THASL Chief expresses concern over SLAITO opposition to higher forex earning MRR

• Stresses Sri Lanka’s golden opportunity to reposition tourism via Minimum Room Rate must not be squandered
• Expresses confidence MRR will not impact tourist arrivals but enhance much needed higher foreign exchange earnings
• Warns selling 5 star double room per night at $ 60 net no longer acceptable
• Points to DMCs only accounting for 20% of city hotels bookings 
• Insists higher room rate means higher contribution to Govt., hotels and economy 

THASL President  M. Shanthikumar

“It is a pity that some members of Sri Lanka Association of Inbound Tour Operators (SLAITO) with vested interests are objecting to the implementation of the Minimum Room Rate (MMR) for the Colombo city tourist hotels,” charged Shanthikumar.

“Whilst the hoteliers endorse President Ranil Wickremesinghe’s vision for tourism and are working towards improving the present pricing structure in the city to reasonable levels through a MRR, we are surprised that SLAITO is trying to scuttle this move through a series of press articles voicing their objections. This is purely for the benefit of a few individuals,” THASL Chief alleged.

According to Shanthikumar, Sri Lanka has a golden opportunity to reposition the tourism industry under the Presidency of Ranil Wickramasinghe and the leadership of Tourism Minister Harin Fernando. “This opportunity shouldn’t be squandered,” THASL Chief said.

He recalled that President Wickremesinghe speaking at the recent Travel Agents Association of India (TAAI) annual convention held in Colombo said: “We faced bankruptcy in Sri Lanka and now are getting out of it and debt restructuring is taking place. We still have to remember that the balance of trade is not in our favour. So we have to ensure a positive balance of trade in time to come. One of the means of raising funds which is not debt-creating is tourism. So exploit it to the full. Use it. We are looking at new tourism. We have to go from 2.5 million to 5 million. Look at the upper end of the market. Why not have $ 500 to $ 1000 a night? We must learn from islands such as the Maldives, the smallest of the South Asian countries.........”

Shanthikumar said strong and effective travel agents have given Sri Lanka the confidence that the country can be marketed aggressively even if a MRR is in place and they have assured they will target a different segment of the market, especially from destinations such as India. “We must commend such agents and their confidence to do the best for the destination,” THASL Chief said.

According to him, the immediate survival and higher revenue generation is the need of the hour. Tourism Minister Harin Fernando has assured that the global promotional campaign by SLTPB will be rolled out towards the last quarter and the President Wickremesinghe has proposed to roll out the  new tourism plan later this year. These efforts will yield positive results by 2024 early 2025.  

THASL was responding SLAITO’s concerns as published yesterday (https://www.ft.lk/front-page/SLAITO-claims-short-sighted-moves-by-cartel-of-hoteliers-threaten-to-disrupt-recovery-in-tourism-industry/44-751264) over MRR. It alleged 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,” SLAITO alleged. 

In a statement it claimed 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. It warned that the Indian market, particularly the Meetings, Incentives, Conferences, and Exhibitions (MICE) sector, will be impacted most by MRR.

However THAS is confident that a MRR will not impact tourist arrivals to the destination but have a huge benefit in terms of increased foreign exchange earnings.  “This is tried and tested,” emphasised Shanthikumar and cited past figures to prove THASL’s argument.

When MRR was implemented in late 2009; 

a) 2009 to 2010 tourist arrivals grew by 46%

b) 2010 to 2011 tourist arrivals grew by a further 30%

The India market performance; 

a) 2009 to 2010 Indian arrivals grew by  50%

b) 2010 to 2011 Indian arrivals grew by 42%

By end 2018, Sri Lanka doubled the above numbers in terms of tourist arrivals and the Indian market.

“Proof of the pudding is in the eating they say. So on what basis is SLAITO basing their arguments?,” queried THASL Chief adding that tour operators in 2009 too objected heavily against the MRR. However the eventual growth in tourist arrivals proved SLAITO wrong.

Shanthikumar said with Colombo having the highest standard of hotel products in the country, the largest inventory of quality hotel rooms for a single region, selling cheap is sending the wrong signal to the world. In terms of investment, the international brands, local conglomerates, stand-alone hoteliers etc. have invested heavily in building, operating this inventory over the years. 

“Hence, selling a 5 star hotel room at $ 60 net for a double room per night including a 31% tax is no longer acceptable. Higher room rate means higher contribution to the Government and hotels. It is a way forward for Sri Lanka to attract a better profile of clientele and increase the foreign exchange earnings, rather than target the lowest profile of a market,” emphasised Shanthikumar.

He also said that hoteliers invest heavily in overseas promotions annually, apart from being the highest TDL payer and contributor to Government coffers by way of taxes and levies. 

THASL Chief argued that SLAITO members are not the only source of business channel to the destination, even though they try hard to establish so.  There are many other ways in which tourists arrive in Sri Lanka and book hotel rooms. “In Colombo the DMC business contributes only 20% and these agents have never ever been able to increase this contribution to the city for the past several years, even when the price is at its lowest,” pointed out Shanthikumar.

The online platforms such as booking.com, Agoda, Expedia etc and direct booking websites of hotels are also key drivers of tourism business, THASL Chief said adding “This is the global trend and we cannot run away from it. It is time we recognise their contribution.”

Shanthikumar said THASL is baffled by SLAITO’s apparent stand which goes against the vision of President Wickremesinghe to position Sri Lanka to the more discerning traveller. THASL also believes tourism can be a foreign exchange power house in the coming years and is willing to aggressively work towards it with dynamic out of the box thinking. 

“We have to think differently and adopt different strategies to get there. Hoteliers are willing to do so, and the MRR for Colombo is just one step forward,” stressed Shanthikumar.