THASL Chief stresses need for fair competitive market rate for city hotels

• Over supply of rooms and low occupancy trigger price war with rates dipping to low as $50 BB basis by some 5-Stars putting pressure on others
• Warns of absolute need to increase demand and pricing or country will lose foreign exchange, revenue and tax income
• Tourism authorities urged to roll out effective marketing campaign soon as possible
• Regrets Sri Lanka as a tourist destination not reaping full benefit following restoration of normalcy and revival of economy by President Wickremesinghe

The Hotels Association of Sri Lanka (THASL) President and Colombo City Tourist Hotels Association (CCTHA) former President M. Shanthikumar yesterday stressed the need for fair competitive market rates for city hotels amidst price wars and low occupancy.

“There is an excess supply in Colombo. The city has the highest inventory in the country amounting to over 7500 rooms. The Colombo hotel occupancy at present is below 30%,” revealed Shanthikumar.

The City’s accommodation inventory includes world renowned international brands, local chains, stand-alone hotels, luxury heritage properties, conference venues and other types of globally competitive accommodation ranging from 5 star to 1 star.

Additionally a further over 2000 rooms in the luxury category are due to come into operation by the end of 2024 in Colombo.

THASL Chief said the price wars have gone to unprecedented levels with reputed 5 star hotels selling below $ 50 including taxes and breakfast. “With rising costs and historically high inflation rates, these prices are absolutely unviable.  Star categories below 5 cannot withstand the pressure when 5 star accommodation is sold so cheap,”Shathikumar said.

“There is an absolute need to increase demand and pricing within Colombo by designing a strategic plan that will benefit all areas.  The Colombo city hotels will not be able to survive for too long with such pricing in the market. What is even more frightful is the huge amount of foreign exchange the country is losing as a result and the colossal revenue loss to hotels,” he said.

Shanthikumar warned that when Colombo with its high end inventory is selling at unviable, low prices, resort hotels out of Colombo are compelled to bring down their rate to maintain compatibility. “A fair competitive market rate would not only benefit its stakeholders, it would increase the country’s foreign exchange earnings which is undoubtedly the need of the hour. Other peripheral benefits like staff cadre monthly service charge above their salary, TDL income and tax income will see an immediate increase,” pointed out Shanthikumar.

“It is a fact that if pricing in Colombo remains so low as it is now, the perception of the entire destination is at risk as travellers will perceive Sri Lanka to be a cheap destination. This is in contradiction to the image President Wickremesinghe wants to achieve for Sri Lanka,” THASL Chief emphasised.

“We believe this must change and the Sri Lanka Tourism Promotion Bureau should immediately roll out a digital campaign which is the fastest way to recovery. Simultaneously, consideration must be given by the concerned authorities to stabilise pricing,” Shanthikumar added.

THASL Chief said it was unfortunate that the destination is not reaping the full benefit of the return to political and economic stability achieved within a short period after President Ranil Wickremesinghe took office at a time when the country was on the brink of a collapse.

“It is our belief that the tourism authorities should have immediately sent out a confident communication to overseas source markets conveying that Sri Lanka has returned to normalcy,” pointed out Shanthikumar.

According to him, the unprecedented negative publicity brought about by the International media during crisis years changed how Sri Lanka was perceived amongst its international audience.

“In short the absence of a country level positioning and aggressive consumer marketing campaign has resulted in slow demand led growth across the country,” he added.

Traditionally India and China are the key influencer markets for Colombo city hotels. Presently these two markets have not started their operations in full scale to Sri Lanka. Hence the pressure on occupancy and pricing is mounting. “We foresee this to continue for the next 2 years within Colombo,” THASL Chief predicted.

Year to date tourist arrivals crossed the half a million mark last week.