Ending weeks of uncertainty, the Ministry of Tourism confirmed today that the minimum room rates for Colombo city hotels, which was introduced at the end of the war and expired in March this year, will be reintroduced in September. Speaking exclusively to The Morning Business, Minister of Tourism and Christian Affairs John Amaratunga said that the regulation, which has divided opinion among hoteliers and travel industry stakeholders, must be reintroduced for the betterment of the industry. “At the moment the regulation is not strictly enforced because the time period it was applied for has lapsed, but the minimum room rate should be introduced again. Some audits have to be done and it’s just a matter of reintroducing the rate to the hotels in Colombo. The minimum room rate regulations will be reintroduced in September.” Minimum room rates of US$ 125 for five-star hotels were enforced in 2009, with hopes of increased tourist arrivals and in response to complaints by small hotels of price cutting by five-star hotels. The Gazette pertaining to the imposition of the rates scheme expired on 31^st March 2018, leading to room rates dropping rapidly from the stipulated US$ 125 to around US$ 80, particularly at 5 star hotels. However, tour operators called for the government to allow market forces to determine room rates, arguing that Colombo is overpriced and that the tourism product the island currently offers does not justify the high rates. “We are supportive of market-led pricing compared to regulation-based pricing. This will benefit the destination in the long run. Having said that, we need to get other elements of the equation right as well; example – Strategic Marketing Communication, Better Service Levels, Up-to-date Training Methodology, Wider Product Offering, etc,” said the Sri Lanka Association of Inbound Tour Operators (SLAITO), Chairman Harith Perera. A strong argument in favour of minimum room rates has been the perceived negative impact it has on MICE (Meetings, Incentives, Conferences and Exhibitions) tourism, which prevents hotels offering discounted rates below the minimum rate even to bulk reservations, potentially driving them towards more attractive packages in competing destinations. However, Perera hinted that MICE tourism is not as price sensitive as it is being made out to be, and that the focus should be on developing Sri Lanka’s MICE tourism offering. “MICE tourism needs better quality and vitality. Unless that vitality and quality are offered, the MICE market will continue to be insignificant in the grand scheme of things.” When inquired about the opposition from SLAITO to the re-imposition of minimum room rates, Minister Amaratunga said that this regulation will be to serve the travel sector as a whole, and not individual groups. “The hoteliers association looks at this from the perspective of hotel owners, SLAITO looks at this from the perspective of travel agents. Nevertheless, it will be reintroduced.” The Colombo hotels have generally been in favour of minimum rates, with particular support from the higher end hotels. In a meeting held on 23rd August with the participation of hoteliers representing 25 star class hotels in Colombo, 23 hotels had voted in favour of minimum rates. “23 hoteliers voted to go forth with the minimum room rate regulation at this meeting. The gazette is active as we speak, the regulation will be continued with the same prices”. He added that a strict monitoring process should be in force and the minimum rates should be continued because it is a safety net for hotel owners.