SLTDA firm on keeping minimum rates

Tuesday, 16 February 2016 00:59 - - {{hitsCtrl.values.hits}}

Emphasises minimum rate important to attract potential investors
Says will change policy if demand keeps on increasing
Gazette in the making to regulate luxury apartments

By Shehana Dain

The Sri Lanka Tourism Development Authority (SLTDA) has endorsed the minimum room rate, cementing its stance on a matter that has caused some friction within the industry with opposing views.

”There are two thoughts in the system of minimum rates. Minimum rates benefit the whole hotel industry. Especially in the scenario of protecting lower category star hotels to get a better rate. In contrast, minimum rates are not a key factor to reduce the occupancy rate in Colombo hotels and it adds value to the yield in order to assure the benefits of hotel industry employees. The potential investor assures the sustainability of the return due to the minimum rate,” SLTDA Director General Malraj B. Kiriella told the Daily FT.

However Kiriella emphasised that there could be a change of the system in future if the demand keeps on increasing because the regulators believe that the forces of supply and demand are the key indicators to determine the market rates in future.

The SLTDA stand comes amidst some dissent within certain sections of the tourism industry over the minimum room rate. At recent industry forum one of the core stakeholders of the country’s tourism industry opined that minimum rates for star-class Colombo city hotels was an unhealthy practice.

John Keels Holding Deputy Chairman Ajit Gunewardene voiced that it creates market distortions and is open to abuse.

However the Hotels Association in Sri Lanka (THASL) President Hiran Cooray said that the policy has helped city hoteliers attract more investments and needs to be continued for several more months to prevent a rate war.

SLTDA also clarified its position with regard to the glut of apartments coming up around Colombo. Director General remarked that a gazette is in the making to regulate the upcoming apartment hotels.

According to report compiled by an independent research firm star graded hotels will incur a loss up to $ 480 million with over 3000 luxury apartment units which will hit the market by 2018. Thus these units are expected to be used as investment assets subsequently been rented out for tourists.

Tourism could generate 350,00 new jobs by 2020 but skills gap a threat

According to a study conducted by the National Human Resources Development Council (NHRDC) of Sri Lanka involving experts in the industry and HR specialists, the tourism industry will need to have around 130,000 newly trained personnel by 2020 based on the 4 million tourist arrivals target.

The tourism industry overall based on arrival forecasts will add around 350,000 direct and indirect new jobs by 2020 according to the report. In Sri Lanka there are 98 registered training programs with 141 programs offered around Sri Lanka. DFT-1-33

According to the report 118 programs have no quality certification and only 23 are certified.

Many hotel groups also conduct in house training using internally developed programs, many of which are of high quality.

The Report says the industry will be better served if these courses are also registered and certified to allow accreditation.

According to NHRDC Chairman Dinesh Weerakkody around 197 new hotels with around 11,700 rooms catering to all levels will start their operations (2015- 2018 )that will immediately require newly trained personnel putting enormous pressure on the TVET sector.

The requirement of trained employees in the up-coming new hotels should be met by the Sri Lanka Institute of Tourism and Hotel Management (SLITHM) launching improved curriculum and training programs and increasing intake in consultation with the TVET sector.

The SLITHM curriculum also needs to be offered through other institutions and that would require the government to strengthen the institution. The large hotel groups would however manage their manpower requirements through their internally generated training programs.

According to the report the industry going forward needs to create a new employment value proposition to attract talented young people into the industry and in addition deliver the training and certification programs where there is a higher concentration of hotels without centering all their efforts in the Western Province.

The report says the proposed education voucher system will also help the industry to attract new talent.

According to Weerakkody the current capacity or intake into training and learning centers is only 8600 and that will have to increase significantly. Quality and delivery also needs to improve. According to the report there are several universities producing hospitality, tourism and events management graduates, but most of these programs are not current, the UGC should therefore consult the industry to determine their value to the industry and redo their programs.

The report also says depending on the type of tourists Sri Lanka hopes to attract in the future the current skill levels will have to move up to mirror the new customer value proposition