Hoteliers frustrated over govt.’s continuous failure to resolve critical issues hampering tourism

• THASL Chief urges govt. to bring hotel sector on par with other industry tariffs
• Warns tourism sector risks losing competitive edge in marketing the destination
• THASL notes country’s tourism earning can be increased to US$10 bn with appropriate policies in place

By Nishel Fernando

 While voicing frustration over government’s continuous failure to resolve the critical issues faced by the tourism sector,The Hotels Association of Sri Lanka (THASL) stressed that a unique financial model is required for the steady recovery of the tourism sector.

“We need the government to look at an exceptional financial model for the revival of tourism. It is a known fact that the recovery will be slow but hopefully steady. THASL assessed the present situation and future of our industry and for its mere survival, no doubt, hotels require government assistance. THASL has sent a comprehensive plan to the authorities concerned for consideration. We hope the government will look at this positively with an open mind due to the importance of tourism,” THASL President M. Shanthikumar said.

He made these remarks addressing the 57th anniversary celebration of THASL held in Colombo on Monday.
He warned that the tourism sector risks losing its competitive edge in marketing the destination due to current unfair taxation.

“The hoteliers are already burdened with a series of topline taxes, levies, fees and the most recent one on the top line the Social Security Contribution Levy of 2.5 percent. We have been without revenues for nearly 18 months while still continuing to maintain the employees and the hotels. The industry will lose its competitive edge in marketing the destination with such taxes and there is no doubt it will affect the anticipated tourist arrivals growth to the country. 

As the key foreign exchange generator, it is imperative that the tourism industry be granted relief extended to all other export industries in the country. At least until such time we see the tourist arrivals stabilising to the country. This is absolute critical,” he elaborated. 

Shanthikumar highlighted that successive governments failed to resolve the issue of unfair topline tax of 1 percent payable to local government authorities imposed on the hotel industry.
“It is totally discriminatory to charge millions of rupees from hotels by local government authorities when they only charge without an exception a paltry sum of Rs.6, 000 annually as licence fees from every other industry.It is disappointing to note that this has not been addressed by successive ministers. 

We seek immediate attention of our Minister who is not present here today and Chairman SLTDA to resolve this issue however difficult it would be and abolish this tax. There are over 300 cases in court filed by the local government authorities against hoteliers across the country,” he said.

Further, he also urged the government to bring down the electricity tariff rates imposed on the hotel industry on par with other industries.  “The tariff rate for the hotel industry is higher than all the other sectors. Our request is for the government to bring the hotel sector on par with other industry tariffs and not to discriminate the hotel sector with higher tariffs,” he added.

With overall loan balances of hotels rising by 40 percent due to non-payment of loan capital and interest during the moratorium period, Shanthikumar noted that the industry is challenged with lack of funds to carry out even the minimum refurbishments required to welcome tourists. “Unfortunately, we have not received a positive response to any of these critical issues. Why is the accommodation sector in the country treated so unfairly by policies when tourism is the number one forex earner in the country? We really would like to have an answer from you. We seek the government assistance when the majority of our members are unable to resolve present complex issues and hope you will pay attention to same by providing a long-term sustainable solution to our problems,” Shanthikumar requested from the authorities.  THASL believes that Sri Lanka’s tourism earning can be increased to US$10 billion with the appropriate policies in place. Currently, the tourism sector employs 12 percent of the workforce in the country while the US$ 15 billion hotel industry accounts for 70 percent of jobs.