Sri Lanka hotel room price controls not removed: Minister

ECONOMYNEXT – Sri Lanka’s price floor on graded hotels has not yet been removed, tourism Minister John Amaratunga said amid reports that the price controls had been lifted.

"I have not removed it. The regulation is still in place," Amaratunga said Friday.

State-run Daily News reported Sri Lanka Tourism Authority Chairman Kavan Ratnayake as saying that the minimum room rates would be removed to allow market forces to decide room rates in Colombo.

The removal was temporary and would be re-activated if necessary, he was quoted as saying.

The minimum rate for 5-star hotels in 125 US dollars, while the rate is 95 US dollars for 4-star hotels and 75 US dollars for 3-star hotels.

Two and one star hotels also have minimum rates. However, a guest has to pay more, as indirect taxes are added to the minimum price.

The price controls were brought during the Rajapaksa regime reportedly following pressure from a politically powerful special interests lobby led by four-star hotel owners in Colombo, according to those familiar with the matter.

Since 2015, authorities have said controls would be abolished, culminating with an official communique in 2016 which said that they would be removed by March 2017.

However, on each occasion, the lobby had persuaded authorities to keep the minimum room rate.

Minister Amaratunga had last said that the March 2017 deadline has been delayed by 2 years.





Some of the bigger hotel chains are in favour of removing the price controls.

Some industry analysts say removing the price control would make Colombo a more attractive destination for the (Meetings, Incentives, Conventions and Exhibitions) competing with East Asian destinations like Kuala Lumpur.

Lifting the price controls will also allow hotels to flexibly price rooms especially in the off-season and respond to market forces and bring more tourists to Sri Lanka, raising occupancy.

Tourists on average spend around 170 dollars a day in the country and the price control lobby by robbing the freedom of other hotels to price may be hurting the entire country by trying to get 10 or 15 dollars extra for their rooms, critics say.

Tourists who feel Colombo is overpriced compared to other cities have the option of cutting their stay in the capital to the minimum and going to another city quickly, staying in alternative accommodation not regulated by the Tourism Authority or going to East Asia where there are no price controls.

"The existing regulation is working, and there’s nothing to say that it requires removal," Amaratunga said Friday.

However, he said that the government is negotiating with airlines and hotels to offer off-season budget packages for potential tourists. (Colombo/Aug17/2018)

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