Cheap rates have cost foreign exchange:

City hotel room rates up from Nov. 1 - Minister Mustapha

by Shirajiv SIRIMANE

Sri Lanka has been placed with the 'cheap' label in numerous areas such as labour, transport and other work sectors and due to short term gains by a few, City Hotels too has now become the cheapest in the region. While Sri Lanka sells a five-star room in Colombo for around US $ 40, New Delhi markets a three star room for US $ 50. Maldives cheapest room available is in the excess of US $ 60 and some rooms go up to over US $ 500 in the resorts.

The main reason for Sri Lanka selling City hotels was not the war, nor fewer tourists, but unfair competition and under cutting. Today too one could book a four-Star hotel for US 40 and this is not only lowers the countries image but also deprives foreign exchange to the country.

"Enough is enough and this undercutting has to stop and this is why the government decided to intervene," said Tourism Development Minister and Deputy Minister of Tourism, Faiszer Mustapha. "With effect from November 1 a new gazette notification would be issued so that specified room and meal rates would be spelled out," he said.

From November 1, a five-Star hotel room would be sold at US $ 75, four-star at US $ 60 and at three star at 45 excluding appropriate taxes in the City limits of Colombo and Mount Lavinia area.

Minister stressed that the government is not forcing their way in but purely intervening on the requests of the industry.

"By offering a room at a low price it deprives the country of foreign exchange and employees do not get a good service charge," he said.

"In addition, the country is projected as a low selling destination resulting in hotels dropping their standards. When five and four-star hotels start selling hotels at 40 dollars the small city hotels dominated by the Small and Medium sector faces severe hardships," he pointed out.

He said that tough laws would be introduced to check if hotels are flouting this rule. The Ministry would go to the extent of sending decoys to check. If a hotel violates the price control order, first a warning letter would be issued and if the hotel keeps on undercutting a fine of US$ 1000 plus would be levelled against them.

"We are sure this scheme will work as 90 per cent of the hotels are in favour of a check and balance system of this nature," he said.

He added that 42 per cent of tourists to City hotels are businessmen and they are more than willing to pay around US $ 75 per day for their stay in Colombo. Mustapha also said that tourism is now on an upward trend with arrivals increasing by over 40 per cent in the last four months against the previous year.

This is as a result of peace and we expect a better winter season this year, he predicted. Chairman Hotel Developer's Owning Company of Colombo Hotel, Nawaz Rajabdeen said that they welcome this move as it is needed to maintain high hotel standards.

"This is something that should have been introduced much earlier," he said.

Rajabdeen said that with low rates, revenue to hotels drop and then they are forced to lower the standards resulting in a quality drop. With high revenue we can offer more services and the employees too would be benefited, he said. An official of the newly refurbished Cinnamon Lakeside former TransAsia said that regulation for minimum room rates was a step taken in the right direction at the right time.

We have invested heavily on the hotel and a minimum room rate is a guarantee for our return on investment, he said.

Other hoteliers too endorsed this sentiment noting that tourism is on a upward trend and guaranteed room rates would guarantee the City hoteliers and their employees better times in the future.