Sector Books/Booklets

The Hospitality Industry in India – A guide to Legal Issues

Apr 5, 2019

The rapid and unprecedented changes witnessed by hospitality industry over last few years have helped shape this sector in its present form. Disruptions to the ‘standard’ industry model – in the form of alternative franchising models, online booking platforms, real-time review by users, emergence of aggregators, and many others – have forced the industry to adapt, evolve and respond, leading to the emergence of a new normal. Going forward will the likes of Amazon, Google and Facebook expand their services to the hospitality industry? Will the current disruptors become the disrupted? Perhaps.

2019 is expected to be a landmark year for India’s hospitality industry which is expected to post a robust growth of 7%-9% in FY18-19. While overall sentiment is quite bullish, maintaining a fine balance between reinforcing the old and incorporating the new will be critical.

While traditional challenges pertaining to stringent government regulations, constantly changing policy related issues, rising infrastructure costs, and paucity of talent remain a perennial concern, the industry has to also contend with a new set of challenges around data privacy, electronic contracts, workplace security, etc. Going forward we expect the focus to move from physical hotels to customers’ needs – the same customer who can afford to stay both in a five-star hotel as well as Airbnb. What then can the operator do to engage the customer? Will Performance Tests continue to remain unchallenged as the only way to judge an operator? Will we see F&B being outsourced in five-stars given the competencies in India’s restaurant capabilities? In this context, the gap in understanding between managers and owners – as regards industry standards of practice and the terms underlying the all-encompassing Hospitality Management Agreements – will likely emerge as a critical factor determining success of hospitality ventures. Further, with the advent of REITS, it’s only a matter of time when hotels will be housed in such structures, permitting owners to spread their risks. Set against the backdrop of this ever-evolving operating environment for the industry, ELP’s guide –The Hospitality Industry in India: A Guide to Legal Issues – is an attempt to create a collective repository of industry best practices and market trends in the hospitality sector. Drawing upon our experience of over 17 years in this sector, this guide specifically addresses the pressing legal issues which are being faced by various stakeholders in the industry. Our team of specialists has endeavored to simplify and cut through the complex legal language to put forth these issues in a commercially attuned, reader friendly format.

The subjects covered in this guide include the very real and practical problems faced by the industry presently, which, if addressed and handled correctly, could be game changers for the sector. From a legal standpoint, potential pitfalls in the everyday operations in a hotel, HMA’s, franchising agreements, competition law, taxation and IBC have been included. Equally, the guide also focuses on the pressing issues of data privacy and the prospective business models which seem likely to play out in the sector.

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