The suspension of the minimum room rate (MRR) for Colombo City Hotels following an order from the Court of Appeal will help to increase occupancy levels in Colombo, veteran hoteliers said.
They said that due to the MRR, occupancies in City hotels in recent times dropped to around 25%. “Price sensitive markets such as India moved out of Colombo and went elsewhere.”
“If no more issues such as the Visa issue or breach of peace don’t take place we predict a very good winter season for City hotels.”
President of the Sri Lanka Association of Professional Conference, Exhibition and Event Organisers, Imran Hassan said that the MICE industry was hardest hit due to the implementation of MRR with several conferences that were to be hosted in Colombo being shifted to other countries. “This was a great loss to the industry and now we can breathe a sign of relief.”
The Court of Appeal on Tuesday issued interim orders in the cases CA Writ 691/23 and CA Writ 695/23 suspending the operation of the order published by Extraordinary Gazette No. 2349/02 dated September 11, 2023 which imposed a Minimum Room Rate for corporate and free independent tourist hotel rooms located within the limits of the Colombo Municipal Council area.
The suspended notice, as published in Extraordinary Gazette No. 2349/02, set the MRR at USD 100 for five-star tourist hotels, USD 75 for four-star hotels, USD 50 for three-star hotels, USD 35 for two-star hotels, and USD 20 for one-star hotels.
Managing Director of City Hotels, Gamini Mathew said that though occupancy may have been static the hotels had more revenue when the MRR was in place.
“The staff were happy as they received a better service charge.”
Mathew who is also a committee member of Travel Agents Association of Association (TAASL) said that with the MRR off they again expect undercutting by big hotels which will have a negative impact on their revenue.
“To overcome this we are going to suggest the authorities appoint an Ombudsman’ to monitor and take suitable steps against these ‘undercutting’ big hotels.”
