Hotels and restaurants may take a hit from ‘no service charge’ rule but D-Street doesn’t mind

Shares of most hotels and restaurant chains including Indian Hotels, Sapphire Foods, and Barbeque Nation Hospitality among others were in the green territory on Tuesday, a day after the government banned hotels and restaurants from levying service charges.

Shares of Indian Hotels, Oriental Hotels, Jubilant Foodworks, Sapphire Foods and Devyani International among others rose in the range of 0.5 to 3.45 percent following the development. ITC and Mahindra Holidays and Resorts were trading lower.

Following an increase in consumer complaints, the Central Consumer Protection Authority (CCPA) barred hotels and restaurants from levying service charge automatically or by default on food bills and allowed customers to file complaints in case of violation.

The CCPA has issued guidelines for preventing unfair trade practices and violation of consumer rights with regard to levying of service charges. Restaurants and hotels generally levy a service charge of 10 percent on the food bill.

"No hotels or restaurants shall add service charge automatically or by default in the bill," CCPA Chief Commissioner said in the guideline.

A restaurant or hotel must inform the consumer that the service charge is voluntary, optional and at the consumer's discretion.

Also Read: Consumers cut spending on clothing, fuel, gadgets as inflation eats into budget: Survey

In case a consumer finds a restaurant or hotel levying service charge, s/he can request the concerned hotel or restaurant to remove it from the bill amount, lodge a complaint on the National Consumer Helpline (NCH), file a complaint against unfair trade practice with the Consumer Commission or to the district collector for investigation and subsequent proceeding by the CCPA.