'If complete prohibition is implemented, state goverment will incur losses up to Rs 50,000 crore,' said one manager

Prohibition Hoteliers hope for the best and prepare for the worst
news TN 2016 Friday, May 13, 2016 - 18:55

Prohibition is the buzz word this election season. Political parties across the spectrum have promised to implement prohibition if voted to power. While much of the political focus is upon shutting the state-run liquor shop (6.826 TASMAC outlets), the question over what happens to hotels and bars has been largely left unanswered.  

“If the prohibition does come into place, then pubs and bars across the city will run out of business. Forget laying-off employees, we will have to shut shop completely,” rues the manager of a well-established restobar in the city.

However, star hotels are more optimistic. “We are expecting that at least hotels get permission; we only perceive it [prohibition] as a lock down on the government-run TASMAC shops,” says Shabin Sarvotham from GRT Grand. Moreover, if TASMAC shops are shut, then people will turn to hotels to grab a drink which might spike sales marginally, he adds.

Post May 19, the new state government could turn to two models of prohibition currently in place at the national level.

The Kerala-model would mean phased prohibition where bars operating out of five-star hotels alone would be allowed to function. Alternatively, the Gujarat-model, introduced in 1960 in the state would mean a complete ban on alcohol.

While the Kerala model does seem more favourable to star-hotels, Shabin does not think so. “it should not be just a five-star or a four-star hotel that is exempt. It should be implemented in such a manner that only a proper bar is allowed to serve liquor, wherein one goes, has a drink and comes,” he says.

On the other hand, if complete prohibition does come into place, the revenue losses incurred by the state government will be huge. “If a complete ban is imposed, then the state government will be incurring upto Rs.50, 000 crores as losses. To offset this loss, they will raise the licencing costs and taxation, which is another cause of worry for us,” explains Shabin.

Hotels, generally star hotels, are expected to obtain FL 3 licences, before they operate a bar within their premises. According to the Tamil Nadu Liquor (Licence and Permit) Rule, 1981, an FL 3 licence requires a structure with a minimum of twenty bedrooms, well-trained staff and a parking lot. Arasu Dennis, an entrepreneur and hotelier, told The Hindu, that setting up these establishments involve lot of money, such as licence costs, rental and advance costs.  

At the same time, star-hotels are preparing themselves for every scenario possible. “The South India Hotel and Restaurant Association will probably file a petition, should there be a blanket ban.  We hope this isn’t the case; only time will tell,” says Shabin.

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