Hospitality Sector: Navigating asset-light models, management agreements, and tax implications

India's hospitality sector is experiencing a period of strong growth, driven by increasing domestic and inbound tourism, rising disposable incomes, expanding air connectivity, and growing investor interest in hospitality assets. Hotel brands are aggressively expanding their presence across India, including in Tier 2 and Tier 3 cities.

Interestingly, the industry is also witnessing a shift towards asset-light business models, with brands increasingly favoring management and operating arrangements over direct ownership and operation of properties. There is also integration of hotels with residential, retail, office, and other lifestyle assets within integrated projects.

These evolving models raise important legal, regulatory, and tax considerations relating to project development, contractual arrangements, licensing and branding rights, GST treatment, direct tax efficiencies, regulatory compliance, among other related matters.

The webinar will inter-alia cover:

1.      Recent trends in the Hospitality Industry:

• Shift from asset-heavy ownership models to asset-light structures such as hotel management and franchise arrangements

• Emerging trends shaping investments and operations in the hospitality sector

2.      Different Operating Models: Legacy vs. New Models

• Legacy Model: Own and operate - Considerations and Implications

• New Models: Key features and commercial considerations under management vs. franchise vs. leasing models

  • Allocation of operational and business risks

  • Key regulatory, income-tax and GST concerns in each operating model

• Upcoming Models: Hybrid, Mixed Use, Manchise models

3.      Hotel Management Agreements (HMAs)

• Understanding the HMAs framework

• Emerging trends in HMAs

• Employee Secondment arrangements

• Brand licensing and service arrangement with Overseas Hotel Brands: Insights from the Hyatt Judgment

• Key regulatory, Income-tax and GST issues

• Other important aspects relating to HMAs

4.      Interactive Q&A session

Speakers -

Shubham Vijay, Partner

Anupam Misra, Associate Partner

Harshit Khurana, Associate Partner