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Room rates of many Sri Lanka hotels
are very high. Some as much as US$ 600 to 800. Had there been
reasonable rates there would have been a boost in tourist arrivals, said
Faizer Mustapha, Deputy Minister of Investment Promotion.
Addressing a media briefing in Colombo on July 10 on the signing of an agreement to construct a mixed development project undertaken by John Keells Holdings Ltd., Mustapha said that hoteliers should be made aware of this situation.
“A mistake that was committed in the tourism industry is that after the 30-year conflict, we increased the room rates. Today, tourists think twice before coming to Sri Lanka. They’ll wonder why they can’t go to Thailand, where they can get a room for US$ 60. In Sri Lanka, some room rates are US$ 640.
“Today, one of the complaints from tourists is that our room rates are very high. Had we provided rooms for US$ 60 to 70, we could have benefited by other means. When tourists come from Russia, they spend a lot. So are Chinese tourists. How we lost that market is, at the inception, we had hiked our room rates to around 600 to 800 US dollars,” said Mustapha.
It is something that Sri Lankan hoteliers should be made aware of. Of course the number of arrivals had increased but increase would have boosted to 100 per cent had we been more realistic with our room rates, observed Mustapha. “We could have kept the rates low until the tourists who came here took the message back,” he noted.
When informed that it was this government that brought in the new room rates, Minister of Investment Promotion, Lakshman Yapa Abeywardena said the ruling was on the minimum room rate. “It was a time where certain agents bargained and brought the rates down to about 30 – 40 US dollars,” he pointed out.
Faizer Mustapha, Deputy Minister, elaborating on the issue said that Minister Yapa was not claiming that the minimum rate was bad. “The minimum rate was brought in during my tenure because some hoteliers were selling rooms for very low rates. Today hoteliers like Shangri La and John Keells are investing in Colombo city hotels because if there is 30 to 40 per cent occupancy, the hotels could be operated. Earlier, they were not even getting a proper service charge,” he observed.
He said that what Minister Yapa had said was that some hoteliers were charging 600 – 800 dollars to grab from the room rate, which was short-sighted. The hoteliers have to be cautious not to overcharge the tourists to safeguard the industry, said Mustapha.
He also said that some hoteliers were putting up boutique hotels spending millions catering to the niche market. So the upper ceiling has to be a voluntary mechanism. The government simply could not bring an upper ceiling saying one cannot charge more than so much.
The people in the industry should adhere to self regulatory mechanisms not to overcharge and send the tourists to Thailand and other places when Sri Lanka can be a competitive nation, said deputy Minister Mustapha and pointed out that some Colombo hotels were charging only about 50 dollars at that time.
“How could a smaller hotel charge a decent rate in that scenario? The minimum rate was introduced to safeguard the industry and that was forward thinking,” said Mustapha.
Minister Yapa making his observations said that in places like Pasikudah, hotels have been built with numerous facilities and exclusive features. There the government could not impose ceilings on the upper rates, and nowhere in the world had such measures been adopted. However, the hoteliers should come up with a mechanism of their own to regulate the charging cycle, said the Minister.
“We do have two major markets to develop, China and Russia. The two countries that have surged forward in those lines are Thailand and Malaysia. The reason is mainly the room rate. This is a subject that should be broadly discussed,” added minister Yapa.
At the media briefing, it was also mentioned that according to the minister, 4,500 rooms are needed for the Commonwealth Heads of Government Meeting (CHOGM) in November. This means that hotel rooms from Negombo to Hambantota would be full. In the Cinnamon Grand Hotel, 500 rooms have been reserved for the heads of governments and other prominent people. At the CHOGM held in Tobago in 2009, that county had got investments up to US$ 5 billion. When it was held in Australia, the investment quantum had been US$ 10 billion. In Sri Lanka for the period 2012 and 2013, the total investments amounted to only US$ 1.2 billion. This year, apart from the CHOGM, our target is US$ 2 billion, said the minister.
Commenting on the Australian national James Packer’s involvement in JKH’s 850-million-doller investment project, the minister said that Packer would have operated casinos in Macau or any other place, but in Sri Lanka what is taking place is a mixed development project.
When asked whether there would be a casino in the new project, minister Yapa said that there would be no casinos in Sri Lanka but Betting and Gaming. Even for Betting and Gaming there is no licence. In 1980, the Colombo Municipal Council had issued a casino permit to one Dahanayake.
Asked whether Packer could operate a casino in Sri Lanka, Yapa replied, “I don’t know”. However, the minister admitted that in the event Packer makes use of a casino already being operated in collaboration with a local entity, there was nothing the govt could to about it.
Addressing a media briefing in Colombo on July 10 on the signing of an agreement to construct a mixed development project undertaken by John Keells Holdings Ltd., Mustapha said that hoteliers should be made aware of this situation.
“A mistake that was committed in the tourism industry is that after the 30-year conflict, we increased the room rates. Today, tourists think twice before coming to Sri Lanka. They’ll wonder why they can’t go to Thailand, where they can get a room for US$ 60. In Sri Lanka, some room rates are US$ 640.
“Today, one of the complaints from tourists is that our room rates are very high. Had we provided rooms for US$ 60 to 70, we could have benefited by other means. When tourists come from Russia, they spend a lot. So are Chinese tourists. How we lost that market is, at the inception, we had hiked our room rates to around 600 to 800 US dollars,” said Mustapha.
It is something that Sri Lankan hoteliers should be made aware of. Of course the number of arrivals had increased but increase would have boosted to 100 per cent had we been more realistic with our room rates, observed Mustapha. “We could have kept the rates low until the tourists who came here took the message back,” he noted.
When informed that it was this government that brought in the new room rates, Minister of Investment Promotion, Lakshman Yapa Abeywardena said the ruling was on the minimum room rate. “It was a time where certain agents bargained and brought the rates down to about 30 – 40 US dollars,” he pointed out.
Faizer Mustapha, Deputy Minister, elaborating on the issue said that Minister Yapa was not claiming that the minimum rate was bad. “The minimum rate was brought in during my tenure because some hoteliers were selling rooms for very low rates. Today hoteliers like Shangri La and John Keells are investing in Colombo city hotels because if there is 30 to 40 per cent occupancy, the hotels could be operated. Earlier, they were not even getting a proper service charge,” he observed.
He said that what Minister Yapa had said was that some hoteliers were charging 600 – 800 dollars to grab from the room rate, which was short-sighted. The hoteliers have to be cautious not to overcharge the tourists to safeguard the industry, said Mustapha.
He also said that some hoteliers were putting up boutique hotels spending millions catering to the niche market. So the upper ceiling has to be a voluntary mechanism. The government simply could not bring an upper ceiling saying one cannot charge more than so much.
The people in the industry should adhere to self regulatory mechanisms not to overcharge and send the tourists to Thailand and other places when Sri Lanka can be a competitive nation, said deputy Minister Mustapha and pointed out that some Colombo hotels were charging only about 50 dollars at that time.
“How could a smaller hotel charge a decent rate in that scenario? The minimum rate was introduced to safeguard the industry and that was forward thinking,” said Mustapha.
Minister Yapa making his observations said that in places like Pasikudah, hotels have been built with numerous facilities and exclusive features. There the government could not impose ceilings on the upper rates, and nowhere in the world had such measures been adopted. However, the hoteliers should come up with a mechanism of their own to regulate the charging cycle, said the Minister.
“We do have two major markets to develop, China and Russia. The two countries that have surged forward in those lines are Thailand and Malaysia. The reason is mainly the room rate. This is a subject that should be broadly discussed,” added minister Yapa.
At the media briefing, it was also mentioned that according to the minister, 4,500 rooms are needed for the Commonwealth Heads of Government Meeting (CHOGM) in November. This means that hotel rooms from Negombo to Hambantota would be full. In the Cinnamon Grand Hotel, 500 rooms have been reserved for the heads of governments and other prominent people. At the CHOGM held in Tobago in 2009, that county had got investments up to US$ 5 billion. When it was held in Australia, the investment quantum had been US$ 10 billion. In Sri Lanka for the period 2012 and 2013, the total investments amounted to only US$ 1.2 billion. This year, apart from the CHOGM, our target is US$ 2 billion, said the minister.
Commenting on the Australian national James Packer’s involvement in JKH’s 850-million-doller investment project, the minister said that Packer would have operated casinos in Macau or any other place, but in Sri Lanka what is taking place is a mixed development project.
When asked whether there would be a casino in the new project, minister Yapa said that there would be no casinos in Sri Lanka but Betting and Gaming. Even for Betting and Gaming there is no licence. In 1980, the Colombo Municipal Council had issued a casino permit to one Dahanayake.
Asked whether Packer could operate a casino in Sri Lanka, Yapa replied, “I don’t know”. However, the minister admitted that in the event Packer makes use of a casino already being operated in collaboration with a local entity, there was nothing the govt could to about it.
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