Sri Lanka’s MICE sector opposes minimum room rate

The Sri Lanka Association of Professional Conference, Exhibition & Event Organisers (SLAPCEO) has raised major concerns over the government’s plan to reintroduce a minimum room rate (US$130) for hotels.

Such a move is expected to have a “detrimental impact on the MICE tourism industry”, according to reports from The Daily FT, Sri Lanka’s national daily business paper.

SLAPCEO highlights multiple reasons for opposing the proposed minimum room rate, including the impact on competitiveness, the uncertain global economic climate, and the challenges faced by older properties.

The association also raises concerns about the effectiveness of enforcing minimum rate laws at a time when visitor arrivals remain depressed and have yet to recover from the 2019 Easter Sunday attack and the recent pandemic.

When it comes to MICE business, LAPCEO points out Colombo primarily competes with cities like Bangkok, Kuala Lumpur and Hanoi, where the average rates for a five-star hotel with breakfast are approximately US$100 per night or lower at present. Benchmarked against these three cities, the reintroduction of a minimum rate will render the Sri Lankan capital city uncompetitive.

Moreover, the suggested minimum rate of US$130 plus taxes, will work out to a rate of US$225 on online platforms when the cost of breakfast, taxes and a 15% agency margin is maintained, will put Colombo in the pricing bracket of advanced cities like Dubai and Singapore.

SLAPCEO also emphasises its commitment to promoting Sri Lanka at the right price and ensuring the government benefits from higher tax revenues. However, the association warns that implementing the minimum rate policy without careful consideration could have unintended consequences similar to the previous organic fertiliser regulations.

“However, if a policy like the minimum rate policy is not rolled out carefully, or at the right time, we sadly feel that the implications will be no different to the organic fertiliser regulations that were brought in by the previous government. Undoubtedly, that too was a laudable effort, but was not thought through and prematurely implemented, and we have grave concern that this may do the same to the MICE industry which we represent.”