REPORT FROM SRI LANKA—Sri Lanka, the island nation at the tip of India, enjoys good weather—outside of monsoon season—varied and accessible wildlife, a rich history and world-class archaeological sites and stunning, tropical beaches, but sources said the country needs to continue improving its infrastructure to fulfill its tourism potential.
Fewer than 10 years have passed since the end of the country’s 25-year civil war in May 2009, and the mostly Tamil-populated north lags behind the mostly Sinhalese-populated south in terms of hotels, resorts and infrastructure, according to sources, but inbound travel is increasing.
Nalin Perera, tourism promotion officer based in the London office of the Sri Lanka Tourism Promotion Bureau, said as of November 2017, the number of visitors to Sri Lanka from the United Kingdom increased 7.4% year over year to 180,123.
Perera said the U.K. has always been a large source market due to its former colonial links with the Indian Ocean island, but global visitor numbers also have increased. The number of total arrivals to Sri Lanka increased 2.5% year over year to 1.8 million as of November 2017, he added. The country’s top two source markets are India and China.
Although arrivals to Sri Lanka have increased, the country’s hotel industry has yet to see the benefits.
Ranil de Silva, joint managing director at Aitken Spence Hotels, said the hospitality sector in the country remains in a maturation phase, even though much progress had been made. Aitken Spence Hotels has nine assets in Sri Lanka, including five under its Heritance brand. It also has another 12 assets outside of the country, notably six hotels in The Maldives under the Adaaran brand.
While more visitors are traveling to northern parts of Sri Lanka to destinations such as Wilpattu National Park, the eastern coasts and the city of Trincomalee, western and southern beach destinations still enjoy the lion’s share of visitors. Resort destinations such as Negombo and Bentota are popular, as is the small walled city of Galle with its Dutch and Portuguese origins and history.
“The north needs to get its infrastructure right,” de Silva said. “Accessibility is poor, and that is also the case for other areas. For us, at the moment, we’re not rushing into development in such areas. We have land there, in Trinco, but now is not the right time.”
Another problem is Sri Lanka’s recent success as a must-go destination, but visitors are flocking to book accommodations beyond traditional hotels.
“Supply is moving faster than the demand, forcing rate to remain stagnant, and added to that informal-sector home stays and Airbnb are increasing rapidly,” de Silva said. “There is more inventory, thus (hotel) rates are being challenged.”
De Silva said he has seen a lot of new brands moving into Sri Lanka, including brands from Marriott International, which he said opened the 198-room Weligama Bay Marriott Resort & Spa last October.
“A maturing market is a challenge as both new brands and supply are coming in at the same time,” he said. “2018 will be a challenging year, but after that we are far more hopeful. After all, global travel is increasing very fast, and Sri Lanka is considered to be a hot destination.”
According to data from STR, parent company of Hotel News Now, as of November 2017, year-to-date occupancy across Sri Lanka was 64.2%, which represented a 7% decline from the same period in 2016. Average daily rate grew 6.6% over the same period to 17,139.64 Sri Lankan rupees ($111.41), while revenue per available room dropped 0.9% to 10,998.30 Sri Lankan rupees ($71.49).
Hotels in Sri Lanka’s capital Colombo experienced a 7.5% occupancy decline to 67.3%, while ADR increased 4.2% to 18,319.11 Sri Lankan rupees ($119.07) and RevPAR dropped 3.6% to 12,323.84 Sri Lankan rupees ($80.10).
Growth spurts
Aitken Spence’s parent company also has a tour operator division, which is not uncommon among Sri Lanka hotel operators and, according to de Silva “still a very significant part of the Sri Lanka market.”
“The industry here has been focused on holidays at beaches, but now we are seeing a shift to what we call ‘round trips,’ first seeing historical sights, tea plantations and the Hill Country near to (the city of) Kandy and then ending up on the beach,” de Silva said. “The trend for visitors to want to have more experiences is something being seen all around the world.”
De Silva said his firm plans to partner with the TUI Blue brand, whose parent company also has decades of experience in tour and package operations. De Silva added that most of Aitken Spence’s assets were managed in-house
“We are expanding, but the country overall still has a long way to go to correctly market the destination,” he said. “It will pick up. The ideas and plans are there, but the implementation is taking too long.”
The largest hotel company by asset is Jetwing Hotels, a family-owned firm based in Colombo that has 35 hotels, which—apart from one in New Zealand—are all in Sri Lanka.
This month will debut its 44-room North Gate by Jetwing, located in Jaffna, Sri Lanka’s northernmost city, which during the civil war acted as the de facto capital of Tamil separatists.