Bernard Goonetilleke, chairman of Sri Lanka Tourism, the tourism promotion agency, said the price war among hotels could be damaging in the long-run.
"There has been a price war in hotels in Colombo and Greater Colombo city hotels which reduced room rates by a considerable figure, which if it continues would adversely affect the interests of the hotels themselves," he said.
"Also the excellence of the hotels and service capacity could get affected because if you bring down rates you also bring down service standards.
"Some hotels might find it difficult to manage if it (price war) continues.
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So the idea is that there should be minimum room rates justifying the cost of operations in each place. There's no need for hotels to undersell at this point of time when demand is on the rise."
Michael said hotel room rates in Colombo were far below that of hotels in the region.
"You'll never find rates like this elsewhere in the region.
In India and the Maldives the minimum rate is 15