President of The Hotels Association of Sri Lanka (THASL) M. Shanthi Kumar lashed out at the government for delaying to receive payments from suppliers in foreign currency for hoteliers.
“All contracts are signed in dollars and our suppliers receive payments from their foreign principals in dollars. As ethical business practice, suppliers must pay hoteliers in foreign currency via the formal banking system,” he said.
‘There seems to be a great hesitation and objections to do so and I consider this very unfair and unethical.’
Shanthi Kumar who was re elected for the second term to head the THASL at their AGM held at Colombo Hilton on Monday said that hoteliers are already burdened with a series of top line taxes, levies, license fees and the most recent top line social security contribution of 2.5% has further added to the burden.
“We have been without revenues for nearly 18 months still continuing to maintain the employees and the hotels. The industry will lose its competitive edge in marketing the destination with such taxes and there is no doubt it will affect the anticipated tourist arrival growth into the country. As the key foreign exchange generator, it is imperative that the Tourism industry be granted the relief extended to all other export industries in the country.”
Tourism is an export industry. However due to an issue on the definition of ‘an export’, we have not been granted relief of what the other export industries enjoy. Unlike the apparel, tea or rubber industry we have the potential to achieve USD 10 billion annual revenue in the coming years.” The electricity tariff rate for the hotel industry is higher than all the other sectors. “Our request is for the Government to bring the Hotel Sector on par with the other industry tariffs and not to discriminate against the hotel sector with higher tariffs.”
“Our long term request to relieve the hotel industry of the burden of an unfair topline tax of 1% by local government authorities has still not been settled. It is totally discriminatory to charge millions of rupees from hotels by local Government authorities when they only charge without an exception a measly sum of Rs. 6,000 annually as license fees from every other industry.” Why do hoteliers have to pay so much more when the industry is struggling to survive?” he asked.
“There are over 300 cases in court filed by the local government authorities against hoteliers across the country and they are spending millions of rupees for the past 14 years on litigation to get rid of this unfair local government tax only on the hotel sector.”
Tourism debt mounts to Rs. 500 Bn.
The overall tourism debt due to the nonpayment of loans capital and interest during the moratorium is around Rs. 500 billion said President THASL, Shanthi Kumar
This includes the working capital loans of enterprise Sri Lanka, Saubhagya loans, term loans and accumulated interest due to the moratoriums extended. The loan balances have increased by 40% thereby increasing the liability.
“However, we also understand that some of these loans are presently being settled, some other accommodation units are still under construction and some have already decided to close the hotels. The lack of funds is posing a challenge for hoteliers to continue to maintain the staff and even to carry out a smallest of refurbishment. Hence we request the Govt to give us a clear idea of the total debt payable including interest with a breakup of the actual liability of the operational hotels. We urge the Central Bank to get this information from the public and private sector banks as a total and mediate in this regard.”
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