Editorial-July 13, 2013, 6:02 pm

The newspapers are full of reports of new hotels under construction and older properties that are being refurbished and expanded. We are often treated to lavish colour pictures of these developments and given last year’s arrivals topping one million visitors and 2.5 million targeted for 2016, there is room for optimism that all the rooms that are available already or will become available in the short-term can be filled. But there are disturbing reports that the our leisure industry is pricing itself out of the market with the rates charged by many hotels running higher than those of competing destinations like Thailand and Malaysia offering better facilities and services. So the big question is ``Are we shooting ourselves in the foot?’’ The annual report of one listed hotel-owning company recently boasted that although occupancy was down, revenue was up thanks to the higher room rates they could command.
Investment Promotion Minister Lakshman Yapa Abeywardene last week told reporters that our hotels were over-charging and alleged that some properties had jacked up their charges as much as tenfold after the war ended in 2009 with no improvement in services. He said that the rates that are being charged were ``unrealistic’’ and opined that the country would do better by attracting more visitors with realistic pricing. The minister admitted that the government could not impose price control – although during the bleak days of the war when five-star hotel rooms were sold at 50 dollars and less the regulator imposed a minimum rate regime – and made the point that too-high prices were driving tourists to competing value-for-money destinations.
There is no doubt that what the minister said makes sound commonsense. It is something that several hoteliers themselves have expressed both in public and private. Given the massive investments that have been made and are committed to the leisure industry, there has to be a practical bias in our approach, both in policy and commercial terms, to all matters affecting tourism. We recently commented that the government, obviously for political reasons, is being coy about the casinos in the pipeline. No less that President Mahinda Rajapaksa recently boasted that his government has issued no new casino or liquor licences since it assumed office. But everybody knows that there are many casinos in operation in Colombo. Time was when it was said that these are only for foreign gamblers and locals are debarred. But it is very well known that many locals play the tables at these places and nobody attempts to stop them.
Despite its coyness about talking about casinos and distancing itself from the developing scenario, it is clear that many such gambling places are alive and kicking particularly in Colombo; and more are in the pipeline. This has been so not just yesterday and today but for a considerable period of time. The Australian gambling mogul James Packer’s plans for the so-called `mixed development’ along D.R. Wijewardene Mawatha seems well on track and last week’s unveiling of conglomerate John Keells Holding’s plans for a mega-development on the Slave Island property belonging to the group, while making no mention of a casino/casinos, obviously includes gambling in the big picture. These deals have clearly received the government’s nod. The president may hold on to his insistence that no new licences will be issued but he is not ruling out deals between existing licence-holders and new players.
We ran a research report a couple of weeks ago saying that the gambling industry could generate USD 900 million a year with just two 500-room integrated resorts (Packer and JKH?) helping to push up city room rates and adding a possible 900,000 visitors to the present one million. These are all compelling numbers and given the investment that has been or will be made in the short and medium term in the leisure industry, it is imperative that hypocritical moral compunctions are not factored into the equation. As we have often said, a country like ours targeting a vibrant tourist industry cannot have useless laws like the Poya Day ban on liquor in hotels. Certainly keeping taverns and wine stores closed on these days and stopping supermarkets selling booze is well and good. But keeping hotel bars closed encouraging tourists to drink in their rooms on `dry’ days is a useless exercise akin to the presidential promise of no new casino licences while permitting loopholes big enough for a coach and six to pass through.
The research report we cited said that the country’s tourist industry brought in about a billion US dollars on a million tourist arrivals. But it warned that a shortfall of 5,000 rooms in the city and 78,000 hotel staff as well as the lack of ancillary entertainment and shopping and dining facilities could keep visitors down. Colombo dwellers see very many restaurants opening regularly in the city and new shopping malls too are part of the emerging picture. Now that plans for two `mixed’ developments which would include casinos are firming, the entertainment aspect is getting addressed. Nevertheless it is imperative that gambling places, whether established under the Casino Business (Regulation) Act No. 17 of 2010 or the earlier Betting and Gaming Levy Act No. 40 of 1988, (since amended last April), are fairly taxed. While we need the Packers of this world as well as the JKH’s which played a big role in developing the country’s tourism industry, we don’t need sweetheart deals such as what the Australian press has attributed to the arrangement with Packer.
The UNP’s National List MP Harsha de Silva has alleged that some of the deals already reached and in the pipeline will cost the cash-strapped government whopping revenue losses. While it is a given that big investments and major players cannot be attracted without incentives, these must be kept to manageable levels. It would be useful if the government bares what the gambling industry currently brings into its coffers. Some pointed parliamentary questions would hopefully elicit the answers. The public is also entitled to know what the revenue projections are from an expanded casino industry. Mr. Dhammika Perera, as we pointed out in this column not long ago, is one of the biggest players in that industry and is the Secretary to the Transport Ministry. Mr. Thilanga Sumathipala is a government MP and his family runs a well known bookmaking business. So whether the government tries to keep these activities at an arm’s length or not, people who are close to it are very much in the game and that, surely, tells its own story.