Hotels decry Tourism Ministry plan to tax service charge

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Ananth Baliga and May Kunmakara

Hotel and restaurant representatives have rejected a proposal from the Ministry of Tourism that would see hospitality businesses fork over a portion of their service charges to pay for an industry-wide training fund.

At a meeting with major hotels, restaurants and industry associations in Phnom Penh last week, the ministry set forth a plan to redistribute part of the service charge – typically added to a customer’s food or hotel bill, and which is intended to go to company staff – to pay for a new “capacity building” fund for the sector.

Sok Ly, president of the Cambodia Restaurant Association (CRA), said the ministry’s proposal presented no details on what percentage of the service charged would be taken nor how the fund would be managed.

“Something that we did not agree on is: Why do we need to give it to the Ministry of Tourism,” said Ly. “Service charge belongs to the staff.”

Last December, the ministry held a meeting with the CRA, where it was proposed that 70 per cent of the charge go to employees, 10 per cent to the hotel or restaurant and 20 per cent would be retained in a fund for training of staff, according to the CRA’s website. Ly said he wasn’t at attendance for this meeting and no further discussions had been held until last week.

While they would abide by the law, Ly said: “it isn’t the MoT’s responsibility to recruit the staff for the owners. I don’t think so, right”.

Ly said that every establishment had their own training requirements and getting staff trained using this fund would not be helpful, as each restaurant or hotel would have to re-train them based on their specific needs. Industry representatives are collectively against the idea, he added.

“For me if you want to help the industry get bigger, they have many other ways to support the industry. Not by taking it from the staff,” Ly said.

Contacted yesterday, one hotel manager privy to discussions said that the move was “unconstitutional”, while several others contacted by the Post declined to comment due to the sensitivity of the issue.

Neb Samouth, director general at the Ministry of Tourism, said the meeting last week was only to discuss a way to set up a code of conduct to govern the appropriate use of the service charge.

“The big part of amount of the service charge goes to the staff; some will be used for the fund, which we plan to set up for staff capacity building and offering them training to upgrade their skills,” he said.

“It is the first discussion, as we want to avoid any problems which we previously had – for instance, some hotels didn’t fairly allocate the money.”

The fund would be handled by a committee and the ministry would play only a coordinating role in the process, Samouth said. The fund would move forward only after further discussions were held with stakeholders, he added.

“I think some hotels and restaurants misunderstood our intention because we just want to make clear on using the service charge and to set up the code of conduct, and set up the committee.”

“It still needs time to explain them. But it is on a voluntary basis,” added Samouth, adding that he hopes this will be implemented this year.

Ang Kim Eang, president of the Cambodia Association of Travel Agents, said that while there were issues with the implementation of a consistent service charge across the industry, he said that it should not be used for anything other than it is intended.

“I think it [service charge] should go to the staff as an incentive” he said.

http://www.phnompenhpost.com/business