Minimum room rates leave tour operators helpless!
Tour operators in Sri Lanka have shot down new policy changes set to establish minimum room rates in Colombo which they claim would result in less travellers opting to select Sri Lanka for their next holiday.
At a time when the tourism industry is just picking up there is concern that these new policy changes could contribute to lower demand compared to other destinations in the region.
Sri Lanka Association of Inbound Tour Operators (SLAITO) President Nishad Wijetunga told a media conference in Colombo that the implementation of the minimum room rates from August 1 was without any consultation with them and “when we are just raising our heads and sadly this is within our control”.
Vice President Nalin Jayasundere highlighted that the proposed rates of the hoteliers in Sri Lanka is higher than its competitors in the region.
Under the new rates Colombo would be selling at US$152 BB which is higher when compared to Kuala Lumpur ($81 BB), Bangkok ($83BB), Dubai ($89 BB), Delhi ($97 BB) and even Hanoi ($115 BB).
He noted that when booking through a travel agent the cost will be 10-20 per cent cheaper but Sri Lanka will continue to retain this proposed standard rate due to the implementation of the minimum room rates policy.
Opposing this latest move by hoteliers, he pointed out “What we say is have a price being based on demand and supply.”
Colombo currently has about 9000 rooms with about 35 per cent occupancy and it is noted that there is an increase in the occupancies due to the improving situation.
SLAITO’s Devendre Seneviratne pointed out that while a few branded hotels have opposed the minimum rates policy others believe that “travellers need to consider the loans they have obtained to run their operations”.
Recalling a similar situation back in 2009 when the industry imposed a minimum rates policy it was pointed out that this led to severe undercutting of rates by city hoteliers themselves.
Tour operators opined if the government is going to control the price then it will not work and with the booking season for winter commencing from July – September there will be drop in demand at these high rates.
The policy change will lead to a 70 per cent drop in business and also cause a severe impact on the MICE or Meetings Incentives Conference and Events business.
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