“Govt. locks horns with “popular” room tariff”
With reference to the report in last week’s Business Times under the above heading, Sanath Ukwatte, Chairman of Mt. Lavinia Hotel has sent the following letter: “There’s a misconception in a recent media comment that the Mount Lavinia area is not included in the minimum pricing mechanism. This is not correct. Hotels in Mount Lavinia area are included in the gazette and therefore have a legitimate interest in the ongoing debate. In my view the current debate on minimum pricing in the hotel sector can be put in proper perspective only if we recognise the reality that in the situation we have in Sri Lanka, the open economy cannot mean the uncontrolled rule of market forces.
I concede that state intervention should be few and far between and they should be seen as the exception rather than the rule. However, there are some areas in which the State has a necessary role to play in order to correct market distortions or undercutting and ensure a more equitable distribution of resources and income. The most important point is the human resource aspect because of the large number of employees supported by the hotel sector. Apart from the considerable high number they come from mainly from rural areas in the country and are instrumental in bringing about a significant improvement in the standard of living and in communities they live in. Today thanks to minimum rates their service charges have gone up considerably in the region of Rs. 30,000 or more.
Furthermore, facilities needed for training and improvement prospects are made possible by a pricing structure which assures some degree of stability in hotel revenues. In a highly competitive global environment it is a constant challenge to satisfy increasing demands of guest needs. This means continuous reinvestment into product development, innovation and consistent delivery of services to suit guest preferences. Sharp fluctuations of hotel revenues will prevent long term planning and investment in the hotel sector. It must also be remembered that the open economy can also open up opportunities for grave abuse as we have witnessed prior to implementation of minimum rates and it needs to be corrected in order to provide a level playing field. In my opinion this is an essential function the State is required to perform.”