GANGTOK, : The Sikkim Hotel and Restaurant Association (SHRA), along with other tourism stakeholders associations, including the PTDA, RTDC, and NTDCS, has jointly submitted a representation to the Tourism & Civil Aviation department, requesting the rollback of the recently mandated Rs. 50 Sustainable Tourism Development Fund (STDF) collection through hotels and homestays.
In their submission dated March 20, the tourism stakeholders highlighted several practical, legal, and compliance challenges associated with implementing the mandate, which requires hotels and homestays to collect the fee from guests at check-in.
While expressing their support for the government's efforts to promote sustainable tourism, the associations argued that the current collection method would create numerous operational difficulties for the hospitality sector.
“We are not against the collection of the Sustainable Tourism Development Fund. However, hotels and homestays cannot collect this fund for the department because of various implementation hassles,” expressed the representatives.
The stakeholders emphasized that if hotels mix the STDF fee with the guest bill or deposit it into their bank accounts, it could inadvertently attract GST and income tax, leading to unnecessary taxation on a government-mandated charge. This could create confusion and disrupt accounting processes.
Many hotels and homestays in Sikkim remain unregistered with the Tourism Department. As a result, only compliant establishments would bear the enforcement burden, while unregistered properties could bypass the fee collection, leading to unfair competition and revenue leakage.
The operational challenges includes, hotels and homestays in remote locations with unreliable electricity and internet connectivity would face significant logistical hurdles, during large group check-ins (e.g., weddings or tour groups), verifying individual payments would cause delays, guest dissatisfaction, and operational inefficiencies, and smaller properties with minimal staff and basic facilities would struggle to implement the fee collection effectively.
The associations warned that without strict enforcement, some properties might collect the fee without remitting it, leading to revenue leakage and potential fraud. Additionally, verifying whether every tourist check-in has been reported would require costly and cumbersome compliance audits.
The stakeholders cautioned that imposing an additional charge at check-in could lead to guest resistance, particularly among those booking through online travel agencies (OTAs) or corporate packages.
Guests might perceive the fee as an "extra charge," generating negative publicity for Sikkim's tourism industry and potentially deterring future visitors. Hotels may be forced to pay the fee on behalf of guests who refuse, creating financial and operational burdens, it was submitted.
Many hotels use Property Management Systems (PMS) and booking software, and integrating the department's fee collection system would require technical changes, additional costs, and staff training. This would be particularly challenging for small and mid-sized hotels operating on manual or semi-digital systems.
The associations expressed that both hotels and the Tourism department would require additional manpower for fee collection verification, dispute resolution, and reporting, increasing administrative costs.
To address these challenges, the stakeholders proposed alternative methods for collecting the Sustainable Tourism Development Fund.
Fee Collection at Entry Points: They suggested placing QR codes at major entry points to Sikkim, such as Rangpo, Jorethang, and Melli, enabling tourists to pay the fee directly to the department's account upon entry. QR codes could also be displayed in tourist vehicles, with drivers informing passengers about the payment. This method would ensure uniform compliance and reduce the risk of revenue leakage.
Integration with Entry Permits for Major Tourist Destinations: Instead of collecting the fee at hotels, they proposed integrating the charge into the entry permit fees for popular attractions such as North Sikkim, Tsomgo Lake, Nathula Pass, Namchi Char Dham, Pelling Skywalk, Buddha Park, and the Ropeway. This approach would ensure that tourists visiting key destinations contribute directly to tourism development without adding administrative burdens on hotels.
The SHRA and other tourism associations urged the Tourism department to reconsider the implementation strategy and engage in discussions with industry stakeholders to create a practical and fair system that supports sustainable tourism without imposing undue burdens on the hospitality sector.