Sri Lanka’s decision to enact a compulsory minimum rate policy for Colombo hotels has led to a row between hoteliers and travel agents in the country.
Set for implementation from August 1 this year, the policy requires five-star hotels to charge at least US$130 per room, excluding taxes; four-star at least US$100 and three-star at least US$80.
Travel agents are inflamed, saying that the policy is a poor decision as tourism is still slowly recovering from multiple crises.
Nishad Wijetunga, president of the Sri Lanka Association of Inbound Tour Operators (SLAITO), told reporters on June 27 that the move would result in Sri Lanka being portrayed as an expensive destination and discourage event planners from choosing the country for their meetings.
He added that Sri Lanka’s minimum rates were higher than the average room rates for hotels in competing destinations. Citing examples, he said Thailand’s average rate for five-star hotels was US$80 including taxes; Vietnam was US$105; Delhi US$95; Malaysia US$80.
He expects the policy to fail, and emphasised that market forces should determine prices.
A similar minimum rate policy was in force in 2009, and was later discontinued as hotels took to undercutting one another.
The government has defended the new policy. Tourism minister Harin Fernando said at a media conference on June 26 that the current room rates were not sustainable for hotels.
Hotels Association of Sri Lanka’s president, M Shanthikumar, has hailed the viability of the policy, saying that it would help improve the financial health of city hotels, save jobs, and boost industry earnings.
Hotels battling a string of crises in the country, including the pandemic, have been given a moratorium on loan repayments.
Shanthikumar added that the policy was necessary for Sri Lanka to overcome perceptions that Colombo was a cheap destination.
In response, SLAITO vice president Nalin Jayasundera said it was unfair to make tourists bear the financial burden of hoteliers.