Food License and Registration Required for Hotel Business

Posted by Enterslice on January 16th, 2019

The Indian tourism and hospitality industry has played an important role in the growth of the services sector in India. In hospitality, hotel market is one of the markets who contributes largely among others in the growth of the service sector. Sales from hotels account for 87.4% of industry revenue and 82.0% of industry employment, though they account for only 44.0% of industry establishments. 

What are the external factors affecting the hotel market in India?

There are several external factors which are affecting the performance of the hotel market as described below:

• The domestic trip by resident
• Consumer spending
• Consumer Confidence Index

How does profit and revenue generated from this business?

Mainly, Hotels generate revenue and profit from selling out their rooms. In spite of that, there are several other sources of revenue like sales of food and alcohol, selling of conference and meeting rooms.

Point to be considered before setting up a new hotel

· Best Location: Location is one of the most important factors to be considered before setting up a Hotel. In a location, where competitors are not fulfilling the demand of the customer your hotel can take the advantage.

· Plan for the Capital: The applicant has to take a sound decision regarding the arrangement of capital because it needed millions of amount to invest.

· Business Plan: It is one of the most important factors to be considered, a Simple and persuasive business plan, not only helps to take opportunity but also helps in convincing any investor and lender for investing in your project.

· Smart pricing Strategy: Smart pricing strategy increases the hotel occupancy. Room cost should be determined on the basis of cost and market research.

· Quality Management: Focus should be on employee satisfaction and customer services.

Startup Cost for a new hotel

The main cost without any reduction in setting up a new hotel occurred at the time of

• Building or buying the hotel
• Working capital for staffing, marketing, and other operational expenses

Licenses and Registrations required for setting up a Hotel Business

• Business Registration
• The Business/Company Registration is one of the most important steps while commencing the business of the hotel. It should be set up under an artificial legal entity like a company or LLP.
• Post-Incorporation Compliances

  Once, the structure of the Hotel has been established and registered either as a Company or LLP following various compliances need to comply as described below:

  • Fire Safety Permit: For operating a hotel business, it is mandatory to obtain a fire safety certificate or permit from the Fire Department. It is basically provided once the building has been incorporated and proper fire prevention and fire safety measures are required under the framework of relevant fire safety rules and regulations.
  • GST Registration: After the implementation of GST, it is mandatory for every business carrying out a taxable supply of goods or services and whose turnover exceeds the threshold limit to obtain GST registration and obtain GST number.
  • GST Return Filling: For every entity having GST registration, it is mandatory to file GST return, irrespective of business activity or sales or profitability during the return filing period.
  • PF Registration: If any hotel has the staff of more than 20 employees, then it is obligatory upon the hotel management to obtain PF registration.
  • Police License for Hotel: It is compulsory for all the hotels, to maintain a proper log of all Guests who have stayed at the hotel, as well as follow relevant regulations and maintain a valid permit from the Police Department.
  • ESI Registration: It is mandatory in India for all Businesses that employ 10 or more employees to obtain Employee’s State Insurance ESI registration. As per ESI Regulations, the employer is obliged to contribute 4.75% of the wages for all employees earning Rs.21, 000 or less toward ESI employer dues. The employee is also required to contribute 1.75% of his/her wages as ESI dues.
  • Bar License: If the hotel serves alcohol in the restaurants or operates a bar, then it is mandatory for them to obtain a Bar license from the departments operating under the State Government.
  • Food Business License: For every restaurant operating in India it is mandatory to obtain the FSSAI Food License under the Food Safety and Standard Act. It is usually provided for one year and is renewable at the end of each year.
  • Professional Tax: It is a tax levied on a person engaged in any profession, trade, calling and employment in India.
• Other Compliances: There are also several other Law and regulations applicable to the hotel industry but their applicability vary from the business to business of the Hotel

Conclusion

In today’s scenario, the hotel industry is a revenue generating industry. If any investor wants to invest their money in this industry, Enterslice with the help of their experts helps them in complying with all the legal requirements required for setting up of this business.