Sri Lanka sets minimum hotel rates

10th October 2009, Comments 0 comments

The country, which has been plagued by decades of ethnic conflict, hopes to control prices in an effort to profit off of a recent tourism boom.

Colombo -- With tourism booming in Sri Lanka following the end of decades of ethnic conflict, authorities have ordered hotels in the capital to increase room rates and curb an aggressive pricing war.

Luxury hotels in Colombo will be forced to charge a minimum of 90 dollars a night, while stays in cheaper hotels are set to rise to 40 dollars from November, said M. Shanthikumar, president of the City Hotels' Association.

"The government thinks the time is ripe to set a floor price, then everyone can survive and make money," Sri Lanka Tourism chairman Bernard Goonetillake said.

Rates of some 3,000 hotel rooms in Colombo currently range between 35 and 120 dollars. The number of foreign visitors has risen steadily since security forces crushed the long-running Tamil Tiger separatist insurgency in May.

The number of holiday-makers to the tropical island rose 34.3 percent to 41,207 in August over the same period in 2008, boosted by key markets in Britain, Germany and India, according to official figures.

City hoteliers have been under-cutting each other to bring in the visitors, said Chandra Mohotti, general manager of the seafront Galle Face Hotel.

"People were offering rock-bottom prices to pinch tourists from each other and the smaller hotels found it difficult to survive. I hope the minimum room rate policy works this time," Mohotti said.

"There was an immediate increase in tourist arrivals when the war ended in May. I think this is a good rate to kick off ahead of a very busy winter season," Shanthikumar said.

The war alone cost the tourism industry an estimated 12 billion dollars in lost business, said Chandra Wickramasinghe, president of the Sri Lanka Association of Inbound Tour Operators.

Tourism chairman Goonetillake said Colombo hotels were fully booked from June to September mainly due to corporate business and foreign cricket teams from Pakistan, New Zealand and India touring the island.


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