Hoteliers welcome Govt. measures to support tourism industry

• Renews appeal for debt restructuring, repeal of unfair and discriminatory Municipal taxes on hotel revenue

THASL President Sanath Ukwatte

The Hotels Association of Sri Lanka (THASL) in a statement yesterday welcomed the Government measures to support the tourism industry but renewed its appeal for debt restructuring and repeal of unfair and discriminatory Municipal taxes on revenue. 

Following is the full statement issued by THASL President Sanath Ukwatte.

THASL sincerely thanks and welcomes the Government’s decision to support THASL’s proposals and agreeing to extend the following for all hotels registered with the SLTDA:

1. Liquor licences on gratis basis for the year 2021;

2. Payment of electricity bills until the end of 2021; and

3. The tripartite agreement with the Ministry of Labour until end March 2021

We are grateful for the Government’s support to sustain the tourism industry at this critical juncture. 

We once again appeal to the Government to intervene in resolving the debt crisis the industry is facing due to COVID-19 travel disruptions through an effective debt restructuring program. 

THASL is concerned that failure to restructure nearly Rs. 350 billion in tourism-related debt will lead to the collapse of an already crippled tourism industry, placing the livelihoods of millions of Sri Lankans at stake.

THASL also urges the Government to abolish the unfair municipal taxes which we have been lobbying for over an extensive period of time.

Under the Municipal Councils Ordinance, Municipalities may introduce, at their discretion, duties on the licences of businesses operating in each municipality. A restriction was placed on Municipalities preventing them from imposing duties in excess of 1 % of the turnover of hotels. 

This measure was introduced in 1985 to support hotels from unfair taxation by Municipalities at a time where wide discretion allowed Municipalities to exorbitantly tax any business, including hotels, thereby crippling a young tourism industry. 

Unfortunately, a measure originally introduced to support hotels has only created a further stranglehold on our businesses. While major conglomerates and multibillion dollar businesses are taxed a mere Rs. 6,000 for a business licence by a Municipality, hotels are taxed 1% of their entire revenue, sometimes running into hundreds of millions of rupees, irrespective of whether they are loss making or not. 

This tax is on top of the Municipal rates and an additional fee for garbage collection which runs into Rs. 30 million a year for a city hotel. Hotels already paying tourism development levy of 1% on revenue to the SLTDA. This discriminatory taxation has placed an immense burden on a hotel industry that is crippled with twin crises of Easter Sunday and a global pandemic and we urge its repeal. 

COVID-19 has adversely impacted the tourism industry with nearly 25,000 people losing direct employment and millions of indirect stakeholders affected. The hotel industry is worth $ 10 billion and a majority of the people making a living from tourism are badly affected due to the pandemic. 

Hotel staff that had their basic salaries supplemented by service charges have faced crippling income reductions. Therefore, the support offered by the Government to the hotel industry which is the backbone of the tourism industry will help save vulnerable businesses and jobs. 

THASL’s over 240 registered hotel members has over 29,000 rooms countrywide. Our members comprise the largest to the smallest of hotels. They have immensely helped local communities and industries to prosper not only by creating new jobs but providing income opportunities to the smallest of vendors and service providers. 

Whether it is fruit, fish or meat suppliers, tuk tuk drivers, craftsmen or entertainers, cultural sites or temples, Sri Lanka’s hotels sustain an ecosystem intrinsically sustained by tourism. 

THASL also acknowledges and supports other registered and unregistered accommodation providers who contribute immensely to the industry and whom we are confident will benefit from the support extended by the Government. Unlike other industries, the unique feature of tourism is that every Sri Lankan has the ability to make a living off tourism income. 

We are grateful to the Government, especially the Minister of Tourism, Secretary to the Ministry of Tourism, the Director General of Tourism and the Chairperson of SLTDA for having regular dialogues with us, listening to the industry and acting quickly to support the industry.