Business Times

Dangerous signs: Overpricing of hotel rooms

By Sunimalee Dias

Economic Development Deputy Minister Lakshman Yapa Abeywardena says that the government has to take stock of the current “dangerous” situation where hoteliers have taken to overpricing the product.
In this respect, he pointed out to the Business Times that while overpricing could be to some extent controlled within the five star hotels, it would not be possible if boutique hotels also increased their price.
“That is dangerous. We should think about it,” he said adding that it is not only about the money but “we have to achieve the target (annual arrivals).”

Boutique hotels based on the concept of providing an exclusive range of additional facilities in a very private setting have no pricing restrictions unlike 5 - star hotels. The minister highlighted that he had come face to face with this situation when vacationing at a particular hotel that increased its prices from the previous year’s US$540 to US$800.

The main objective would be to “not only get large numbers but offer them superior service and experience not matched by any,” he said. The minister pointed out that in Malaysia and Thailand room rates were lowest but in Sri Lanka since January and February “our hoteliers increased prices too much.” In this respect, the government has met with the Tourist Hotels Association of Sri Lanka (THASL) and requested them not to increase the price.

The government increased its minimum room rate for this year to US$125 for 5 -star hotels. Meanwhile the government is gearing up to implement a host of new regulations within three months impacting on all stakeholders in the industry.

This is expected to create a number of key developments for the tourism industry going forward from simplifying the tax process to addressing environmental problems and new areas for hotel development to whale watching.

Sri Lanka Promotion Authority Chairman Dr. Nalaka Godahewa told the Business Times said that these regulations will be brought in “due to the influx of tourists.” Minister Abeywardena explained that under the new regulations one of the main issues addressed will be the availability of lands from the current buffer zone of the wildlife parks that will be open for new investments.

He pointed out that these buffer zones will provide space for investors to construct new hotels under the wildlife guidelines with proper approvals. It was observed that currently there are investors interested in setting up projects in these lands as they are in close proximity to the wildlife parks and will be a key attraction to tourists. Lands will provide space for the construction of about 25-30 hotels, the minister said.

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