Mad room rush slashes Sri Lankan hotel rates
Hoteliers in the Southern coastal belt and Colombo city hotels are feeling the pinch of trying to attract travellers and have resorted to undercutting at a time when there is a mad room rush. Slashing prices on room rates has become the norm in the five stars in Colombo and the Southern hotels of three and four stars who are trying to grab a share of the visitors holidaying during the off season.
Citrus Hikkaduwa General Manager Cyril Perera said that with most hotels were fluctuating on their rates with website bookings prices racing down to US$60-65 from the usual $85-90. In this respect he believed that a minimum rate structure as set for the Colombo city hotels would hold good in the South as well especially during the off season.
The industry notes that prices were being manipulated by everyone and this was clearly impacting on the businesses which should not be the situation. In this respect, in a bid to grab a fair share of tourists wanting to holiday during this season hotels were undercutting each other since May this year that was creating much chaos.
Website bookings have taken over by storm with its crazy offers of cuts and discounts for tourists and which has contributed to being one of the major attractions to find travellers. However, the five stars in the South are offering different rates to their group travellers but were not caught up in the price competition.
It was noted that although these rates might not be the best for the five star hotels the yield was better during this season when there was less tourist traffic, Heritance Ahungalla Executive GM Refhan Razeen told the Business Times. Meanwhile, in the city hotels while the three and four stars are having a high occupancy and sticking to the minimum rates most of the five stars have been not been having a good time this off season.
The room rate structure has impacted them leading to price undercutting that has caused most to complain that the minimum rate may not be a great idea during this time. Cinnamon Red GM Terrance Fernando speaking with the Business Times said they were subject to the minimum price and at the moment was selling at an average of $85. He noted that his hotel was doing well even before August, when there is a surge in arrivals, with about 80 per cent occupancies.
Five stars that have undergone refurbishments were facing less than 50 per cent occupancies in the past few months. However, today almost all hotels in the city are having over 80 per cent occupancies, industry sources said. The undercutting, industry sources noted has been happening for the last one and a half years among city hotels.
This has been hurting the bottom lines and service charges for the staff of these hotels and the government revenue as well since the rate cuts would mean lower taxes to the state, sources said.