The Supreme Court’s judgement on the ‘State of Tamil Nadu, represented by its Secretary, Home, Prohibition and Excise Department, vs. K Balu’, for stopping the grant of licences for the sale of liquor along national and state highways and over a distance of 500 metre from the outer edge of the highway or a service lane alongside, has created a stir among hoteliers. April 1, 2017, was fixed as the date for ceasing out existing licences for all states and union territories. The ruling from the Supreme Court is expected to hit hard on revenues of premium segment hotels.
Impact : While the Supreme Court’s judgement is undoubtedly for public interest, i.e., involved in dealing with road accidents caused due to drunken driving on the highways, the hotel industry will face sweeping changes to the way the sector functions. Since April 1, 2017, the premium segment hotels, which fall within the 500 metre range of a national highway of state highway, have been directed to stop selling/serving liquor.CRISIL Research has assessed the effects of the Supreme Court judgement on premium segment hotels (5-star and 5-star D category) of top 12 cities in India.