Business Times

Fuel hike hurts tourism revenue

By Sunimalee Dias

Sri Lanka's tourism industry is compelled to absorb the fuel price hikes but seeks relief from the devalued rupee. Industry heads speaking with the Business Times observed that there would be a 15-20% increase in operational costs due to the fuel price hike. Hoteliers would be affected in relation to electricity, vegetables and transport resulting in an overall cost increase in electricity by 15%, Colombo Hoteliers Association President Shanthi Kumar said. He noted that they were currently absorbing the costs as it would be difficult to pass it onto customers.

Mr. Kumar said they would watch the situation for at least a month before going in for discussions on the issue with the industry. Food items are also expected to increase 15-20% and the real impact would be known within a month, he said.

The increased costs has resulted in workers in the hospitality industry requesting a salary hike as well, Tourism Hoteliers Association of Sri Lanka (THASL) President Anura Lokuhetty said. However, he pointed out it was not possible to change things overnight as the increase in costs have an impact on the selling prices as well. He too pointed out that while they had no plans to hold discussions with the government on this they would do so in the future.

The cost increases would inevitably "eat into profitability", he said adding that at the same time they would have to remain competitive in the global market in order to attract increased tourists.

Sri Lanka Inbound Tour Operators Association (SLAITO) President Nilmin Nanayakkara said the fuel hike results in an increase in transport costs. This would amount to an increase of Rs.2 per km for cars, Rs.7 per km for vans, Rs.10 per km for small coaches and Rs.12 per km for large coaches. He noted that while they could not pass this onto the tour operators right now they would consider passing it on from October. However, with the devaluation of the rupee the industry seems to be able to take sufficient cover for the time being.

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