I know this is a topic that comes on and off. I just wanted to share my recent experiences in regards to rates.
I usually visit Sri Lanka every year or so and from SL. After visiting several hotels I am quite amazed by the rates. I was told many reasons as to why the rates are so high, none of which makes any sense to me.
1. War is over so rates are higher ! I think safe environment is something that everyone expect. It is a basic need. In other words this translates to that 3 years ago rates were cheaper because you could have gotten killed while on vacation, so here is a discount for ya. You cannot charge a higher rate because country is peaceful as it is a basic need.
2. The 2nd reason is there is an influx of tourists, it is a basic principal of supply and demand. Is this really true? Even with better profits most hotels ran less than 60% occupancy. How many of these " so called tourists" are ex-Sri Lankans with citizenship from other European countries who visited Sri Lanka on 30 day tourist visa? When I visited the hotels I didn't see full hotels. Early check ins, no lines, and staff is just waiting around.
( of course good for the guests) In most of the hotels restaurants were empty except few hotels like Cinnomon Grand. Some were busy only due to weddings.
3. People are converting their houses to hotels wanting a piece of the pie. Just because you add some new bathroom fittings and change the decor you cannot call your house a 5 star boutique hotel or provide least facilities and called it a eco Hotel ?
Prices for some these places are over $ 200 a night. This is nothing but a highway robbery.
I mean I understand this whole concept of the country wanting to cater to high end tourists or someone who would really want to visit Sri Lanka for some unique feature it has to offer regardless of the cost. i.e. whale watching. I myself a hotelier and manage a hotel in California. It just seems like the price is set not according to what the country/hotel has to offer , but with what people in US or Europe pay for a hotel room in the same star class( star class it self declared by the hotel anyways in SL). and set those rates as the Sri Lankan rate thinking that foreigners can and will afford that. Some will, but most tourists will look elsewhere. There is a general misconception in Sri Lanka that all the foreigners are rich and dumb and it is ok to rip them off in every chance you get. i.e. two different prices for locals vs. foreigners, even at temple of tooth. Then we talked about our great hospitality. I was also told some of these " so called boutique " hotels are owned by foreigners to rip off fellow tourists.
There are many 4-5 star hotels in Beverly Hills that is cheaper than Sri Lanka. Problem here is that once you step out from any hotel in Sri Lanka it is not Beverly Hills or Bora Bora. To say it nicely I would say that Sri Lanka badly need some infrastructure.
There is no point saying how better accommodation/price you can find in regional competitors like Maldives, Thailand, Singapore, etc for the same price. I didn't post this just to put Sri Lanka down. It is just sad the direction country is moving. As a developing country SL cannot pick and choose whom they want to serve. At least not at this time. If we build more hotels and keep rates high all the millionaires in the world will visit SL is a false assumption. If you create a bubble it surely is going to burst at some point.