•  Opines MRR a threat to competitiveness and unnecessary Government intervention and past attempts enforcing price controls were met with limited success

The Advocata Institute yesterday raised concerns about the policy by Sri Lankan authorities to enforce minimum room rates (MRR) for hotels in Colombo effective from 1 October.

The gazetted rates are $ 100 for 5-star hotels, $ 75 for 4-star hotels, $ 50 for 3-star hotels, $ 35 for 2-star hotels and $ 20 for 1-star hotels.

The Advocata Institute said it examined the policy and its impacts on the hotel sector in its latest policy brief available at https://www.advocata.org

While authorities argue this is to counter under-pricing, Advocata Institute believes it could harm the tourism sector, burdening hotels already facing challenges from the global pandemic.

“The policy is seen as a threat to competitiveness and unnecessary government intervention, potentially leading to customer dissatisfaction and loss of clients compared to neighbouring countries,” Advocata said.

“Past attempts enforcing price controls were met with limited success,” said Advocata, arguing that minimum rates restrict flexibility, hinder healthy competition and disregard the diverse nature of accommodations. “The foundation for these rates, based on star classifications, is criticised for overlooking qualitative aspects,” it added.

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