Tour operators have come out strongly in favour of recent government moves to remove the controls on the room rates in the Colombo city hotels. Minimum rates applicable to star-class hotels in Colombo and the periphery are due to be removed in first quarter 2017, a move that is backed by the 5-star hotels while [...]

The Sunday Times Sri Lanka

Fixed room rate removal hailed by tour operators

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Tour operators have come out strongly in favour of recent government moves to remove the controls on the room rates in the Colombo city hotels.
Minimum rates applicable to star-class hotels in Colombo and the periphery are due to be removed in first quarter 2017, a move that is backed by the 5-star hotels while smaller hotels are opposed to the move.  Sri Lanka Association of Inbound Tour Operators (SLAITO) President Devendra Senaratne told the Business Times that the minimum rates was a bone of contention for the industry as it did not serve the purpose of doing business in the country and as a result of which there was a price war despite the controls in place. Moreover, he noted that the MICE market was low in the city hotels but once the rates become flexible there could be a surge in demand for this tourism segment.

The industry must give in to the market forces and create a demand for the destination and let the demand determine the price, Aitken Spence Travels Managing Director Nalin Jayasundere, who is also a SLAITO member, said.  He pointed out that with a large base of rooms the tour operators would not be able to get the right room rates if price controls were to exist. Sri Lanka introduced a minimum rate on city hotels in Colombo and nearby to ensure there would not be a price fluctuation as a result of which a number of establishments claim they could operate profitably as there was no price war.

However, recently the government stated they would remove the minimum room rate on city hotels from next year April as a result of which tour operators believe it could allow the destination to be marketed more competitively.  Mr. Jayasundere queried the need to protect only Colombo asserting that “when Colombo becomes expensive it will affect the other areas as well.”  He also pointed out that these price controls was what was hampering the MICE tourism since most “tour operators have said that Sri Lanka is not competitive for big conferences compared to other destinations like Thailand.”

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