Sri Lanka to scrap minimum room rates for hotels

Sri Lanka will remove controversial minimum room rates imposed on hotels from May 2024, allowing competition to return to the industry, Tourism Minister Harin Fernando said.

During a press briefing in Colombo, Minister Fernando stated, “There is good news, we are taking out the minimum room rate from the 30th of this month. I think the market forces have to run. That’s what we believe in also, but there was a reason that this was. Even if we put the minimum room rate, Shangri-La and all sell for much higher rates – they go 180-200. With ITC coming they have lifted the benchmark. So it is up to the hotels also to do their own marketing and they also have to go out there, do their marketing, get their promotions done.”

He emphasized the shared responsibility between the tourism ministry and agencies in promoting the industry through marketing campaigns.

Other hoteliers echoed Minister Fernando’s sentiments. Angeline Ondaatjie, Chairperson of several Tangerine group hotels, expressed the need for competitive pricing, stating, “As a hotelier, I naturally want the highest price, but it is not possible to get the highest price from all properties at all locations just because the owner wanted it. People think that just increasing your price is a marketing tool. It is not. If you want to sell a hotel, it has to be competitive, within the region, within the country as well within the whole of South East Asia.”

Bobby Hansen from the Sri Lanka Association of Inbound Tour Operators emphasized the importance of market forces, especially for accommodating large groups that expect lower prices.

Priyantha Fernando, speaking on behalf of the agency, highlighted the success of the policy in increasing city hotels' incomes, with occupancy rates rising to 70-71% and a 33% increase in income generated in Colombo over the last six months.

The decision to remove minimum room rates reflects a shift towards a more competitive and dynamic hotel industry in Sri Lanka.