Hotel owners are constrained to cut the number of workers and rationalize their costs to make up for the loss of their share in the service charge they impose on customers.
Arthur Lopez, president of the Philippine Hotel Owners Association (PHOA) said Republic Act 11360, or the Service Charge Law (SCL) is discouraging investments in the accommodation sector as this removes the share of management from the service charge.
Lopez said hotels have always treated their share from the service charge as income which they use to make up for operational losses like pilferage and breakage.
Hotels slap a service charge of 10 percent on food and rooms from which prior to the SCL, they get 15 percent.
According to Lopez, a 600-room hotel is likely to lose $2 million per year with the SCL and its implementing rules and regulations (IRR) which give all of the service charges collected by the establishment to hotel employees excluding contractual or service workers.
Certain levels of managerial workers who now get a share will continue get so but prospective managers will no longer be entitled.
On the high side, a hotel worker gets an average of P30,000 in service charge per month on top of his salary, Lopez said.
“(That share) is a very big loss to hotel owners. We just have to sell more, increase our occupancy and cut on costs,” Lopez told reporters at the sidelines of the Arangkada Forum in Paranaque City yesterday.
He said prospective investors are having second thoughts to invest here because of the SCL.
The IRR of the law will be released soon.