Minimum hotel rates termination shakes tourism industry
The tourism industry has expressed mixed feelings following a Government announcement to scrap the minimum room rates’ policy in Colombo city hotels. Marketing the destination which has become a big issue due to the its lack of competitiveness on the global scale has led to many tour operators calling for the removal of the ceiling on room rates in Colombo but now some hoteliers want the government to change plans. On Thursday the government announced plans to abolish the scheme from March next year leaving Colombo city hotels the freedom to price room rates competitively.
Tourism Development, Lands and Christian Religious Affairs Minister John Amaratunga has decided to abolish the minimum room rate regime with effect from March 31, 2017, the announcement said. This decision, the release noted was taken by the Minister based on a recommendation of the Tourism Advisory Council which comprises of key players in the hotel and travel trade. The Council was of the view it was time to do away with the minimum rates as it has “now served its purpose.” Sri Lanka Association of Inbound Tour Operators (SLAITO) issuing a statement on Friday called it a decision taken “at the right time.”
It said that the MICE sector was “affected severely losing out on meetings and conferences” to competing destinations in the region. Aitken Spence Travels Managing Director Nalin Jayasundera said that this would prove good for the country in general and help business during the off season as it would allow the rates to fluctuate accordingly. This would improve on the occupancies to Colombo and help in being competitive with destinations like Malaysia and Thailand, he noted. Veteran hotelier and Galle Face Hotel Management Senior Vice President Chandra Mohotti explained that while the imposition of a room rate structure was a “rare phenomenon in any tourist destination” it however, helped the small and medium hotels in Colombo.
He noted that once arrivals increase the new policy should satisfy all concerned. However, it was pointed out that should the total arrivals not match up to the availability of rooms then it could impact the smaller hotels. In the long run, Mr. Mohotti explained it could affect the revenues of the 5-star hotels and as a result “the good faith of all is required.” In the meantime, it is learnt that some of the smaller hotels would be looking at lobbying the government to ensure they would not be impacted and attempt to subvert this move. The 3-star hotels would be significantly impacted since they believe it would be tough trying to sell their product in a marketplace where the bigger hotels would have be able to cut rates leaving no room for the smaller hotels to become too competitive.