Jan 14, 2016 (LBO) – Sri Lanka is on the brink of a strong reform agenda and transformational change that could pave the way for inclusive and balanced growth, JLL said in a research report focusing on the tourism sector.
For the hospitality industry, this means aiming for 2.2 million tourists, up from 1.8 million last year, the professional services and investment management firm said.
“Building on a strong infrastructure base, establishing a structured investor framework and providing the required focus and investment into the promotion and development of the tourism sector will be the immediate need.”
Being ranked among the “top ten coolest countries” in the world to be visited in 2015, by Forbes magazine, suggests the tourism industry is well placed for growth.
“Sri Lanka’s cultural triangle is of great significance to the Buddhist population, with the country having a repository of some 6,000 Buddhist monasteries.”
“Approximately 72 percent of the Buddhist tourists in Asia Pacific reside between China, Japan and Thailand; however, South East Asia is a largely untapped market for Sri Lanka,”
A focus on road development will support the tourism sector, although defining a consistent brand – currently “Sri Lanka – One Island, Thousand Treasures” – is needed.
According to the SLTDA, Sri Lanka has 28,000 rooms, of which over 60 percent fall in the informal segment consisting of supplementary establishments and unclassified hotel inventory.
The total room inventory across the country increased by 1,850 to reach 18,100 rooms in 2014, excluding supplementary establishments.
“Growth in average room rates has been largely contained due to the increased hotel supply additions – the country saw an overall increase in rates of just 3 percent in the past financial year, while the past four-year period has seen a 7.5 percent increase in rates.”
“From 2016 onwards, the market will see the entry of internationally branded hotels on a large scale, beginning with the south-west coast, followed by Colombo and eventually other parts of the country.”
The enforced “minimum room rate” in Colombo has served to prop up the Average Room Rate in Colombo and prevent undercutting among hotels, however, rates are perceived to be high for the hotel product offered and pricing should be liberalized, JLL said.
Nevertheless, occupancy rate in Colombo has been falling due to an increase in the amount of rooms available.
A shortage of skilled labour is also a problem affecting the industry, and steps should be taken to improve training, the firm said.
According to the company, JLL’s Hotels and Hospitality Group has more than 320 hotel and hospitality experts who have overseen transactions totaling more than 48 billion dollars in the last five years.
JLL has 230 corporate offices operating in 80 countries, and was recently involved in advisory services for clients for the Colombo Port City.