SLTDA awaits final Court verdict on minimum room rate suspension

• SLTDA Chief Priantha Fernando says termination of MRR by end-May still undecided; awaiting legal advice from Attorney General

By Charumini de Silva

Sri Lanka Tourism Development Authority (SLTDA) confirmed yesterday that it is awaiting the final verdict from the Court of Appeal regarding the implementation of the Minimum Room Rate (MRR), which has been temporarily suspended. 

“We have sought legal advice from the Attorney General regarding the issuance of an official statement on the temporary suspension of the MRR,” SLTDA Chairman Priantha Fernando told the Daily FT.

On 21 May, the Court of Appeal issued interim orders in cases CA Writ 691/23 and CA Writ 695/23, suspending the enforcement of the MRR imposed on corporate and free independent tourist hotel rooms within the Colombo Municipal Council area, as per Extraordinary Gazette No. 2349/02 dated 11 September 2023. The interim orders mean that the MRR will not be in effect until a final determination is made in the case.

Fernando noted that a final decision on the MRR, which was initially set to be terminated by the end of this month, is still pending. 

“The termination of the MRR is still under review and the continuation of it would be dependent on the legal advice from the Attorney General and the final verdict from the Court of Appeal,” he added.

The petitioners, including the Sri Lanka Association of Inbound Tour Operators (SLAITO), the Association of Small and Medium Enterprises in Tourism (ASMET), and the Sri Lanka Association of Professional Conference, Exhibition & Event Organisers (SLAPCEO), along with intervening petitioner Fairview Hotel argued that the MRR was implemented without sufficient consultation with key stakeholders in the tourism industry. 

They contended that the SLTDA failed to conduct a comprehensive study before enforcing the MRR, leading to a rate that lacked a rational basis.

Critics within the industry claimed that the MRR would disproportionately benefit certain hotel categories while negatively impacting the broader tourism sector. 

The suspended notice had set the MRR at $ 100 for five-star hotels, $ 75 for four-star hotels, $ 50 for three-star hotels, $ 35 for two-star hotels, and $ 20 for one-star hotels. 

This room rate structure faced substantial criticism from stakeholders who believed it was “unfair and detrimental” to the industry. The court’s suspension of the MRR reflects ongoing concerns and disputes within the tourism industry regarding the fairness and impact of the rate structure.

City hoteliers attributed the sharp rise partly to the introduction of MRR since October last year by the Government. 

From a low of $ 137 million in October last year, monthly earnings from tourism rose to a record $ 346 million in February. Sri Lanka is inches away from reaching the 900,000 mark in tourist arrivals by the end of the month, which was regarded as significant since they achieved a similar feat only in May last year and in October in 2023.

Earnings from tourism rose by 92% to $ 1.25 billion in the first four months of 2024.