Financial Times

Tourism to bounce back in no time
By Duruthu Edirimuni
Stockmarket analysts say that even though the tsunami devastation had a direct adverse impact on the tourism industry it will bounce back in no time. "The hotel sector in the immediate future will experience tough times but it will last only for about six months," Dimuthu Abeyesekera, CEO, Asha Phillip Securities Ltd., said. "It will take off when the beach properties are renovated better than before."

Asanga Seneviratne, Managing Director, Asia Securities said there will be a price dip in hotels on the coast. "The prices in the coastal hotels were inflated; sometimes doubled and tripled during the last two years and they will come down significantly," he said.

He added this is a good opportunity to revamp the whole tourism industry. The industry earned US $ 323 million in 2003 and was expected to earn US $ 350 million in 2004.

Some damaged resorts have declared sizeable insurance claims. Some hotels have written to the Colombo Stock Exchange saying it will take 12 to 15 months to reconstruct their properties. However, stock analysts say the hotels will lose another big season next December if they decide to reconstruct properties over such a long period of time.

"I think they are doing this to convince the insurers, but they are giving the market the wrong vibes," a stock analyst said. He said the hotels will be definitely funded on their insurance claims and many will go for a better construction. "They will aim to uplift their properties," he said, adding that some owners are quite elated about this, while being appalled at the human loss.

Seneviratne said that two to four star properties will definitely reposition at a higher level. "As a whole the beach area hotels will take from six months to a year to revamp and by winter 2006, they will be showing good earnings and operating at a higher level," he said.

He noted there is renewed interest for investment in the coastal sector."There are plenty of takers for beach properties, but not at the pre- tsunami prices," he said.

The visitor arrivals to the country exceeded 500,000 by the end of November 2004 and analysts said the number would not be less than 450,000 arrivals for 2005.

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