Hoteliers call for state assistance

By Harischandra Gunaratna

Newly elected President of the Hotels Association of Sri Lanka (THASL) M. Shanthikumar says Budget 2022 has not addressed their problems.

Addressing THASL’s 56th anniversary celebrations at Taj Samudra, Colombo, recently, Shanthikumar said: “We are disappointed that Budget 2022 has ignored tourism. It is an industry in distress needing state assistance for survival and revival.

“Hoteliers are already burdened with a series of topline taxes and levies. The topline social security contribution of 2.5% is definitely adding to their burden. We have been without revenues for nearly 18 months but continue to pay workers and maintain our 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.

“Being an industry with dollar earnings we need the government to consider exempting the tourism sector from the social security tax of 2.5% on the total revenue at least until such time we see the tourist arrivals stabilising the country’s economy. This is absolutely critical.

“Due to the nonpayment of the loan capital and interest during the moratorium, the loan balances increased by 40% thereby increasing the liability. The lack of funds is posing a challenge for hoteliers to continue to maintain the staff, the plant and to carry out even the smallest of refurbishment to welcome tourists.

“Seeing a virtual collapse of hotels, we requested for a long-term debt restructuring from the government as revenues and profits began to slide post the Easter Sunday attack. These were requested ONLY for businesses that had settled their dues until the Easter Sunday attack. It was very clearly stated in all THASL letters to the Government. We have no issue in this being brought in as a criteria. The most important thing is for the government to act as soon as possible. We therefore request the Govt to provide such a relief which will be very helpful to sustain this industry where over 3 million of our population depend upon.

“A long-term request to relieve the hotel industry of the burden of an unfair topline tax of 1% Municipality and 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. 6000 annually as license fees from every other industry. Why do hoteliers have to pay so much more when the industry is struggling to survive? We seek immediate attention from the Government again to resolve this issue and abolish this tax.

“So is the case with Electricity. The 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.

“Further, with the onset of the pandemic in early 2020, closed borders and vacant hotel rooms, the hoteliers could not settle their electricity bills. We requested a temporary installment settlement structure over a period of 12 month from March 2020 to September 2021 (for 18 months).

“Unfortunately, we have not received a positive response to any one of these critical requests,” Shanthikumar said.