Tuesday, 16 July 2013 01:46
Says Colombo rates decided by Govt. imposed guidelines in 2009
High charges due to operational costs but still not as expensive as alleged by Minister
By Cheranka Mendis
Dismissing recent charges of overpriced rooms, a tourism industry expert yesterday insisted that Sri Lankan hotels are maintaining costs under the minimum rates stipulated by the Government in 2009.
Responding to the statement made by Investment Promotion Minister Lakshman Yapa Abeywardena last week on Sri Lankan hotels overcharging on accommodation in an attempt to “cash in” on the rising tourist numbers, City Hotels Association President M. Shanthikumar noted that the city hoteliers are maintaining a just price in preparation for the anticipated competition, even with high cost of operations.
Reports noted Minister Abeywardena stating that some hotels had increased room rates tenfold since the end of war without improving its product and services. Speaking to the Daily FT, Shanthikumar countered this point where city hotels are concerned, pointing out they are adhering to the minimum rate stipulated by the Government in 2009 under the direction of President Mahinda Rajapaksa.
Under this, five star rooms go at US$ 125 plus taxes (US$ 152), four stars at US$ 95 plus tax (US$ 121), three stars at US$ 75 (US$ 95), two stars at US$ 55 (US$ 65). “These are reasonable amounts for the city of Colombo,” Shanthikumar said, adding: “Travellers have a choice in deciding which category would suit their budget and pick accommodation accordingly.”
“There is absolutely no overpricing where the city is concerned. All prices are affordable.” He noted that the minimum rates were implemented in 2009 which was studied at length by all city hoteliers and agreed upon. “The then Deputy Tourism Minister Faizer Mustapha worked with the city hoteliers wholeheartedly in implementing the minimum rates.”
Shanthikumar added that the minimum rates help the country to a great extent by enabling city hoteliers to carry on their businesses successfully, and most importantly, allows staff to get a reasonable monthly service charge.
Undercutting of room rate charges among star hotels in Colombo adversely affected smaller hotels and forced the Government to enforce a compulsory minimum room-rate structure from 1 November 2009 with stiff penalties for offenders
“There are interested parties who are trying to project negative publicity for their benefit. Those parties should understand that the cost of operations is extremely high here compared to those of the region, especially in electricity and other taxes.” Sri Lankan hotels are charged a super tariff for electricity compared to other industries in the country, and is notably, the highest in the region. The super tariff increased by 25-30% from the previous tariff in April.
“It is easy for someone to compare hotel rates of the region with ours but they should also, at the same time, look at the cost of operations.”
Shanthikumar assured that even the suites are not priced as high as US$ 600, as the Minister says. “Suites sell at 25%-30% more than the room rate. With taxes, this would be close to US$ 200. I do not believe rates are as high as US$ 600 outside Colombo as well.”
He also stressed on the fact that most city hotels are currently under refurbishment, spending colossal amounts of money. These rooms will be operational by 2014/2015. “Keeping up to the anticipated competition level is a difficult task, especially to build a product up to international levels. A lot of money is being spent in preparation for this.”
Currently, Sri Lanka has 20,000 rooms (inclusive of informal accommodation) while the number of rooms in Colombo is 4,000 (star category and boutique hotels). Five star hotels in the city include Hilton, Cinnamon Grand, Cinnamon Lakeside, Kingsbury, Taj Samudra and Galadari. Ramada and the Galle Face Hotel fall under the four star category.