New Delhi: The Federation of Hotel and Restaurant Associations of India (FHRAI) has strongly challenged the recent policy changes introduced by the global online travel agency (OTA) Agoda, which is part of Expedia group as the apex body representing Indian hotels and hospitality writ large. The FHRAI has asked for these to be withdrawn immediately due to breaches of existing agreements and against the Indian tax laws, especially on GST compliance.
Unilateral Commission Structure as follows :
The main pillar of the FHRAI‘s complaint on Agoda is the online travel agency’s arbitrary tweaking of its commission scale.
Accordingly, the online travel agency has announced an international “Reference Sell Rate” (RSR), where commission is calculated as part of overall room rate(R) which includes taxes. This is a sudden deviance from the previous hotel partners contracts commission only apply base room rate.
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GST Non-Compliance (Supposedly)
Source: The FHRAI also alleged that Agoda had not complied with the Indian GST compliance laws. The hospitality body said that Agoda is charging commission after deducting commission from Goods and Services Tax (GST), which is against Indian tax law. It is understood that Agoda is not calculating GST on its own commission, which has led to a transfer of costs on to the hotels in India Notwithstanding we have seen complications on GST compliance and hence reconciliation for hotel partners.
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Effect on Hotel Partners and Hospitality World
FHRAI has also noted that these changes are putting an enormous financial and operational burden on its hospitality member establishments. Charging at commission on the gross room rate (inclusive of GST) which is further squeezing the already narrow margins of our hotel partners. The major worry for Indian hotels from OTA issues raised by Agoda’s new policy have been addressed.
Call for Roll Back Now and Compliance
The FHRAI has formally written to the online travel agent, requesting Agoda to cease the latest commission adjustments on its model, to cease following the original tax-excluded structure assured under all existing contracts, and be fully compliant with Indian tax law. The importance of open and transparent dialogue in order to create sustainable beliefs amongst these platforms like Agoda was amplified by the hospitality body.
