Please Help: rate of service tax

one of my office client is providing event mgmt services for this he take some input services like hotel, travel, auditorium etc. and then after adding some profit margin he billed to his customer after charging service tax @ same rate as he paid for input services e.g hotel charged 2.06% from him then he will also charged @ 2.06%. My question is that is he charging correctly or he should charged @ 12.36%. Please assist me in this regard.