Sri Lanka tourism product needs facelift to justify price hikes

Feb 08, 2011 (LBO) – Sri Lanka needs to improve the quality of its tourism product and infrastructure to further increase room rates after a post-war rise in rates made the island look expensive, an equities research report said. The country also needs to improve entertainment and shopping in order to break the seasonality of the industry and lure visitors during the ‘off-season’ to fill hotel rooms year-round, the report by NDB Stockbrokers said.

The report cited as a concern the rise in room rates after the end of the island’s 30-year ethnic war in 2009 which led to a boom in tourist arrivals.

More than 650,000 tourists visited the island in 2010, up 46 percent from the year before, and the country plans to attract 2.5 million visitors by 2015, NDB Stockbrokers said.

“We feel that Sri Lanka is increasingly becoming an expensive destination. Therefore, in order to further increase rates it is necessary to improve the quality in terms of entertainment and infrastructure.”

Room rates have increased by over 25 percent from the 2009 levels, mainly in hotels in Colombo and the south coast, according to industry experts.

Five-star room rates in Sri Lanka were around 110-450 US dollars a night compared with 1