Veteran city hotelier and tourism industry leader M. Shanthikumar has warned on the dangers of the move to abolish the minimum room rate in the country. In an insightful interview with the Daily FT, Shanthikumar, who is the Director at Ramada Colombo and President City Hotels Association and Vice President Tourist Hotels Association, explains the rationale for the implementation of minimum room rate, defended its objective and benefits for the country and the impact if abolished. Following are excerpts:
Q: What was the reason the Minimum Rate was gazetted only for Colombo City Hotels and not for rest of the country?
A: The Colombo Hotels continue to face an unusual situation for many years where market demand did not set the pricing platform. The prices were constant and extremely low where five-star hotels room rate was around $ 50. Even on rare occasions when the city hotels were running at full occupancy the rates did not change nor did it change during peak season. The same phenomena will continue if the Minimum Rate is abolished today, which is the reason majority of city hoteliers are asking to hold the Minimum Rate structure.
Colombo business is not seasonal but year round. This is because Colombo City has more of business traffic (where the company concern settle bills) and very a low percentage of holiday/leisure travellers seen traditionally to date.
This is not the case in terms of resorts. Their rates are clearly defined with season/mid season/off season pricing which varies dramatically.
Q: Do you agree with Mt. Lavinia Hotel Chairman Sanath Ukwatte and Renuka City Hotels Chairman Ravi Thambaiyah; warning the danger of removal of Minimum Rate published in their articles in Daily FT on 17 August and 9 September?
A: They are absolutely right. For Renuka City Hotels Chairman's comments see http://www.ft.lk/article/566955/Renuka-City-Hotels-Chief-warns-of-dangers-of-removing-minimum-rate and for Mt. Lavinia Hotel Chairman's comments see http://www.ft.lk/article/560167/Ukwatte-wants-minimum-room-rate-to-stay–warns-of-dangers-of-its-removal