Service charge in hotels is not mandatory

In recent times, hotels and restaurants have been charging an additional charge in the name of ‘Service Charge’ in lieu of tips which is made mandatory in many hotels. There have been a lot of controversies surrounding the service charge charged by hotels where several complaints have been filed at online consumer forums.

Department of Consumer Affairs (DCA) has said that the service charge is not mandatory and no Restaurants/Hotels should force customers to pay such charges. It is up to the customers to pay it or not. Citing to several complaints that Restaurants are levying an additional 5 to 20% in bills in lieu of tips, regardless of the kind of service provided, DCA said it on Monday.

The department asked state governments to sensitise hotels and restaurants and advise them to display at appropriate places on their premises that service charges are discretionary/voluntary and can be waived if a consumer is dissatisfied with the services. The department said arbitrary levy of this sum in lieu of tips amounts to an unfair trade practice.

“We have been receiving several complaints from consumers that they have to pay service charges even when they are not satisfied, so the government has issued an advisory that hotels or restaurants must give a choice to consumers whether they want to pay that money or not,” said Consumer Affairs Secretary Hem Pande. “The consumer is emboldened with this move. It is completely on the discretion of the consumer to pay the service charge or not,” Pande added.

“We are issuing advisories to our members and customers should be made aware of service charges. But a restaurant is well within its rights to charge whatever it chooses for its goods and services. I don’t think the waiving off bit is fair,” said Riyaz Amlani, president of the National Restaurant Association of India (NRAI).

Though it was considered by an effective move, the decision has created lots of speculations and debates over the social media forums. Several have posted their opinions that it would end in unwanted quarrels and disputes between the Restaurant staffs and consumers as they have to complaint about their service in order to waive off the service charge.Hotels have said service charge is vital to run the business to pay for the service staff, the toilet cleaners, valet, kitchen helpers, and dish washers.

DCA should make it clear on service charges charged by hotels and restaurants. The service charge should be taken out of the bill rather than saying it’s optional. Or it should declare a reasonable cost over the bills. It will lead to unwanted quarrel and disputes as anyone can eat and then refuse to pay for service saying the quality is not up to the standard even after enjoying the hospitality or otherwise.

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