Govt. confirms no more room rate limits in Colombo
View(s):Sri Lanka Tourism authorities have taken the decision to ensure that the minimum rate will not be renewed following the lapse of the gazette implementing it.
“We will not renew (the minimum rate),” Sri Lanka Tourism Development Authority (SLTDA) Director General Upali Ratnayake told the Business Times on Wednesday.
He noted that there will no minimum rate issued by the authorities explaining that it was now up to the market to decide the rate of the hotels in the Colombo city.
It could be brought back if all hoteliers in Colombo insist on its revival, the DG stated.
“As a policy the reason why we wanted the minimum rate was to protect the industry,” Mr. Ratnayake explained adding that at the time it was first implemented soon after the conclusion of the war in 2009 it was needed.
However, today the Director General pointed out hoteliers were in a better situation compared to how they were back when the minimum rate was first imposed.
In fact, he noted that the last audit had indicated that many hotels have deviated from the minimum rate. And hoteliers when asked to make payment for the audits complained stating even that was an issue for them.
In the light of these developments the SLTDA insisted that the best measure to adopt was to ensure that the minimum rate was removed and not renewed and allow the market forces to take their own course.
Asked about any action taken against violators of the minimum rate, Mr. Ratnayake said that they would issue warnings but fell short of taking them to court on the matter.
But he pointed out that should a consensus be reached among all hoteliers in the city of Colombo for the renewal of the minimum rate then it could be implemented.
The gazette on the minimum rate for city hotels lapsed on March 31 this year and authorities have not taken a decision to renew it.
In 2009 when this regulation first came into force the rates in the city were dropping to even less than US$50 and as a result authorities following a unanimous decision by hoteliers in the city decided to impose a flat rate of $93 minimum for a five star property, four stars were at $60 and three stars at $45 per room night.
But today interestingly the Colombo landscape has changed so much so that hoteliers cannot contend with a minimum rate since even when it was imposed they faced stiff competition from apartments that were rented out to tourists which became a constant issue.
Hoteliers even tried to get these apartments that were rented out to tourists to be regulated in order to ensure they fall in line with the rates.
On the contrary today, city hotels are in competition with these apartments as room prices continue to drop and have even reached similar levels to that of these new accommodation units in the city.