Hoteliers see dollars, DMCs cash on rupees
Sri Lanka’s tour operators have been hit by the new budget proposal mooted by hoteliers to carry out transactions in US dollars causing dissent among the Destination Management Companies (DMCs).
In protest the Sri Lanka Association of Inbound Tour Operators (SLAITO) had written to the Finance Minister against the budget proposal and has already had a discussion with an advisor to the Finance Ministry in this regard.
Nkar Travels Managing Director Nilmin Nanayakkara said that this request for a dollar transaction was made by only a few hoteliers who are interested in lobbying the Finance Ministry to get their payments in dollars from the DMCs.
“A large majority of hoteliers have no such interest because we agree for rates in advance in foreign currency but pay them in Sri Lankan Rupees at the rate of conversion when the services are consumed,” he explained.
Therefore, he pointed out that if there is a rate gain because “we are” paying in Sri Lankan Rupees at the prevalent rate there is no disadvantage of currency gain for any hotel.
“Those conniving have painted a picture as if they are not getting the advantage or gain of foreign currency fluctuation,” Mr. Nanayakkara said.
“Not giving the correct picture to the Finance Ministry when lobbying prior to the budget is disastrous and in my view this is misleading the Finance Ministry if they did so,” he stated.
He explained that it was those hoteliers that had obtained dollar loans who had been involved in lobbying the Finance Ministry to make payment in dollars mandatory which is what we are against.
“We are concerned by the budget proposal to make the US dollar transaction mandatory,” JourneyScapes Managing Director Devendre Senaratne told the Business Times.
He noted that as tour operators “when we sell a tour on most occasions it is we who decide places of interest and economics, social, cultural aspects of the clients and when we do that we decide and put them up in hotels – so we have to decide on how we handle our currencies because in Sri Lanka we have a right to pay in rupees.”
This would also mean that the hotels are gaining especially in Sri Lankan Rupees which has not appreciated; and so every time when there is a rate the hoteliers benefit and the payment is made on the date of the departure of the client, he explained.
In this respect, Mr. Senaratne opposed the dollar transaction and pointed out that this was a claim that was made by only a few hoteliers and not everyone in the hotel industry required this.
A veteran hotelier in the industry pointed out that they were hoping the DMCs would look at this move in the greater interest of the country as it is not possible to have only one segment of the industry doing well.
Paying back the dollar loans that hoteliers have obtained is the need of the hour of most hoteliers and these hoteliers believe would ensure that the hard currency comes into the country.
“We think the money and investment is in the hotel product and it needs foreign currency to pay back and this move has been lobbied by the Tourist Hotels Association of Sri Lank (THASL),” the hotelier explained.