ECONOMYNEXT – Sri Lanka’s meetings , incentive travel, conference and exhibition (MICE) market is taking hit from the price controls on hotel rooms in the capital Colombo, industry officials said.
Within the Colombo area, the floor rates have been set where below 3-star rating are to charge 50 dollars upwards, 3-star hotels are to charge 60 dollars upwards, 4 star establishments are to charge 75 dollars upwards, and 5 star hotels are to charge 100 dollars upwards, from October 01.
“Certain MICE events would not be excluded from the minimum room rate, particularly for customers who are booking for more than 250 people,” Sri Lanka Association of Professional Conference, Exhibition & Event Organisers President Imran Hassan said.
“When MICE groups or wedding or event groups come in they usually negotiate with hoteliers when they do their buyouts. They never buy at the full rates,” said Hassan.
“Big business events come to Colombo since it is Colombo that has the facilities, they will never choose a location outside of Colombo, like Sigiriya and Galle.”
Colombo is the only city within the island which has the facilities to host large scale meetings, conventions, exhibitions and conferences for MICE tourists who fly in for business.
“When the volume is high, the person who’s paying will have to pay more if the rate goes up,” Nalin Jayasundara, Managing Director of Aitken Spence Travels said.
“Now, if you take Thailand, Malaysia, Vietnam, UAE, Dubai, even a place like Delhi, that is considered to be quite expensive, we have done a comparison for October 10.
“Sri Lanka with this minimum room rate will become more expensive than all the other destinations.”
“Not only the local hotels in those countries, even the branded hotels are cheaper compared to some of the hotels in Colombo. So, what we are saying is, we are outpricing ourselves.”
India, which is considered a “last minute market” is highly price sensitive and is currently the largest MICE business generating market for Sri Lanka, officials say.
“If you take the Indian market, they don’t book six months ahead,” Jayasundara said.
“India generates the largest volume of MICE business to Colombo. That’s a last minute market. When they see these rates in Colombo, they are not going to be choosing Colombo, hereon.”
Indians also make up the largest in-bound group of travellers to Sri Lanka, and individual travellers are observed to generally enjoy the novelty of staying in the nation’s commercial capital, for at least one night on their travels.
“The greater risk is that the country will lose out,” Janice Ekalaranasinghe, Vice president of SLAPCEO, when thinking of the domino effect the price floor may have on other non-MICE tourists.
“And if business goes out of Colombo, at least the country will benefit. The greater risk is that the country loses out, in the long run.”
Sri Lanka Tourism Development Authority (SLTDA) has backed minimum room rates saying charges within the city hotels at 65 US dollars with bed and breakfast were “ridiculously low”.
The quality of hotels, service levels and location may vary. (Colombo/Oct06/2023)