GST cut on a hotel rooms: Know how it will impact the MICE travel industry

By: |
October 9, 2019 3:21 PM

Globally, the MICE industry is robust, while in India it is still maturing. Many companies and organizations remain unaware of MICE travel’s benefits.

MICE, MICE Travel, GST, GST rate cut, GST on Hotel rooms, GST Rate cut on hotel rooms, GST rate cut on hotel bookings, MICE GST MICE travel is on the rise and while 70% corporates still prefer an outbound destination.

MICE Travel: India has always been a popular destination for MICE travel with foreigners. Its vastness and diversity continue to attract travellers who enjoy participating in meetings, incentives, conferences, and exhibitions in exotic surroundings. While places like Jaipur, Gangtok, Darjeeling, and of course Goa have always been popular among foreign tourists, 5-star hotels and large resorts were always popular among MICE travellers. The popularity of hotels and resorts among MICE travellers is set to grow after the recent decision by the GST council to tweak GST rates.

Also Read | What is MICE Travel? The growing business travel trend taking the tourism sector by storm

The GST Council’s September 20th decision to change taxes on many services and products including hotel room bookings will certainly have a positive impact on MICE travel in India. The GST rate on hotel rooms that cost Rs 7,500 and above was lowered from 28% to 18% while that on hotel rooms that cost between Rs 2,500 to 7,500 was lowered from 18% to 12%.

Speaking about the subject, Sandeep Singh, Founder, said, “The MICE industry is a vital pillar of the corporate infrastructure. Without it, much of the culture that allows companies to thrive and succeed will not exist. Hence, the decision to lower the GST on hotel rooms will not only lead to more MICE travel, but it will also allow the corporate culture in India to flourish”

The low cost of staying in hotel rooms will make them more popular among foreign and domestic travellers. Hotel rooms will particularly become more popular among MICE travellers for many reasons.

Why MICE Travellers Will Be Particularly Affected

MICE travel is different from traditional travel. While traditional travellers usually need to make bookings for around a dozen rooms, MICE travellers make bookings for dozens if not hundreds of rooms. This makes MICE travel particularly price-sensitive. India has a large number of hotels that are attractive to MICE travellers, yet the high-cost of hotel room bookings kept many who would have liked to hold MICE events in India at bay. This has changed since the recent decision by the GST council.

The India Convention Promotion Bureau

The India Convention Promotion Bureau (ICPB) has already circulated to overseas agencies that the GST rate on hotel rooms stays has fallen significantly. Such circulation will play a vital part in attracting MICE travellers to India. Overseas, agencies make MICE travel bookings and once more become aware that MICE travel to India has become more affordable, they will be more likely to recommend India as a destination to companies and organisations.

MICE Travel Will Become More Attractive

Nearly all industry insiders believed that the GST on hotel rooms was unreasonably high. A 10% drop in the GST rate is significant to all tourists particularly to MICE travellers because of the price sensitivity of such travel. The lower price for hotel rooms combined with the tremendous appeal of India as a destination for MICE travellers is sure to lead to an increase in MICE traffic to India.

In addition to greater demand among overseas MICE travellers, domestic demand for MICE travel will increase as well. This is because while MICE travel has always been price-sensitive, domestic companies and organizations are especially swayed by lower prices. The GST Councils’ decision will give an impetus to MICE travel among domestic companies and organizations more of whom will choose to hold large events in hotels and resorts.

The MICE Industry Will Benefit

Globally, the MICE industry is robust, while in India it is still maturing. Many companies and organizations remain unaware of MICE travel’s benefits or are dissuaded by the belief that MICE travel is prohibitively expensive. This is set to change as awareness of MICE travel grows and it becomes relatively affordable.

Expressing her views about the development, Tanuja Pandey, Founder and Director MICE ONLINE said, ‘’Taxes on hotels have a great impact while planning MICE travel! Most hotels outside India always give a common rate that is inclusive of taxes – in India, the previous different tax slabs for bulk hotel rooms resulted in Indian Hotels losing out on MICE and wedding bookings – business shifted out of India resulting in loss of tourism revenues for all stakeholders!”

“MICE travel is on the rise and while 70% corporates still prefer an outbound destination, at least a common reduced GST gives planners and hotels a fair chance to retain, if not increase the market share for MICE bookings within India. We will now look at pushing MICE destinations and hotels within India aggressively and bridge the gap to a 50-50 ratio now,” she added.

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