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24 © Batta 2016 | SMEs and Sustainable Tourism
Figure 2: Average Annual Occupancy of Hotels the taxi operators to install fare meters due to
in Manali the pressure of the taxi union.
Figure 3: Percentage of Drop in Tourists Going by the data on new hotel units coming up
in the area, employment in the tourism sector is
Results of the study reveal that leakage from the growing at the rate of 7.5 percent per annum.
local economy is too heavy. All the grocery However, there are serious issues in terms of
items, packed edibles, milk and poultry prod- availability of employment opportunities to
ucts, linen, and raw food stuff are imported locals. Analysis shows that budget units
from places in the neighboring states, and only employed 100 percent local staff while the small
some vegetables and a limited quantity of milk units employed 63 percent and 81 percent
is locally available. Almost 80 percent of the managerial and lower staff locally. The medium
expenditures made by the hotel units, especially hotels employed only 8 percent of the manage-
the small and medium units, is spent outside the rial staff and 68 percent lower staff locally. The
local economy. The souvenir shops are also percentage of local employment fell with an
stacked with items imported from outside the increase in size of the establishment, perhaps in
local economy. There also appears to be some view of the enhanced skill requirements of
tension between local tour operators, taxi manpower with more rooms and other services
operators, and hoteliers. SMEs in the tourist added to the hotels.
transport sector, like bus and taxi operators, are
often engaged in conflict with passengers. Most Even though there are a number of banks and
hoteliers treat this problem as a serious threat other financial institutions operating in the
to their business. Discussions with the local area, most hoteliers felt that they are not able to
authorities reveal that they are not able to get access finances due to lengthy procedures and
high interest rates. Compared to the only 9
percent rate of interest paid by large companies,
SMEs are made to pay 11 percent after also
offering land and other fixed assets as collateral
to the banks. Owners even have to pay stamp
duty and registration fees on mortgages to the
local authorities, which further escalates the
cost of credit for SMEs.
Capital formation due to tourism is an
important aspect for the host population. In
terms of ownership of hotel properties, local
control varies with the size of the hotel. While
all the 37 hotels in the budget segment are
owned by the locals, only 63 percent of hotels in
the small size category and 34 percent of hotels
in the medium hotels category are owned by the
local people. Locals control the tour and taxi
operators segment. Regarding contributions to
the local community by reinvesting profits in
the social infrastructure, the position is quite
disappointing. Even though most hotel owners
feel that hoteliers should invest something to
enhance the carrying capacity of the civic
infrastructure at the destination, little has been
done so far in this regard. Most hoteliers
attribute this problem to a lack of a coordi-
nating agency.
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