Tourism is a fast-growing industry, but with the credit crunch in 2008, figures have dropped as people have less money to spend and companies are unable to expand as rapidly. However, with the recent defeat of the Tamil Tigers, tourism along with other industries is expected to rise and shine in the near future.
With the large scale promotions taking place all over the world and the actual ground work, the tourism sector seems to be causing much buzz around these days. Daily FT took it upon our selves to go forth and see what exactly is happening in the field when it comes to some of the major direct benefactors, the city hotels in Sri Lanka.
The overall view of the occupancy rates seems to have dropped slightly this month based on the pre-booking of some of the main hotels in Colombo. Following the increased occupancy rates in the months of July and August, the General Managers and Sales Dirctors of the hotels stated that they are anticipating a drop in the month with the summer vacation being over.
During the past two months occupation levels were high due to the Middle Eastern traffic that came into Sri Lanka. However just because the war is over we cannot expect people to flock to Sri Lanka. The increase during the last two months was due to the summer vacations in the Middle East and as they are not very welcomed in the West they now opt to come to Asian countries such as Maldives, Thailand and Sri Lanka, said General Manger of Galadari Hotel, Sampath Siriwardena.
The tourism promotional activities held at the Dubai travel market was said to be another plus factor which attracted the large number of Middle Eastern travelers.
Chairman of Ceylon Continental, Nahil Wijesooriya agrees, somewhat strongly than the latter. Our occupancy rates gradually increased in the post war condition with 43% occupancy in June, 56% in July and 63% in August however occupancy is looking down in September with the Middle Eastern crowd returning to their country, especially because of the Ramazan season.
The situation is slightly better than before but it is not the huge drama the Tourism authorities expect, said Mr. Wijesooriya. They want us to increase our rates, but for that we have to have good occupancy. The Ministry trying to control and impose rates to hotels seems to have forgotten the underlying rules of market demand and supply. Of course we ll increase our rates but not haphazardly. Ceylon Continental have increased the lowest rate of a single room to USD50-55 from the previous USD40 with the response of the occupancy. But the increase has to come gradually.
Mr. Siriwardena acknowledged that it is always good to increase the rates and earn an extra income, but the time should be right to impose such standards. First we have to get people to come here and enjoy their stay and market it as a terrorism-free country and only then should we focus on jacking up the prices, says Mr. Siriwardena. In my opinion 2011 will be the best year to do so, especially since I believe, that proper recovery will only happen mid next year.
Jerome Auvita, General Manger Hilton Colombo, the only international hotel chain activating in Sri Lanka however states that since profit is the main intention of every businessman, Hilton will support the local economy by improving the rates with the market growth. When asked whether there are any plans to increase the rates at the moment, he said, Our Basic Category rates is USD 155, we haven t increased the rates this year and do not intend to so within the next couple of months but next year, there might be a possibility of a rate increase.
The newly opened Cinnamon Lakeside, (previously Trans Asia) with just 1 weeks into the business is said to have an occupancy rate of 40%. GM, Neroy Marso told Daily Ft that even though they missed out the action during the summer vacation, the closing down and refurbishment was timely. Many did not expect us to open so soon so there has been reluctance in booking with us however we have recorded a 40% occupancy within the opening period (Sep 1 to date) and we are confident that this would increase to 50-60% within a few weeks, he alleged.
The increment of rates would be ideal if it could be worked out. Such discussions have been made even before but have not been put into practice. We are quite happy if it actually comes into play. But currently we are sticking with the prices we had since January as those have been agreed on by the hoteliers, said Mr. Marso.
Chairman of Sri Lanka Tourism, Bernard Goonatileke speaking to Daily FT stated that the minimum price might not even come into play if the market corrects itself with time. Even if the ministry does, it would only be for the period from now till winter.
In June we recorded a 28% increase in the occupancy rates and 8% in June, the August statistics have not arrived as yet. The July-August period increase should be attributed to the summer vacation and September occupancy might be less in comparison. However the winter season starts in October for tourism and that would be another high occupational rate recording season, said Mr. Goonatileke.
We are still discussing about the bargain basement prices, and we found out that certain hotels have had 90-100% occupancy rate. This is where the market situation comes into play, he said. The hoteliers do know their value and they will work towards placing themselves correctly, assuring their value in the industry.
Mr. Goonatileke stated that with or without regulations coming into play, the market situation would improve with time. What really happened earlier is that with the recession and its effects the number of international visits fell and the rooms were empty. Hoteliers had no option but to lower their rates that s why we brought the minimum standard forward. The market will adjust its pace with time and the situation will improve with or without bringing in the regulation.
According to Sri Lanka Tourism Development Authority (SLTDA) statistics, total tourist arrivals to the country have almost doubled since the April-May war period. In June this year the tourist arrivals to the country touched 30,234, a 8-1% increase since 2008 27,960 and in July 42,223 tourists came to Sri Lanka, a 28% increase since the 32,982 who visited the year before. The Middle Eastern travelers increased to 4,149 in July a 103.7% increase since the 1,037 recorded in 2008. The statistics showed a 39% increase from the South Asian region in the month of July with India recording a 45.2% increase and recording the highest number of visitors in the region.