Hoteliers in Andhra Pradesh are grappling with significant challenges as low occupancy rates and rising operational costs push many into financial losses. Key expenses include high power bills, which can reach ₹10–15 lakh per month for some establishments, and property taxes of around ₹10 lakh for two quarters, depending on location. Additionally, they are burdened with an 18% APGST (Andhra Pradesh Goods and Services Tax).
The hospitality sector has also seen a decline in patronage for function and banquet halls, as customers increasingly prefer hotels offering affordable dining options, such as meals priced at ₹1,000 per plate. While occupancy rates were previously below 50%, they have gradually improved to 60–70% following the change in government. However, operational costs remain steep, particularly for star-rated hotels, where a general manager’s salary can be as high as ₹3 lakh per month, with senior managerial staff earning around ₹1 lakh.
Another major hurdle for the sector’s growth is the lack of adequate entertainment options in cities like Vijayawada. This has led to senior officials and employees often traveling to Hyderabad for weekend leisure, where entertainment facilities are more abundant. Hoteliers argue that the absence of such amenities in Andhra Pradesh’s urban centers is directly impacting their occupancy rates.
In a bid to address these challenges, hoteliers have approached Chief Minister N. Chandrababu Naidu, seeking industry status for the hospitality sector. They have received a positive response, with indications that a bill in this regard may soon become law. However, hoteliers emphasize that while industry status will benefit new projects, existing establishments need interim relief measures to ensure their businesses become viable.
The hospitality sector in Andhra Pradesh is hopeful that government support and policy changes will provide the necessary boost to overcome current challenges and foster sustainable growth.
