The Hotels Association of Sri Lanka (THASL) has raised fresh concerns over a sharp increase in liquor licence fees, warning that the higher charges are driving up operating costs, undermining competitiveness and unintentionally encouraging the growth of the informal tourism sector, the Daily FT reported on Saturday.
THASL President Hettigoda said the asymmetric tax treatment is the core of the problem. “We are effectively penalising the formal sector while encouraging the informal sector,” he was quoted as saying. “Licensed hotels are heavily regulated, pay taxes, and contribute directly to Government revenue, yet illegal operators continue to function with little enforcement.”
The Association’s pushback comes as licensed hotels and resorts navigate a fragile recovery. March arrivals fell 19% and revenue plunged 37% year-on-year, while the Hikkaduwa hospitality trade reported an 80% drop in trade during the Iran war. Industry voices have argued that fee revisions which raise the fixed-cost base of a licensed hotel — without commensurate enforcement against unlicensed operators selling liquor on the side — shift the tax incidence onto compliant operators and reward those who avoid licensing.
THASL’s intervention lands the same day Sri Lanka’s flagship tourism trade exhibition Sancharaka Udawa 2026 opened at BMICH on a “tourism revival” theme. It follows earlier sector pressure on liquor regulation, including a Cabinet decision to call international bids for tamper-proof liquor seals and a closure order for excise outlets across May Vesak weekend.
Hettigoda did not disclose the specific fee figures in the FT report, but THASL has previously argued in 2026 Budget submissions that any revision should be paired with a stricter enforcement regime against unlicensed liquor sales in informal accommodations.
