint struggle committee – have announced protest programs from today. "If our demands are not met, we will be forced to announce more stricter protest from February 12,” a ultimatum letter by the trade unions reads, adding that they have started their protest programs from January 22.
"But the ultimatum given by trade unions could hit the tourism sector hardly as it has just started to pick up again,” president of HAN Amar Man Shakya said speaking at a press meet.
Shakya also said that tourists planning to visit Nepal will cancel their booking and will change their travel plan and go to other countries, if there is disturbance in the tourism sector. “It will directly affect the tourism sector,” he said, adding that the service tax should be charged only after providing quality facilities to the customers. “Making the service charge compulsory has already passed a bad impression to both domestic and foreign tourists.”
In 2006, HAN had decided to levy 10 per cent service charge compulsory from the customer’s after the trade unions and employees pressurised the hoteliers to charge customers. According to the agreement, the amount thus collected from the service tax would be shared between employees and hotel.
The hotel management has been taking 32 per cent of service charge to maintain and improve its facilities and service and employees are getting the remaining 68 per cent of the total service charge. But the trade unions lately have been asking for all the service charge.
The number of tourists travelling to Nepal has started increasing after the massive earthquake in 2015 and the economic blockade imposed by India.
In 2016, more than 700,000 tourists visited Nepal which is around 200,000 more as compared to 2015. But the disturbance in the tourism sector will again push the number of arrivals.
The association also informed the government of the unions demand that is going to hit the tourism sector very hard, Shakya added. "But there is no rationale behind service charge."
The hoteliers have stressed that the hospitality industry needs to remove such additional charges, which is a burden on consumers.
HAN said that as the salary and allowance of the employees in hotels and restaurants are adjusted every two years, there is no rationale behind the protest by trade unions seeking the entire amount levied as service charge.
Taking into context the removal of such charge in neighbouring India, the hospitality business in Nepal also needs to think about removing such service charges, according to HAN. The Indian Department of Consumer Affairs has recently announced that ‘service charges’, which restaurants include in the bill in addition to taxes, are actually optional and not mandatory.
Currently, three tourism and hotel labour associations have demanded that the staff should get all of the amount collected as service charges.
"The concerned authorities will have to take responsibility for any harm caused to the tourism industry from the protest,” the committee said in a joint statement.
The mandatory service charge system came into force on January 1, 2007. Since then, hotel and restaurant customers have been paying 24.3 per cent extra on top of the advertised prices as 10 per cent compulsory service charge and 13 per cent value added tax (VAT).
Organising a press meet in Kathmandu today, HAN said that the trade unions have given ultimatum to provide them entire 10 per cent service charge amount.
Claiming that the agreement between HAN and unions – some 11 years ago – to share the service charge was not in favour of the workers, the trade unions – Nepal Tourism and Hotel Labourers Association joint struggle committee – have announced protest programs from today. "If our demands are not met, we will be forced to announce more stricter protest from February 12,” a ultimatum letter by the trade unions reads, adding that they have started their protest programs from January 22.
"But the ultimatum given by trade unions could hit the tourism sector hardly as it has just started to pick up again,” president of HAN Amar Man Shakya said speaking at a press meet.
Shakya also said that tourists planning to visit Nepal will cancel their booking and will change their travel plan and go to other countries, if there is disturbance in the tourism sector. “It will directly affect the tourism sector,” he said, adding that the service tax should be charged only after providing quality facilities to the customers. “Making the service charge compulsory has already passed a bad impression to both domestic and foreign tourists.”
In 2006, HAN had decided to levy 10 per cent service charge compulsory from the customer’s after the trade unions and employees pressurised the hoteliers to charge customers. According to the agreement, the amount thus collected from the service tax would be shared between employees and hotel.
The hotel management has been taking 32 per cent of service charge to maintain and improve its facilities and service and employees are getting the remaining 68 per cent of the total service charge. But the trade unions lately have been asking for all the service charge.
The number of tourists travelling to Nepal has started increasing after the massive earthquake in 2015 and the economic blockade imposed by India.
In 2016, more than 700,000 tourists visited Nepal which is around 200,000 more as compared to 2015. But the disturbance in the tourism sector will again push the number of arrivals.
The association also informed the government of the unions demand that is going to hit the tourism sector very hard, Shakya added. "But there is no rationale behind service charge."
The hoteliers have stressed that the hospitality industry needs to remove such additional charges, which is a burden on consumers.
HAN said that as the salary and allowance of the employees in hotels and restaurants are adjusted every two years, there is no rationale behind the protest by trade unions seeking the entire amount levied as service charge.
Taking into context the removal of such charge in neighbouring India, the hospitality business in Nepal also needs to think about removing such service charges, according to HAN. The Indian Department of Consumer Affairs has recently announced that ‘service charges’, which restaurants include in the bill in addition to taxes, are actually optional and not mandatory.
Currently, three tourism and hotel labour associations have demanded that the staff should get all of the amount collected as service charges.
"The concerned authorities will have to take responsibility for any harm caused to the tourism industry from the protest,” the committee said in a joint statement.
The mandatory service charge system came into force on January 1, 2007. Since then, hotel and restaurant customers have been paying 24.3 per cent extra on top of the advertised prices as 10 per cent compulsory service charge and 13 per cent value added tax (VAT).
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