SLAPCEO requests minister’s intervention to stop MRR
Sri Lanka Association of Professional Conference, Exhibition & Event Organisers (SLAPCEO) requests the Minister of Tourism Harin Fernando to intervene to stop the implementation of the proposed Minimum Room Rate (MRR) from August 1 inititated by a few hotels and individuals.
SLAPCEO President Imran Hassan (Pictured) said that following the conversations they had also briefed the Chairman of the Sri Lanka Convention Bureau Thisum Jayasuriya on this as it will have a major negative impact from MICE. The principle of minimum rates itself defies the laws of economics where demand and supply are not permitted to determine what the rate should be.
“We believe that external control on rates should only be considered when dealing with essential services and is never advisable in any other case, particularly with regards to aspects related to travel, where it is completely discretionary, and when we compete with the entire world.” Secondly, where MICE business is concerned, Colombo primarily competes with cities like Bangkok, Kuala Lumpur and Hanoi, and the average rates for a 5 star hotel with breakfast in these 3 cities is approximately US$ 100 per night or lower at present and with the minimum rates that are currently being considered, Sri Lanka will not be competitive at all.
Admittedly, cities like Dubai and Singapore are priced higher, but Colombo is not considered amongst these cities.
“The suggested minimum rate of US$ 130 + taxes, will work out to a rate of US$ 225 on an online platform like Booking.com, when the cost of breakfast, taxes and a 15% agency margin is maintained, which will make it impossible for us to compete with these cities with such a price disparity.”
Thirdly MRR will also have a negative impact on arrivals from key source markets like India as well. “Finally, our prior experience has been that the minimum rate laws were rampantly violated in the past by offering free airport transfers, free meal plan upgrades, free or discounted conference offerings or through commissions and kickbacks to the agent.” He recalled that the General Managers of city hotels actively lobbied to have the minimum rate law lifted in 2017 and 2018.
“As SLAPCEO, we are keen to see Sri Lanka sold at the right price ourselves and are keen to earn top dollars for the destination, and thereby ensure the government earns higher tax revenues through this industry as well.” However, if a policy like the minimum rate policy is not rolled out
carefully, or at the right time, we sadly feel that the implications will be no different to the organic fertilizer regulations that were brought in by the previous government.”