Minimum Room Rate could be scrapped in two months: SLTDA

• Cites unfair practices of DMCs as main reason for MRR regulations 

By Nishel Fernando 

The government may consider scrapping the reintroduced Minimum Room Rate (MRR) for Colombo city hotels in two months, after evaluating whether it has fulfilled its purpose.

“As the minister (Tourism Minister Harin Fernando) said, in a month or two, we might consider removing it,” Sri Lanka Tourism Development Authority (SLTDA) Chairman Priyantha Fernando told Mirror Business. 
In September 2023, the SLTDA reintroduced the MRR for Colombo city hotels after considering the hoteliers’ requests. 

The gazetted rates are US $ 100 for five-star hotels, US $ 75 for four-star hotels, US $ 50 for three-star hotels, US $ 35 for two-star hotels and US $ 20 for one-star hotels.  

The reintroduction of the MRR has created division within the industry. The Hotels Association of Sri Lanka (THASL) has expressed support for the MRR, while the Sri Lanka Association of Inbound Tour Operators (SLAITO) says it favours a few stakeholders.

However, Fernando pointed out that the unfair practices of the destination management companies (DMCs) forced the SLTDA to reintroduce the MRR.

“The problem is with the DMCs; they charge a higher rate from customers. They don’t pass on the benefits to the hoteliers and the margin that they retain is much higher than the normal margins. 

We would ideally like them to settle this among themselves. When they were unable to compromise, we were compelled to come in,” he added. 

Fernando shared that the hoteliers from other areas such as Kandy have also requested the SLTDA to introduce similar MRR regulations. However, he said that the MRR has laid a foundation for room rates, hence he opined that the market force should determine the future prices based on this foundation. “Now, since the foundation has been laid, we should let the industry build up on that. If we can get a better rate, it will benefit the industry stakeholders as well as the whole economy,” he said.

Currently, there are two lawsuits ongoing against the SLTDA and Tourism Ministry regarding the MRR. 

“If we revoke it in lieu of the current ongoing litigation and so on, it falls back on the previous MRR, which was there, which is much higher; it would be detrimental to the DMCs. We can remove it totally and say there’s no MRR application from now on, until we announce again. So, we are watching the situation,” he elaborated.