SLAITO claims short-sighted moves by cartel of hoteliers threaten to disrupt recovery in tourism industry

• Asserts if MRR move implemented it will result in Sri Lanka being an out-pricing destination 
• Suggests Colombo hotels consider self-regulation to maintain free-market economy, without Govt. intervention

Sri Lanka Association of Inbound Tour Operators (SLAITO) claimed in a surprising turn of events, just as the tourism industry was on the path to recovery after four years of consecutive crises, a cartel of hoteliers is now endangering its progress. 

 “It is indeed sad that this time the blow to the industry will come from within, which is in our control to avert, as opposed to the previous four years where the circumstances were beyond the control of the stakeholders. The Hotels Association together with the City Hoteliers Association are insisting that a minimum rate be imposed, for city hotels,” they alleged.

A statement issued by SLAITO showed that a study done, of rates, in competing destinations in the region, shows that the rates being proposed are more than 130% above the average market rates, offered by hotels in the competing destinations. “If implemented, it will be detrimental to the tourism industry and the Colombo hotels themselves that are already struggling. Therefore it is abundantly clear, that this move will result in destination Sri Lanka, out-pricing itself,” they pointed out.

They noted that the Indian market, particularly the Meetings, Incentives, Conferences, and Exhibitions (MICE) sector, has been generating substantial foreign exchange for Sri Lanka, thanks to the efforts of Sri Lanka Tourism, led by Tourism Minister Harin Fernando. “Unfortunately, the introduction of exorbitantly high minimum rates could severely impact the MICE industry in India, hindering the much-needed foreign exchange inflow for the country’s economy,” they said.

SLAITO suggested that the struggling Colombo hotels should consider self-regulation to maintain a free-market economy, instead of seeking Government intervention to control prices, as the move might discourage new Foreign Direct Investments (FDIs) in the hotel sector.

They also claimed that the cartel of hoteliers is also pushing for a “spot rate” issued by the Central Bank of Sri Lanka (CBSL) to be used for converting hotel invoices when payment is made by Destination Management Companies (DMCs). However, this Spot Rate is significantly higher than the rate used by commercial banks for converting inward remittances of DMCs into the local currency. “This unreasonable demand could potentially strain the relationship between hotels and DMCs, leading to a loss of business for hotels that insist on the Spot Rate for currency conversion,” they explained.

SLAITO reiterated that it is crucial to recognise that all stakeholders have suffered during the past four years, and the struggles of hotels with their investments and loans are understandable. However, resorting to such short-sighted tactics will only worsen the situation for everyone involved, especially the Micro and Small and Medium-sized Enterprise (SME) sector. 

“With the country’s situation being stable and bookings for the upcoming winter season looking promising, the natural course of the free market economy would lead to an increase in hotel rates due to high demand. The hotels association’s insistence on stifling this natural process might prove to be counterproductive and detrimental to the industry’s overall recovery,” they added.