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Govt contemplates removal of Minimum Room Rate (MRR) for Colombo hotels as evaluation looms

May 02, Colombo (LNW): The government is contemplating the potential removal of the recently reintroduced Minimum Room Rate (MRR) for hotels in Colombo city within the next two months, pending an evaluation of its effectiveness.

This consideration aligns with statements made by Tourism Minister Harin Fernando, indicating a possible review of the policy in the near future, Sri Lanka Tourism Development Authority (SLTDA) Chairman Priyantha Fernando emphasised.

The MRR was reinstated in September 2023 in response to appeals from hoteliers.

Under the gazetted rates, five-star hotels are set at US $100, four-star at US $75, three-star at US $50, two-star at US $35, and one-star at US $20.

However, the reintroduction of the MRR has sparked debate within the industry, with the Hotels Association of Sri Lanka (THASL) expressing support while the Sri Lanka Association of Inbound Tour Operators (SLAITO) has voiced reservations.

Fernando highlighted that the need to reintroduce the MRR stemmed from perceived unfair practices by destination management companies (DMCs), which charged customers higher rates without proportionately benefiting hoteliers.

Whilst other regions like Kandy have also shown interest in similar MRR regulations, Fernando stressed the importance of allowing market forces to determine future prices based on the foundation laid by the MRR.

He further emphasised the potential benefits to industry stakeholders and the broader economy.

Currently, two lawsuits are in progress against the SLTDA and Tourism Ministry regarding the MRR.

Fernando noted the need to carefully consider the impact of revoking the MRR, given ongoing litigation and potential repercussions for DMCs.

The government remains vigilant, weighing various factors to make informed decisions regarding the future of the MRR policy.

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