Colombo hotel raise rates amidst turbulence

Colombo city's 20 hotels have agreed to implement minimum room rates, raising it from earlier levels despite troubled times for the industry.

The 5-star hotels, in this category, have also agreed to abide by these rates and not undercut each other, a common feature in recent years as a means of survival.

The Advisory Panel on Colombo Hotels appointed by the Ministry of Tourism has reached agreement over minimum room only rates ranging from US$ 35 to US $110 for city hotels slotted into six categories, with the new rates effective January 1. President of the Colombo City Hotels Association M. Shanthikumar told The Sunday Times FT that this decision was taken to increase revenues and meet operational costs of hotels as well as to pay maximum service charges to hotel staff. He added that this will benefit the hotel workers and ensure the survival of the hospitality industry. In November, Nawaz Rajabdeen, Chairman of Hotel Developers Ltd - managers of Hilton Colombo, strongly suggested increasing minimum rates to at least US$100 for top-of-the-range 5-star hotels. “It would be an economic crime if these hotels are permitted to engage in reckless undercutting which deprives the country of its much needed foreign exchange, the staff of a better service charge and the shareholders of a reasonable return,” he said.

Tourists arrivals fell by 20 per cent to 470,000 in 2007, Sri Lanka Tourism said. Tourist industry earnings fell 15 per cent to $342.3 million over the 10 months to October from the same period in 2006.