Double whammy for Lankan hotels
View(s):By Sunimalee Dias
Sri Lanka’s hotel industry is facing a double whammy this month – a 40 per cent hike in wages and a 20-25 increase in new electricity tariffs.
City Hotels Association President K. Shanthikumar pointed out that wages would increase by Rs.400,000 monthly cost for smaller hotels and go upto Rs.2 million for the larger hotels from this month.
In this respect, he pointed out that costs of operations were expected to increase by at least 20-22 per cent this year compared to 2012.
The government imposed a 40 per cent wage hike from April that was passed onto all employees in the hotel industry.
This has caused a further depletion to the hotel industry profits that industry buffs complain would add to the woes of the ever increasing costs on the sector.
John Keells Hotels Group Sector Head Sri Lankan Resorts Jayantissa Kehelpannala said the sector is singled out as the hotel industry for which a specific tariff hike with a ‘fairly significant increase especially in the peak season’ has been imposed compared to other industries. “Our stance was that we should be a part of the industry and not be singled out,” he said. The industry hopes to have further discussions with the authorities on this matter though they believe it “might be difficult” since the new power tariff structure has already been announced.
Aitken Spence Head of Hotels Malin Hapugoda said the hotel industry faced a similar situation in around 2004/05 when it was placed on a special category and charged a higher tariff as a result of which they resorted to court action.
In this respect, they were able to obtain an injunction order restraining the authorities from charging the high prices and to be placed alongside other industrial rates. However, later they were once again imposed a higher tariff, he said explaining that the costs in Colombo were expected to be higher than in other parts of the country.
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