Sri Lanka to abolish hotel minimum rates by next year

July 29, 2016 (LBO) – Sri Lanka’s Tourism Development ministry has decided to abolish the minimum room rates imposed on city hotels with effect from 31st March 2017.

This decision has been taken by the Tourism Development Minister John Amaratunga based on a recommendation of the Tourism Advisory Council which comprises of key players in the hotel and travel trade. The Council was of the view it was time to do away with the minimum rates as it has “now served its purpose,” the ministry said in a statement. Convenor of the Tourism Advisory Council, Felix Rodrigo said the Council had arrived at a unanimous decision to recommend to the Minister to abolish the minimum room rates as soon as possible. The Tourism Advisory Council was appointed by Minister John Amaratunga to advise him on issues facing the tourism industry and is chaired by business tycoon Harry Jayawardena.

The Gazetted minimum rates are applicable to all star class hotels ranging from one to five stars in the Colombo city limits. Minister Amaratunga considering the forward contracts already entered into by many hotels decided to abolish the minimum rates with the end of the next winter season. “We need to respect the contracts already entered into for the coming season which is why it will be abolished from end March 2017,” Minister Amaratunga said. “Almost all the hotels have been calling for the abolition of the minimum room rates and to allow market forces to decide prices.” Amaratunga says by sticking to the minimum rates we have been pricing ourselves out of the lucrative MICE market and losing out to our regional competitors. “As a result we have been uncompetitive in the MICE market.” Minister said. The minimum room rates were imposed during the height of the war to prevent hotels from undercutting each other and causing a price war. With the end of the war and the influx of tourists the rates have been seen as a stumbling block to making Colombo an attractive destination for tourists. “With the abolition of the minimum rate regime hotels are free to charge what they want,” Minister said. “They can charge 50 dollars or 500 dollars depending on the quality of the product. The market will decide the prices and as a result tourists will get value for money.”