ECONOMYNEXT – Sri Lanka imposed a minimum room rate to help some hotels, but it will be removed soon after a call made by President Ranil Wickremesinghe, Tourism Minister Harin Fernando said.
Hotels had difficulties in retaining staff due to insufficient wages and services charges and a debt moratorium was also coming to an end, which had prompted hotels to request for the price control, he said.
“Those were the real factors we listened to the hotel association and increased it, not because we wanted it, and it was only 100 dollars,” Fernando said.
Opposition legislator Shanakiyan Rasamanickam said while a 100 dollar floor rate was imposed on hotels in Colombo, with taxes and other charges it came to around 162 dollars a night and the country was “killing a market” with regard to conventions.
“Actually, there was a 16 percent drop because of the minimum rate, but the revenue increased by 25 percent,” Minister Fernando said.
“His Excellency the President wants it removed very soon. Until the market got settled is why we wanted the minimum rate. Not to continue for the long term.”
Rasamanickam said just outside Colombo city limits, hotels had more freedom to price hotels, but he was happy that President had called for the end to minimum rates.
“I think he actually got it right, but we had to listen to both sides of the story,” Fernando said.
“The DMC would want to be more a market, but the Hotel Association was finding it difficult. So we had to listen to both sides. President had made a clear remark that market forces to keep running. We wanted some stability for a short period.
“Shangri-La is selling at 180. They do not have a problem with occupancy. So, hotels can sell at the rate they want, on their marketing strategy.”