Trade practice of leasing out hotels by various owners under scanner of authorities

GANGTOK, 12 Feb: The state government has finally decided to do something about hotels that are let out on lease by their owners and has now directed the concerned authorities to examine the pros and cons of the leasing out of hotels to third parties by the various owners. The hotel business has been thriving in Sikkim the past years ever since the state government and the Tourism department went into an overdrive with a promotional and marketing blitzkrieg in projecting Sikkim as the destination for tourists, both national and international.
And naturally with there being a tremendous rush of tourists flowing in during the past years as a result of the state’s clarion call – in fact far more than the state and its fragile infrastructure can handle – that the lease owners have been making a killing from the thriving hotel business. But at the same time there does not seem to have been much improvement in the quality of service or infrastructure in what the hotels are offering the tourists.
On the other hand it is well known and been a long and almost traditional practice here in Sikkim that hotels are constructed and then let out on lease by their owners. Not only that, the hotels there is also the practice of letting the hotels out on lease to third parties by various owners, as the state government seems to have belatedly found out. This practice seems to have added its own set of complications for the state government authorities including the UD&HD and the Tourism Department but for the tourists as well.
A committee has been formed under the chairmanship of the Secretary, Urban Development & Housing Department which is to look into various aspects of hotels being leased out to third parties by the various owners including the legal aspect, which is to say, the committee will examine and analyse as to whether such a trade practice is legal or not and what is the culpability of the each of the owners.
The committee also includes a representative of the Finance, Revenue and Expenditure Department, a representative of the Tourism and Law Departments and also the Additional Secretary and Joint Secretary, UD&HD.
A survey will be conducted of all such hotels which have been let out on lease by the hotel owners and a database compiled along with the terms and conditions of the lease and the associated trade practices. The committee set up has been directed by the state government to study the pros and cons of relating to the hotels that are being let out on lease to third parties by the various owners.
There will be meetings and discussions with the various stakeholders including that of the Tourism and Hospitality industry among others. Finally there will be the legal aspect of the practice of leasing out the hotels. The state government has to examine and study whether such a practice is legal and if so to examine the possibility of incorporating the matter in the existing Trade License Act and Rules.