While the Central Consumer Protection Authority’s (CCPA) recent announcement which tagged service charges “unfair” has sparked joy among bill paying consumers, the same is not the case for those who own and run hotels and restaurants.
Although the Bruhat Bengaluru Hoteliers’ Association (BBHA) said that it welcomes the government’s decision, which said that service charges can no longer be included in the bills by default, most pub and restobar owners are not so happy with the decision.
“We welcome the new guidelines issued by CCPA. As per the guidelines, no hoteliers can charge service charge other than the food bill and GST. We are also of the opinion that this additional burden on our customers is not required, though the major part of this charge goes to our staff,” said P.C. Rao, president, BBHA.
He further added, “In the olden days and now also in many hotels, customers themselves give tips to the staff. Compulsorily collecting service charge is mentioned as unfair trade practices. To protect consumer interest on behalf of our hotel owners, we welcome this decision and also advise all our members to do the needful.”
The main concern of many restaurateurs is that lack of service charge might push their employees to leave their jobs. Most of them say that while this makes little difference to the owners, its impact will largely be felt by their employees, especially in the service sector without the incentivising factor. “Most of the people affected by these guidelines will be the service providers,” says Deepak Shreyas, the owner of Aditya Hotel in Mahalakshmi Layout.
Most customers are happy about the removal of service charges, but there are also a few who are sceptical that these charges might be added in other ways to their bills. “While it is important to value the work of those in the service sector, I do not want the charge to be imposed on my bill. Not all the service staff are polite and good at their job. When I do not like the service at a place, why should I pay the service charge? Whenever I like the service, I make sure that I leave a tip,” said Nirup S., an engineer.
Another customer, at a restaurant in Jayanagar said, “Most of us are usually not even aware of how much GST can be levied in hotel bills. Further, what if the service charge is broken down and added like ₹2 or ₹3 in every dish. We will not even be able to identify the difference”, she said.
However, some restaurant owners are also thinking of alternatives, which could help the service sector, without levying those charges on customers. “This is disheartening for the hotel and hospitality industry. The management is further thinking about the permutations and solutions to this as it’s very new to us”, said Ranveer Sabhani, of the Social restaurants.
What did the CCPA say?
A press release by the CCPA on Monday said: “No collection of service charge shall be done by any other name.” Nidhi Khare, Chief Commissioner of CCPA, said if any customer finds out about restaurants violating the guidelines issued from the Ministry of Consumer Affairs, they can ask them to remove the service charge or launch a complaint in the consumer helpline number or the NCH mobile app. “Consumers can also register a complaint in the e-dakhil portal.”
