- Says MRR was brought in until the market stabilised
- Admits after MRR Colombo hotels occupancy dipped by 16%
- However, he says the move helped increase revenue by 25%
Tourism Minister Harin Fernando this week signaled that the recently reintroduced Minimum Room Rate (MRR) for Colombo city hotels will not remain for long, and the industry is expected to operate based on market forces.
Acknowledging that President Ranil Wickremesinghe wants the MRR removed, Fernando asserted that the policy was brought in only until the market is settled, and there were no firm plans for it to continue for a long time.
Addressing the parliament this week, Fernando justified the move to bring in the MRR by pointing out that the rationale behind it was to allow the hotel sector some breathing space in managing expenses.
“We had a serious problem in retaining staff, and we had to keep the service charge. The moratorium was coming to an end and the hotels had to start paying their loans. So these were the real factors. We listened to the hotels association and increased it (MRR). Not because we wanted it,” he said.
Fernando pointed out that since the MRR went into effect on October 1, revenues have increased by 25 percent. However, he admitted that occupancy in the Colombo city hotels has contracted by 16 percent within the same period. “So there was a give and take there,” he said.
The Minister stressed that Sri Lanka must not compete or compare itself with countries such as Malaysia and Thailand, primarily because Sri Lanka has limited hotel rooms.
He reiterated that the MRR was re-introduced to bring some form of stability to the industry for a short period of time.
Meanwhile, two lawsuits have been filed against the Sri Lanka Tourism Development Authority (SLTDA) and the Ministry of Tourism regarding the MRR. The Supreme Court commenced hearings on the cases yesterday, with the next session scheduled for Monday (11).