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‘Government should rethink minimum room rates policy’

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A proposal, set to take effect from October 1, 2023, stipulates rates of USD 130 for 5-star hotels, USD 100 for 4-star hotels, and USD 80 for 3-star hotels within the city of Colombo. While the authorities argue that this measure aims to counter underpricing by higher-tier hotels, this policy threatens to undermine the growth and vitality of the tourism sector. It places an unnecessary burden on hoteliers already grappling with the challenges posed by the global pandemic and subsequent economic crisis. Further, it undermines the country’s competitiveness in the regional tourism market, the Advocata Institute said in a press release.

The release adds: ‘Pricing acts as a reflection of the quality of services offered by hotels and serves as a differentiating factor. If prices fail to accurately represent the services provided, customer dissatisfaction can ensue, especially when compared to more competitively priced options in neighboring countries such as Thailand and Vietnam. This is supported by a comment made by the Sri Lanka Association of Inbound Tour Operators (SLAITO) which states that “before implementing such prescribed rates, it is crucial to generate demand and interest in Sri Lanka…Adopting these rates will render Sri Lanka uncompetitive and result in a loss of clients, even when compared to hotels in New Delhi, with which they are currently competitive”.

‘Sri Lanka has previously attempted to implement price controls between 2009 and 2019, following lobbying by a segment of hoteliers aiming to compete more effectively against 5-star rated hotels. However, this policy failed due to numerous violations resulting from inadequate monitoring and enforcement by the authorities. Many hotels, including those that initially advocated for the government’s proposed room rates, have not complied with the established rates, as alleged by the former Minister of Tourism, John Amaratunga.

‘The imposition of minimum room rates restricts hotel owners’ flexibility in setting prices in accordance with market demand and effectively stifles healthy competition among various establishments. The tourism industry experiences fluctuations in demand that correspond to seasonal and weekly trends. Such demand patterns necessitate the ability for hotels to tailor their pricing strategies to capitalize on peaks and optimize profitability.

‘Every hotel has its unique room pricing considerations depending on factors such as location, size of the hotel, market demographics, level of competition, and type of service offered to name a few. The uniform imposition of minimum rates disregards the diverse range of hotels and accommodations available in Sri Lanka, catering to various budgets and preferences. This one-size-fits-all approach disregards the crucial factor of consumer choice. Imposing minimum room rates on a certain type of accommodation whilst disregarding alternate forms of accommodation available within the city of Colombo such as guest houses and Airbnbs, undermines the effectiveness of this policy.

‘Furthermore, hotels do not solely rely on revenue from room occupancy; rather, the occupancy of rooms paves the way for alternative sources of income such as from food and beverages, along with the provision of other hotel-related services. For example, a leading hotel in Colombo earned 77% of their revenue from food and beverages in contrast to the 19% earned from accommodation services in 2022. Therefore, when the government intervenes in one component of a hotel’s business model, it disrupts the interconnected methods of revenue generation.

‘Further, the foundation for these minimum rates—star classifications—is itself flawed. This system primarily relies on quantitative factors, often overlooking qualitative aspects such as service quality and ambiance. The inability to quantify these vital attributes compromises the accuracy of the classification.

‘The tourism industry in Sri Lanka has historically played a crucial role in the country’s economic development, providing employment opportunities, promoting cultural exchange, and contributing significantly to foreign exchange earnings. However, the recent decision to enforce minimum room rates could deter these potential visitors who are seeking affordable accommodation options, particularly given the publicity international vloggers have given Sri Lanka as a tourist destination. Further, this approach stifles innovation within the hospitality sector, and ultimately leads to reduced tourist arrivals and negatively impacts the entire value chain that relies on a thriving hospitality sector.

‘This policy undermines competition and oversteps in a serious way the role of government in a competitive market economy, the stated policy framework of the government.

‘The Advocata Institute strongly urges Sri Lankan Authorities to reconsider this ill-advised proposal.

By fostering an environment that embraces market competition, Sri Lanka can position itself as an attractive destination for travelers while allowing its hotels to thrive and cater to diverse consumer demands.’

Advocata is an independent policy think tank based in Colombo, Sri Lanka. We conduct research, provide commentary and hold events to promote sound policy ideas compatible with a free society in Sri Lanka. Visit advocata.org for more information.

Advocata spokesmen are available for live and pre-recorded broadcast interviews via +94 77 895 1491

CONTACT:

Subashini Kaneshwaren,

Senior Communications Executive, Advocata Institute

Email: subashini@advocata.org



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Business

Climate compliance pressure mounts on Lankan businesses

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Lankan businesses are facing increasing pressure to strengthen climate governance, compliance, and risk management frameworks as climate-related disclosure requirements, investor expectations, and regulatory standards continue to evolve.

Against this backdrop, Genesis – the Dilmah Centre for a Sustainable Future will host a specialised post-summit technical workshop titled “Climate Action: A Strategic Executive Workshop on Climate Resilience and Business Continuity” on June 12, in Colombo.

The programme is designed as a continuation of discussions initiated at the Sri Lanka Climate Summit 2026 and will bring together sustainability managers, compliance officers, ESG professionals, risk specialists, and corporate decision-makers. It aims to translate climate commitments into practical business strategies.

The workshop will focus on implementation rather than advocacy, examining emerging disclosure frameworks, financing mechanisms, and regulatory pathways shaping corporate climate action in Sri Lanka.

Keynote speaker Dr. Lalanath de Silva, an internationally recognised environmental lawyer and governance expert, will address the evolving legal and compliance landscape influencing climate-related business decisions.

Technical sessions will cover IFRS S2 climate-related disclosures, climate risk governance, green finance opportunities, internal carbon pricing, and access to climate financing. Speakers will include climate risk specialist Rohan Cooray, Shiranee Yasaratne of Biodiversity Sri Lanka, and Suganthi Samarasinghe of UNDP Sri Lanka.

Organisers said climate readiness is increasingly becoming a business necessity rather than a sustainability option, with growing scrutiny from global markets and regulators.

Participation is free of charge, but prior registration is required due to limited seating for professionals in sustainability, governance, compliance, and risk management roles.

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SPAR Sri Lanka Opens New Outlet in Kurunegala

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SPAR Sri Lanka has expanded its retail network with the opening of a new outlet in Kurunegala, marking another milestone in the supermarket chain’s growth across the country.

The new store, strategically located to serve the growing population of the North Western Province, offers a wide range of products, including fresh fruits and vegetables, premium meat products, bakery items, household essentials and both local and international brands.

The outlet also features several specialty sections, including a Coconut Corner, Wellness Corner and a dedicated area catering to pet care products.

Speaking at the opening, SPAR Sri Lanka Chief Executive Officer Kumar de Silva said the new outlet reflects the company’s commitment to delivering a “glocal” shopping experience by combining international retail standards with local customer preferences.

“Our Kurunegala outlet reflects our dedication to providing customers with the best range, superior quality and exceptional service under one roof,” he said.

The store also offers SPAR’s signature fresh food concepts, including in-store bakery products, ready-to-eat meals and freshly prepared juices aimed at meeting the needs of busy consumers.

The company said customers will benefit from a range of promotional offers, loyalty rewards, weekend deals and seasonal discounts.

SPAR Sri Lanka said the expansion would also contribute to local economic development through employment generation and support for local suppliers, further strengthening the country’s retail sector.

Pic and Text by SK Samaranayake

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Royal end title drought with dramatic shootout triumph

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The victorious Royal College Under-20 hockey team pose with the championship trophy after emerging unbeaten champions of the All Island Under-20 Hockey Tournament at the Rajarata University Grounds in Mihintale. Front row (left to right): Ronal Edirimanne, Sulaiman Shihar, Gunitha Dissanayake, Dilsara Prabath, Kumuthulu Goonathilake, Savain Karunasiri, Vidu Wijesinghe, Seth Pathirathne, Pasindu Epa and Hirun Lindula. Back row (left to right): Stefan Anthonypillai, Geesath Bathisa, Haazim Dhailamy, Teacher-in-Charge Uditha Kumara, Coach Damith Panditharatne, Captain Aathif Faleel, Kithmina Rathnayake, Vice Captain Lithum Karunasiri, Nehan Wijayanayake, Yusuf Shihar, Ruvi Perera and Rumal Jayasinghe.

Royal College, Colombo, emerged unbeaten champions of the All-Island Under-20 Hockey Tournament after defeating defending champions St. Thomas’ College, Matale, in a nail-biting sudden-death penalty shootout at the Rajarata University Grounds in Mihintale last week.

The final ended in a 1-1 draw after Royal equalised five minutes from time to cancel out the Matale side’s earlier lead.

With the penalty shootout also ending in a 4-4 deadlock, the match proceeded to sudden death. The Reid Avenue outfit eventually prevailed in the second round of sudden-death penalties to clinch the title.

A brilliant save by goalkeeper Stefan Anthonipillai, who stretched to his right to deny a crucial attempt, and the decisive conversion by Rumal Jayasinghe helped Royal secure the Under-20 championship for the first time since the tournament’s inception in 2014.

Royal’s centre-forward Savain Karunasiri was one of the team’s standout performers throughout the tournament, scoring crucial goals, including strikes in both the semi-final and the final. Anthonipillai was equally impressive, guarding the goal superbly throughout the seven-match campaign.

Royal finished runners-up when the tournament was held in Matale last year.

The Colombo school produced a series of consistent performances despite having to play on an uneven grass surface that was not ideally suited to the fast-paced modern game.

Royal began their campaign with a 2-0 victory over Christ Church College, Matale, before defeating arch-rivals St. Thomas’ College, Mount Lavinia, 1-0. They then beat Kingswood College, Kandy, 2-0 and Maris Stella College, Negombo, 2-1 to top their group.

In the quarter-final, coach Damith Panditharatne’s side overcame fancied Dharmadutha College, Badulla, by 2-0.

Royal then edged out St. Joseph Vaz College, Wennappuwa, 1-0 in the semi-final, adopting a disciplined defensive approach against the aggressively attacking Puttalam outfit.

In the other semi-final, St. Thomas’ College, Matale defeated Trinity College, Kandy, 3-1. St. Joseph Vaz later beat Trinity 1-0 in the third-place playoff.

Panditharatne’s five-year development programme, with a strong emphasis on fitness, stamina and technical skills, played a key role in Royal’s success. The title marked Royal’s first national Under-20 tournament triumph since winning the National Schools Games in 2017.

A former national player, Air Force striker and Sri Lanka Police coach, Panditharatne has focused on addressing the weaknesses of individual players while building a cohesive unit. The former Christ Church College, Matale player has been coaching Royal since 2022 with the support of the Royal College Hockey Club (RCHC), comprising former Royal hockey players.

For his outstanding performances, Anthonipillai was adjudged the Best Goalkeeper of the Tournament. Royal College was also named the Most Disciplined Team of the Tournament.

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