Hotels Association Chief hails MRR; assures no drop in biz, tourists

 The Hotels Association of Sri Lanka President M. Shanthikumar

The Hotels Association of Sri Lanka (THASL) President M. Shanthikumar yesterday hailed the finality of the Minimum Room Rate (MRR) from 1 October and assured there will be no drop in business as claimed by some parties with vested interests.

“We thank President Ranil Wickremesinghe, Tourism Minister Harin Fernando and the Government for introducing the minimum rates effective 1 October 2023 for hotels in the City of Colombo. 

There will be no drop in business as claimed by some parties with vested interests,  who have been releasing series of articles in the last few months against the MRR and pressurising many people in the Government, private sector and overseas agents to protest against and prevent the move,” said Shanthikumar.

“We are optimistic that this initiative to introduce a minimum rate in Colombo hotels will help the country increase its foreign exchange earnings and help the hotel’s increase their topline revenues,” stressed THASL President.

“Whilst we are seeing a pick-up in the business in the city hotels and hoteliers are increasing the online prices, unfortunately the travel agent, the airline crew rates and the MICE rates remain all time low even at this juncture. We cannot afford to lose revenues as the financial commitments too are exceptionally high since the moratorium ended in 2022,” said THASL President.

Appreciating the support extended by all business channels, Shanthikumar said it is to be understood that agents are not the single source of business drivers to the country. He said hoteliers spend over Rs. 2 billion annually for direct overseas promotions, in addition to being the highest Tourism Development Levy (TDL) contributor from the sector. Additionally, there are online platforms which also contribute immensely to increasing arrivals.

“I reiterate that we cannot benchmark Sri Lanka with destinations such as Thailand and Malaysia as they drive volume tourism to reach 20 to 30 million tourists. Their strategies have to be different and Sri Lanka should not compare the same for this very reason,” said Shanthikumar who has taken a keen interest since he took office 3 years ago as THASL Chief to focus on macro initiatives which will help the accommodation sector at all levels to improve top-line revenues.

“I have said it many times, the accommodation sector is the most important sector in the industry.  Whilst the abundance of the natural attractions in the country has put Sri Lanka at the top of the tourism map, It is equally important for holiday travellers to be aware of the type of accommodation we have on offer. We are underestimating the value of the range of iconic hotels and resorts we have on offer. Islands such as Mauritius, Maldives etc have thrived on their accommodation and they are not half as good as what we have to offer our clients. Some locations are absolutely spectacular,” the THASL President said.

According to him, with an investment of over $ 20 billion in the entire hotel stock across the country and driving a workforce of 70% of the entire tourism sector, the risk is far too much to take if topline revenues do not see phenomenal growth in this financial year.

He said the impact of the many challenges faced due to the Easter Sunday attack in 2019 followed by the COVID pandemic in 2020 and 2021 and the political and economic crisis in 2022 seriously impacted the tourism sector more than the 30-year ethnic conflict which ended in 2009. 

“We must come out of this operational and financial mess as soon as possible,” said the THASL President who also thanked Sri Lanka Tourism Development Authority (SLTDA) Priantha Fernando and his team who understood the importance of increasing prices and working towards getting a better image for Sri Lanka rather than the island to be known as a cheap destination.

“We are well aware that Minister Harin Fernando and the SLTDA officials have been under tremendous pressure and criticism for supporting this initiative. We value and appreciate how they withstood all of these without losing focus on the overall objective,” added Shanthikumar.

As per the Gazette notification, the prices for corporate and free independent tourists (FIT), the MRR structure has been defined to accommodate different hotel categories: $ 100 for 5-star hotels, $ 75 for 4-star establishments, $ 50 for 3-star accommodations, $ 35 for 2-star hotels and $ 20 for one-star tourist hotels. The prices for airline crew rooms are; $ 75 for 5-star hotels, $ 55 for 4-star establishments, $ 40 for 3-star accommodations, 30 for 2-star hotels and $ 20 for one-star tourist hotels.

The Association of Inbound Tour Operators (SLAITO) insisted room rates should be based on supply and demand dynamics for a thriving tourism industry. (https://www.ft.lk/front-page/SLAITO-raises-red-flags-over-Govt-intervention-in-city-hotels-room-market-pricing/44-753115). It argued the move could impede the promotion of Colombo, adversely impact MICE tourism. SLAITO also claimed decision may be influenced by a select group of hoteliers and the SLTDA must bear full responsibility for any negative repercussions arising from MRR.

Three reputable audit companies will be appointed to oversee adherence to the Gazette notification. They will be responsible for conducting both general and spot audits. The Gazette also delineates penalties for non-compliance. In the event of a violation, the guilty party is required to remit the penalty fee to SLTDA within two weeks of receiving the violation report.

During the first 12 days of September, Sri Lanka received 46,308 tourists, propelling the cumulative year-to-date figure to an impressive 950,626. Sri Lanka Tourism has set an ambitious target of over 1.55 million arrivals and $ 3 billion in income for 2023.