THE Government's decision to impose a 20 per cent Formula One levy on room revenues of non-trackside hotels has received a mixed reaction.

While established hotels The Straits Times contacted yesterday felt the levy was fair, some budget hotels thought otherwise.

Dora Yeo, general manager of hangout@mt.emily, a budget hotel, said: "It's not fair to impose it across the board for all hotels, because not everyone who visits during the F1 period will want to watch the race."

She said the levy would raise room rates, making it unaffordable for her hotel guests, who are mainly backpackers and students.

A spokesman for another budget hotel, who declined to be named, added: "Any hotel that is not centrally located, like ours, would be concerned."

But Rina Yazid-Gilliland, public relations manager of Grand Hyatt Hotel at Orchard Road, said the reason for the levy was "understandable".

The rates for the F1 levy were announced on Monday by the Ministry of Trade and Industry, which had consulted the Singapore Hotel Association.

Eleven trackside hotels located along the current circuit design at the Marina Bay area will have a 30 per cent levy imposed on room revenues.

All other hotels will have a 20 per cent levy.

The levy will be effective from Sept 24 to 28 next year when the F1 comes to town.

On Tuesday, Minister of State for Trade and Industry S. Iswaran justified the levy by saying that the expected 100,000 race visitors would create a "spillover effect across the island" in terms of the demand for hotel rooms.

Yeo is hoping that his estimation will be spot-on, particularly since her Mount Emily-based hotel's close proximity to the race site will allow her to target those F1 fans on a budget.

George Chen, general manager of Link Hotel, a boutique hotel at Tiong Bahru, is confident it will be a win-win situation for all.

Chen, who felt the levy on non-trackside hotels was "reasonable" and "fair", pointed out: "The annual F3 car races have been held in Macau with great success.

"With our experience gained from our hotel in Macau, we have confidence that the Singapore F1 Grand Prix will be a boom for the hotel industry."