Upscale properties draw short stick in Sri Lanka’s tourism revival

SRI LANKA’S upmarket hotels are registering lacklustre occupancies despite the country’s tourism boom because of demand for cheaper accommodation options.

For the first time, Sri Lanka recorded a million tourist arrivals in 2012, up from 855,000 in 2011.

Most five-star hotels in capital Colombo, which now charge US$180 nett per night, averaged 60-65 per cent occupancy, while hotels within the one- to three-star categories registered over 80 per cent occupancy. These hotels charge US$80 per night, the same rates five-star properties commanded three years ago.

However, staff at another five-star hotel in Colombo who declined to be named said even though occupancies were at 65 per cent, the increased yields due to higher room rates made up for the shortfall.

Rohan Karr, general manager of five-star Cinnamon Grand Colombo, said the high-end segment had seen flat growth over the last year. “We did well because there were major MICE events, including cricket world tournaments…not because of leisure travel.”

He noted that more mid-range hotels were also sprouting in Colombo.

Meanwhile, Gamini Mathew, managing director of the one-star Colombo City Hotel said the property was doing extremely well, with a 15 per cent increase in profits and 86 per cent occupancy.

“We are planning to invest Rs100 million (US$790,000) to add capacity,” he said. The hotel will add 30 more rooms to its existing 50 and upgrade to three-star status.

Industry members said Sri Lanka is the most expensive destination for hotels in South Asia due to high power and food costs, and wages.

“At these rates, we have to offer superior service to attract customers, which we are doing,” said Anura Lokuhetty, CEO/deputy chairman of Serene Pavilions, a top-end boutique hotel south of the capital.

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