The Press SATURDAY, OCTOBER 22, 1955. Hotel Tariffs Tangle

Press, Volume XCII, Issue 27796, 22 October 1955, Page 8

The Press SATURDAY, OCTOBER 22, 1955. Hotel Tariffs Tangle

The decision to increase charges at government tourist hotels must lead to further attempts to disentangle the whole complicated question of hotel tariffs. Because the stateowned tourist .hotels have lost money, the Government no doubt feels—on the principle that the user should pay—entitled to raise tariffs. But the principle does not apply to hotel tariffs as a whole. The Price Tribunal’s recent decision on the application of the licensed trade for the removal of price controls specifically said that the tribunal had “ proceeded on the principle that a hotel is a single business M providing accommodation and “selling liquor, and that the whole “of the expenses and profits must “be looked at to determine the “appropriate prices to be charged”. In other words, the Price Tribunal works on the principle that bar takings should-be taken into account when fixing accommodation tariffs. Since bar trading is much more remunerative, accommodation is subsidised from the bar tills. The Government may argue that tourist hotels, some in remote places and enjoying no large bar takings, are a special case. But this argument applies equally to the licensed trade's case for freeing hotel accommodation charges in the interests of the tourist trade.

It is widely acknowledged that more and better hotels are required for tourists. The licensed trade contends that high-class accommodation of the sort wanted by tourists cannot be provided so long as tariffs for

accommodation are restricted and related to the bar takings. It is said that overseas investors, especially, want a suitable return on the letting of rooms alone. Apparently the Government has some ideas about meeting this position in the interests of the tourist trade. A Cabinet committee is reported to be studying accommodation charges, and a new move to clear the way for increased accommodation charges at

tourist and high-class hotels in the main centres may result. It is suggested that the Government or the Tourist Department may lead an application to the Price Tribunal for exemption from price control of accommodation charges at such hotels. The Department of Industries and Commerce made a suggestion of this sort at the recent hearing before the Price Tribunal. The suggestion is mentioned in the decision of the tribunal, which gave it “ considerable thought ” but held that because it had not been argued fully the proper course was to defer further consideration until a specific application was made. The licensed trade objected to discriminatory treatment of hotels and

pleaded that release from “ price “ fixation ” should not be granted only to. a few. It would certainly be difficult to differentiate while the Price Tribunal adheres to its present principle of regarding a hotel as a single business. The Price Tribunal is not being obstructive in supporting this principle. It holds that while the licensing of the hotel industry under the Licensing Act limits the number of hotel licences, while building controls tend to put a brake on the erection of new hotel buildings or the extension and improvement of existing hotels, and while the controls of capital issues and credit restrict the raising of additional finance, “ the most noteworthy “ result from the release of the hotel “ industry from price fixation would “ be lifting of prices for accommodation and liquor and the automatic “increase in goodwill values”. These are substantial reasons for retaining price controls. But can these principles hold if the hotel industry is to be partly decontrolled and the principle of price fixing abandoned for a part of the industry? It seems that the whole of the industry must be subject to the reasons and principles advanced if they are valid. It would be difficult to find two sets of " principles ” that did not come grossly into .conflict. The Government has not eased this complicated position by its decision to increase charges at government tourist hotels. When the Tourist Hotel Corporation Bill, now before Parliament, is passed and a corporation to manage the hotels is established, the government hotels will join other hotels in the price control system ' .under the Price Tribunal No doubt ' the Government feels that it has good reasons for raising tariffs now and presenting the Price Tribunal with an accomplished fact. But it [ is a strange procedure, to say the least.