Local hotel rates expensive compared to more mature tourist locations
View(s):Sri Lanka’s average room rates are now competitive compared to the regional peers such as Maldives on the basis of the growth and the size of the industry, although the Sri Lankan hotel rates would seem expensive compared to the more mature tourist locations such as Thailand and Malaysia, analysts say.
“This is purely due to the non-existence of multiple tiers in prices charged as compared to other tourist destinations such as Thailand or Malaysia which have sufficient capacity across all tiers from low cost to high cost. This makes the Sri Lankan tourism product’s floor price higher than other destinations,” according to a TKS Securities Research report.
However, it noted that given the diversity of the multi-faceted product and the easy accessibility to any part of the country with the development of infrastructure, the rates have the capability of being matched. “The island which offers unparalleled diversity within a smaller land area of mere 65,610 km, gives the opportunity to a tourist spending ten days on average to fully utilize it, compared to its peers. Thus Sri Lanka’s unique product offering and also the quality offered justifies the premium in its hotel rates,” it added.
It also said that Colombo has been named among the cheapest 10 locations in the world together with Mumbai, Karachi, New Delhi, Kathmandu and Algiers according to the Economist Intelligence Unit’s (EIU) worldwide cost of living index survey. The local authorities anticipate the industry to grow by a further two fold in the next five years, which would lead to a deficit in the total room count of about 23,049, the report said.
Currently the Sri Lankan leisure industry is equipped with 9,408 star graded tourist hotels (ranging from 1 star to 5 star) and a further 6,102 unclassified hotel rooms totalling up to 15,510 by end 2012. During 2012 there were no significant additions (only 23 three star rooms) were made in star category whilst 834 unclassified rooms were added, the report said, noting that in terms of the geographical distribution of the capacity, the southern coastal belt accounts for the lion share of the capacity of 36 per cent followed by Colombo city at 20 per cent of the share. “Now there is a significant shortage of star graded properties in the city where we only have about 3,000 rooms.” The report said that currently the planned additions are near 2,000 rooms by 2016 and there would be a deficit.
In the resort region the country has near 12,000 rooms currently which accommodates near 750,000 tourists year round with an average stay of about 8-days per tourist. In the peak season (October to March) the resorts are almost fully occupied and during the rest of the year recorded 50-60 per cent occupancy level (predominantly the local traveller). “With the country transforming into a year round tourist destination we would need to add a significant amount of 3-5 star rooms in the future where we only have 600 room additions planned,” the report said.
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