According to industry officials, at least three hotels in Colombo are for sale following the imposition of a crippling minimum room rate last year.
This rate went on to classify Colombo City hotels from one to five stars for pricing their rooms at rates lower than those prescribed by the government, with a rate of US$100 for five-star hotels, $75 for four-star hotels, $50 for three-star hotels, $35 for two-star hotels, and $20 for one-star hotels within the city of Colombo, effective October 1, 2023. The minimum room rate was introduced in Colombo to standardise pricing and improve the financial stability of the city’s hotels.
However, according to industry officials, this move has made it difficult for hotels to remain profitable and attract business.
One official from a Colombo hotel stated that after the minimum room rate was implemented, their occupancy rate decreased to below 40 per cent most of the time, making it financially unviable.
As a result of the high rates in Colombo, many potential guests are choosing to stay in other nearby destinations instead. This has caused the loss of business opportunities for hotels in the city. an official from a Colombo city hotel told the Business Times.
Another official mentioned that the ban on offering additional incentives to guests to ensure compliance with the minimum rate has made the situation worse. Hotels are barred from offering supplementary incentives to ensure compliance, aiming to maintain a level playing field for all establishments. “This has further aggravated the situation. Because of this rate, most of the businesses that we were supposed to get are going to other nearby destinations,” he added.
Source: Sunday times
