Tourism takes thorny issues to Basil

Tourism leaders are praying for an early and effective resolution of several thorny issues which have of late cast a shadow on an otherwise shining industry.

Last week following a request for a meeting, Economic Development Minister Basil Rajapaksa met officials of the Tourist Hotels Association (THASL), Inbound Tour Operators (SLAITO) and City Hotels Association where several issues concerning taxation, electricity tariff and minimum room rates for resorts came up for discussion.

Sources said Minister Rajapaksa was attentive and responsive to the issues raised whilst the meeting was described as “very positive.”

Whilst the Minister had given necessary instructions for the resolution of some of the issues, the industry is now awaiting 2011’s first scheduled meeting of the Tourism Cluster under the National Council for Economic Development (NCED) on Thursday chaired by Ministry Secretary Dr. P.B. Jayasundera who is also Treasury Secretary.

Literally electrocuted by high power tariff recently, the industry got another jolt with the sudden imposition of 2% Nation Building Tax (NBT) on turnover of one to three star hotels from 1 January. Previously as per Budget 2011 presentation these smaller hotels were exempted whilst only 4 and 5 star hotels had to pay.  Issues concerning Provincial Council Tax too had been taken up with the industry requesting for rationalisation or simplification of tax regime on tourism sector. A deferment of the minimum room rate on resort hotels was another suggestion.

The other is the high electricity tariff (up by 100%) which remains high despite minor revisions. Sources said that certain city hotels will see their electricity bill increase as high as Rs. 300 million per annum as a result. The industry has been repeatedly urging the Government not to single out tourism but classify it with the rest of the industries with the relevant tariff slapped.

Sri Lanka last year achieved its highest ever tourist arrivals of 650,000, up by 46% from 2009 whilst the target is to surpass the 700,000 arrivals mark this year.

Hotel occupancy drops to 70% in January from high 80% + in Dec.

By Cheranka Mendis

Sri Lanka’s tourism industry is off to a weaker start this year in comparison to a busy Christmas.

Occupancy rates of Colombo city hotels have gone down to 60 per cent inclusive of the pre bookings, whereas in December the rate was around 80-85 per cent.



President of the City Hotels Association M. Shanthikumar speaking to Daily FT claimed that generally the occupancy rate was 70 per cent in January, which low in comparison to a busy December but higher when compared with January last year.

 “However, we do not expect the same to continue in the next few months. In February, especially with the World Cup, we expect more demand and that occupancy rates will go up,” Shanthikumar said.

Presently Sri Lanka has 4,000 hotel rooms including small scale boutique hotels with an additional 16,000 registered as classified and 5,000 as unclassified.

Tourist Hotels Association of Sri Lanka President Anura Lokuhetty also stated that certain hotels down south were not doing well this month, quoting rain as the main troublemaker.

“The Western European countries have had bad weather conditions and due to that many of the charters have been cancelled or postponed. Down south hotels are not doing too well right now,” Lokuhetty said.

“November to late March/early April is the tourism season from European countries. However, the bad winters at the airport also played a role in reducing numbers.”

However, with the rate increment the hotels would fare well in revenue as they did in 2010 and have the option of aggressively marketing themselves as they are no longer a cheap destination. Their fight is now with other leading tourist destination countries and because of this, the standards of the hospitality sector will rise to present a better challenge.

He was confident that with World Cup fever kicking in, the country would do well with arrivals moving towards an upward trend and occupancy rates being full.

Sri Lanka Tourism anticipates around 75,000 tourists during February for the matches that will be played in Hambantota, Colombo and Kandy.