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Laws for Hotel Industry in India

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Laws for Hotel Industry

 The hotel industry is the part of the service industry that deals with the accommodation of guests. By most definitions, the hotel industry includes not only hotels but also many other forms of overnight accommodation, including hostels, motels, inns and guest houses.

With the opening up of the Indian economy after 1991 and the adoption of globalization, there has been a surge in operational activities of various sectors which were previously very dormant. One of the best examples is the hospitality industry. One of the main parts of this sector is the hotel industry.

 Until recently, there were not many strict compliance requirements associated with these laws. With the rise in food poisoning cases, growing concerns and public conscience, these laws now require strict compliance. In addition to the regulation of the above areas, hotels are also required to protect their customers from damages that are criminal in nature, such as theft, bodily harm and even potential harm from terrorist groups.

Licenses required for opening a Hotel:-

To open a hotel, there are various licenses that are required to be obtained. Such licenses include:-

  • Police License / Registration.
  • A license under Shops & Establishments Act.
  • A license under Prevention of Food Adulteration Act.
  • Registration under the Luxury Tax Act.
  • Central Excise License for Bakery Products.
  • Entertainment License on Festival Occasions.
  • License for Chimney under the Smoke Nuisance Act.
  • Registration under the Weights & Measures Act.
  • Copy Right License for Playing of Music.
  • Lodging House License
  • Approval from the Department of Tourism, Government of India.

Laws Governing Hotel Industry:-

The laws that govern the Hotel Industry can be classified into the following broad categories.

  • Establishment and Commissioning of Hotels:-

 Among the first heads of laws that regulate the hotel industry are laws relating to the commissioning and construction of hotels, restaurants, boarding houses and other facilities of this kind.

These laws also include laws like Foreign Exchange Management Act, Industrial Licensing Policy and Land Laws etc. Hotel insurance, especially customized ones, can meet the growing needs of the hotel industry. It can cover all its establishments from spas to guesthouses and apartments, guesthouses etc.

Other insurances like standard insurance would cover risks and damages due to accidents, fires, natural calamities etc.

  • The operation, management, and maintenance of Hotel Industry

 The second title of the laws governing the operation of the hotel industry deals with matters such as the management, maintenance and operational activities of hotels.

Such laws include insurance laws, laws relating to the safety and security of workers, food and hygiene standards, obtaining licenses, the Food and Drug Administration Act, the Trades and Establishment Act, etc. For example, laws like the Food Adulteration Act would prohibit the sale of substandard food , thereby protecting customers from potential harm caused by poisonous foods and protecting their interests by eliminating fraudulent practices.

The Food Safety and Standards Act would set criteria for the manufacture, storage, distribution, sale and trade of food substances so that they remain fit for human consumption for a significant period of time.

The Law on Legal Metrology would regulate the use of standards of weights and measures. Copyright law would protect rights relating to expression in the form of literary, dramatic, musical, visual or architectural works.

In fact, hotels are required to obtain such copyright licenses before organizing any event such as plays or musical performances etc.

  • Taxation, Employment, and Contracts in Hotel Industry

The third set of laws that govern the operation of the hotel are related to the contracts that the hotel enters into with other businesses or employment contracts, such as the Apprenticeship Act, the Employees’ State Insurance Act, etc.

These laws also include the way in which these entities are taxed. Taxes may include Income Tax, Service Tax, Expenditure Tax, Excise Tax, Luxury Tax, Entertainment Tax, Value Added Tax etc.

Legislation such as the Shops and Establishments Act or the Employees State Insurance Act should aim to regulate relations between employers and employers. staff at the hotel.

The first would impose certain legal obligations on employers in matters relating to wages, working hours, holidays, paid time off, overtime pay provisions, etc.

The second is a social security system that would impose on employers to protect the interests of workers in times of emergencies such as illness , maternity leave, physical damage or workplace injuries, follow-up medical care.

The Pension Insurance Act mandates employees to create pension fund programs. The work of apprentices in the hotel industry is regulated by the Apprenticeship Act.

  • Other Laws Governing Hotel Industry 

 Other laws that may govern the operation of hotels may include local statutory standards or other local land standards or guidelines issued by the tourism industry, such as:

  1. The approval of hotels at the project stage and the classification and reclassification of hotels.
  2. The guidelines for the classification of heritage hotels
  3. Time Share Resorts ( TSR)
  4. Stand Alone Restaurants
  5. Apartment Hotel Guidelines
  6. Guest House Approval Guidelines

Hospitality Development and Promotion Board, implementation of a transparent system for effective monitoring of hotel projects.

Ensuring timely accumulation of multi-agency approvals / clearances / NOCs and facilitating the implementation of hotel projects, rapid check-in, etc. will enable the timely completion of hotel projects leading to an increase in the availability of rooms for tourists.

Contributed by:-

Ankit Raj Sharma

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