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Soaring gas prices and shortages: Hospitality industry struggling

08 Jan 2022

  • Immeasurable economic breakdown: ACCOA
  • Gas shortage and import controls cause menus to shrink and restaurants to shutter
  • Industry urges Govt. to compensate those affected due to LPG shortage Just living for today; can’t plan for tomorrow: Harpo Gooneratne
By Maneesha Dullewe The hospitality industry is struggling due to a range of market fluctuations and the ongoing economic crisis, with small eateries and canteens hit the hardest.  With the continued effects of Covid-19, hospitality businesses are at present suffering from a volatile economic situation prevailing in the island. The soaring food prices and shortage of essential items has made survival difficult for many hoteliers and restaurant owners to other smaller canteens, all of whom are coping with the current economic crisis to varying degrees of success, The Sunday Morning finds.   All-Ceylon Canteen Owners’ Association (ACCOA) Convener Asela Sampath emphasised that canteens and smaller eateries were facing significant hardships under these conditions, beginning with staff shortages.  He shared that the cooking staff that works at these restaurants were reporting to work less due to the fears arising from continuous gas cylinder explosions. Secondly, the gas shortages had caused many restaurant owners to close up shop until the market would be able to restock these products.   Thirdly, the increase in fuel, gas, and commodity prices have led to the complete loss of income for these businesses. “For instance, the primary source of income at hotels or hotel canteens is the cup of milk tea,” he highlighted, adding that however, with the milk powder shortage, eateries have had to abandon this menu staple. Moreover, the prices of essential goods have increased, causing the consumers who used to regularly purchase various short-eats or other meals to stop frequenting these establishments.  In addition to this, since these business owners are usually outstation residents who have migrated to towns, they are often unable to pay the rent on their establishments due to the reduction of their daily income, as customers no longer purchase in the same quantities as before.  Noting also that these eateries had to resort to electronic alternatives such as rice cookers and hotplates, which were simply not sustainable, Sampath concluded that there was a “massive, immeasurable economic breakdown for those who subsist directly or indirectly through this industry”. As a response to this situation, he called on the Government to take action against those responsible for the gas-related issues, saying: “The Government should take action against those who changed the composition of the gas and put the lives of the public in danger by bringing them before the law.” He also urged the Government to formulate a programme to provide compensation to those affected by the gas shortages and explosions, including businesses that had suffered economic damages through shutdowns.    Speaking to The Sunday Morning, Harpo’s Hotels, Cafes, and Restaurants Founder and Chief Executive Officer (CEO) Harpo Gooneratne shared his thoughts on the industry-wide troubles, saying: “Because we are finding it difficult to get gas, we are downsizing our menus, some restaurants have closed up, some restaurants are finding it difficult to cope with demand, when you have that kind of issue it’s not healthy for business.”  He also acknowledged the issues stemming from food shortages, saying: “There are certain imported items which we cannot get because some items were being held up at the Port last December. The prices of local items keep fluctuating so it’s tough for us to price our menus. It’s difficult because we can’t pass on these costs to the consumer. So these are tough times when it comes to the importation of food. We have to get our supply chains back.”   When asked what measures restaurants are implementing in order to handle the situation, Gooneratne quipped “We just live for today, we can’t plan for tomorrow,” adding that there is always the possibility that the next day they might not be able to source certain items such as gas, which is why many restaurants are downsizing menus in order to use gas sparingly.  The Hotels Association of Sri Lanka (THASL) President M. Shanthikumar emphasised that it was a critical situation, saying: “When there’s a lot of items which are not available, it’s a very negative situation since we can’t cater to what the customer wants.” Noting that a few hotels have shut down, he said that the association has made every possible representation to obtain Government support on this issue, which the Government has reviewed positively. He thus believes that it needs a little more time for the situation to be addressed.  Mount Lavinia Group Chairman Sanath Ukwatte expressed more optimism, saying: “As hoteliers we are so used to facing challenges. Hotels are not really affected yet.”  Addressing the shortages, he noted that food shortages were a universal problem at present due to supply chain disruptions stemming from the pandemic. “The hotel industry has so far managed because we source our produce locally, from the local farmers. Of course there has been a huge increase in prices. However, as yet our supply chain has not been too badly affected, so we are managing alright,” he assured. On the gas issues, he pointed out that: “We mainly buy industrial gas cylinders, and for industrial gas there hasn’t been a shortage yet. But there has been a shortage in LPG which we also use in smaller hotels and in some hotels we use it for our buffets. In big hotels we use mainly industrial gas. In some hotels we have gas banks, where the bowser unloads the gas into our tanks.”  He concluded that their supply chain with regard to gas remained unaffected since they were purchasing industrial gas. The Sunday Morning sought the response of State Minister of Cooperative Services, Marketing Development and Consumer Protection Lasantha Alagiyawanna on the present afflictions besetting the hospitality industry. Acknowledging the prevailing gas shortage, the Minster said: “The major cause of the gas shortage is because the same capacity of gas as was produced previously is not being produced now due to concerns of safety.”  However, he noted that LAUGFS Gas PLC was taking steps to import several shiploads worth of fuel, adding: “As soon as the production at the two companies stabilises, within the upcoming week or so this situation is likely to return to normal.” The Minister further explained: “The Government faced two situations; one is safety and the other is the shortage. We did receive criticisms over the shortage. However, we bore those criticisms in order to prioritise the safety of consumers.” The State Minister also noted that the rise in prices of essential goods was a global issue and that they hoped that commodity prices in the market would see a drop soon considering changes to the global situation, perhaps in March or April this year.


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