Lankan tourist hotels not overpriced – TKS

Sri Lanka’s Annual Room Rates (ARRs) are competitive compared to the regional peers such as the Maldives on the basis of the growth and the size of the industry, although Sri Lankan hotel rates would seem expensive compared to the more mature tourist locations such as Thailand and Malaysia, a recent research report from TKS Securities (Pvt) Ltd stated.  This is following researchers at another brokerage firm, Capital Alliance who recently warned that occupancies at hotels may be hit as Sri Lanka is about 500 to 800 US dollars more expensive than alternatives for a 10-day holiday with standards lower than competition.

“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”, analysts at TKS Securities stated at the release of their recent report on the tourism sector.

The report adds that however 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 kms, 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’, the report pointed out.

According to this report, country occupancy had touched 77% in 2012 with average stay improving from 9 days in 2011 to 10 days and earnings per tourist rising from US$98 to US$104. Analysts also observed that Sri Lanka’s tourism industry is in auto-pilot stage with arrivals to grow at a minimum Compound Annual Growth Rate (CAGR) of 19% through years 2013 to 2016.
‘The occupancies of the Sri Lankan hotels have been on the rise since the war ended where the 48% year round occupancy rate witnessed in 2009 was remarkably pushed up to 77% in 2011.

When considering the geographical occupancies, the Colombo city has been reporting the highest level of year round occupancy where in 2011 it reached 84.0% for the first time and Northern and Southern Colombo together coming in second with 79.5% in 2011. Outside Colombo, the Southern coastal belt remains the leader with year round occupancy at 78% in 2011. The growth wise, all regions have been showing similar positive growth, where the highest growth has come from the high occupancy Southern Coast, from 72% in 2010 to 78% in 2011’, the report added.

According to the report, occupancy rates has performed exceptionally well during the last couple of years in comparison to regional peers such as Malaysia and Maldives which has recorded 60.6% and 73.1% respectively in 2011.
Recently, Colombo was named among the cheapest ten 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.



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