OYO: Batting for a lower GST for Budget Hotels

Source: SABRE Awards, South Asia, Associations, 2018

Downloaded from WARC

OYO, a hospitality company, campaigned against the high Goods & Services Tax rates and fought the
corner for low budget hotels in India who could not fight back themselves.

OYO needed to press the government about the injustice of high Goods & Services Tax (GST)
rates for small, budget, and mid-market hotels.
OYO realised it needed to speak directly to policymakers in order for its message to be heard and
it could take the angle that lower rates would be in sync with the government's inclusive agenda.
OYO facilitated meetings where FICCI executives, along with representatives of hoteliers,
explained their point of view to the Finance Minister and senior bureaucrats from each of the 10
states and ran a separate media outreach campaign to support and voice the demands of small,
budget, and mid-market hotels.
OYO achieved more than 100 impressions and the committee waived GST for budget hotels
whilst capping the rate for mid-market hotels to 12%, a reduction on the previous 15%.

Campaign details
Agency: Adfactors PR
Brand: OYO

Background
Budget hotels – charging less than Rs 2,000 per room/night comprise 80% of the hospitality market in India.
These comprise the preferred option for the great Indian middle-class. Before the Goods & Services Tax (GST)
was introduced, small hotels levying room tariffs of under-Rs 1,000 were exempt from paying service tax, while
other hotels paid a 15% service tax.
In the period immediately preceding the introduction of GST, there was consternation among hoteliers due to the
possibility of imposition of high tax slabs for the hospitality sector. As per the then-available information, the GST
slab for services sector was expected to rise to 18%.

OYO, our client and India's largest hospitality company, felt compelled to intervene on behalf of small, budget,
and mid-market hotels that had otherwise little wherewithal to engage with the government on GST matters.

Objective
As OYO's retained PR consultancy, we were given the mandate of impressing on the government about the
unjustness of high GST rates for small, budget, and mid-market hotels.

Strategy
Conversations with senior journalists revealed that the OYO senior management directly making representations
to Union ministers and senior bureaucrats at the Capital over GST might not yield any real benefits for the
hospitality industry.

Hence, we decided to deploy other methods.

Several brainstorming sessions later, we finalised on a three-fold strategy to meet our objective.

First, we decided to tie up with a national-level trade body that would represent the hospitality sector. We were
confident that a credible trade association – representing the cause of OYO and small, budget, and mid-market
hotels - would be more effective and the best way to achieve our objectives. We preferred the Federation of
Indian Chambers of Commerce and Industry (FICCI) over the Confederation of Indian Industries (CM). The
former was chosen because of its history of associating with the service and hospitality industry; the CM is
perceived as a trade body more aligned to the manufacturing and engineering sectors.

The second element of our strategy involved FICCI making submissions to various state governments since
tourism and hospitality are 'state subjects'. Therefore, it made sense for FICCI and regional hotelier
representatives (OYO Hotel Partners) conveying their concerns about high GST rates to respective state
government representatives. Accordingly, 10 key states – depending on their importance as tourist attractions or
as tourism hubs – were selected to promote this activity in different zones. The states were: Haryana, Uttar
Pradesh, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, West Bengal, Odisha, Goa and Kerala.

Moreover, since GST called for uniformity in tax rates across the country, we were keen to impress, once and
for all, on the policy-makers about the unjustness of high GST rates for small, budget, and mid-market hotels.
Towards this, we decided to highlight the following in all conversations: No luxury tax is levied on hotels in
Jammu & Kashmir, Sikkim, Odisha and Arunachal Pradesh. Additionally, many other states either have a low
rate of luxury tax or the threshold limit is pegged at a higher slab, as in Rajasthan and Madhya Pradesh,
ensuring relief for budget hotels.

The third part of our strategy was to have FICCI and OYO Hotel Partners effectively explain to policymakers the
benefits of low GST rates. Towards this, the consultancy created a white paper that had clear PR messages: A
low tax rate on budget hotels is equally important under GST to ensure that the cost burden is not passed on to
the middle-class, who are the biggest customers of such hotels. GST, otherwise, would be seen as an anti-
people tax regime. In addition, it must be remembered that budget hotels have always been a source of
employment for thousands across cities and semi-urban areas. They are also a major component of tourism
promotion. A debilitating tax regime would, thus, affect the well-being of the hospitality sector. Therefore, our
demand for a low tax slab for budget hotels under GST was logical and justified. The script called for 0% GST
for small hotels (less than Rs 1,000 tariff per room/night) and between 5% and 12% rate slabs for the budget to
mid-market hotels (Rs 1,000 to Rs 2,500) segments.

Implementation
The PR consultancy facilitated meetings where FICCI executives along with representatives of hoteliers
explained their point of view to the Finance Minister and senior bureaucrats from each of the 10 states –
Haryana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, West Bengal, Odisha, Goa and
Kerala.

The consultancy ran a separate media outreach campaign to support and voice the demands of small, budget,
and mid-market hotels. Press notes with the demand of these hotels backed by the reasons (cited above) were
shared with specific city media across all major cities such as New Delhi, Mumbai, Kolkata, Chennai, Bengaluru
in addition to Pune, Ahmedabad, Chandigarh and Kochi.

Towards attracting the interest of the national media, OYO Founder & CEO Ritesh Agarwal lent his support to
the cause of the small, budget, and mid-market hotels. The consultancy organised media interactions with
NDTV, CNBC, and The Times of India. Mr Agarwal's quotes and authored articles in the media highlighted how
lower rates would be in sync with the Government's inclusive agenda of Sabka Saath, Sabka Vikas.

Outcome
There was extensive media coverage – more than 100 impressions – about the representations made by budget
hoteliers, Mr Agarwal and FICCI to the state governments. The media inserts – across 10 states in English,
Hindi, Punjabi, Gujarati, Marathi, Bengali, Odia, Goan and Malayalam – translated into an OTS of more than Rs
38 million.

Responding to the media coverage and the in-person representations orchestrated by OYO and the PR
consultancy, the Union government's GST committee reviewed and revised rates for budget and mid-market
hotels. For budget hotels charging less than Rs 1,000, the committee waived off GST altogether. For mid-market
hotels offering rooms in the Rs 1,000-2,499 bracket, GST was capped at 12%, which was not only in line with
OYO's appeal but also lower than the earlier 15% tax slab.

P.S. After the GST announcement, acting on our advice, OYO's CEO thanked the Government on Twitter and
via various media quotes for considering and agreeing to the request of budget hoteliers. His opinion pieces
were carried in publications such as Business Standard and The New Indian Express to increase awareness
among hotel partners about the change in tax regime and to inform them about the benefits of these new rates.
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