Govt .target of 2.5 million tourists by 2016 could fall short by around 400,000; report says
The government target of attracting 2.5 million tourists by 2016 may fall short by around 400,000, says a stock market research report. It said proposed gaming centres (under the earlier administration) centering on mixed development projects would have raised the inbound numbers and more importantly, their spending profile.
It said the three potential integrated resort projects proposed under the last regime would have made a substantial impact on the country’s present visitor profile attracting more affluent guests and change the industry as a whole while promoting the country as a foremost tourist destination in the region.
“Under the previous regime three integrated resorts driven mainly by gaming/casinos was proposed to change Colombo’s landscape and possibly help attract the government’s ambitious 25 million arrivals. The three projects were Waterfront Properties by JKH, Crown Casino by James Packer and Queensbury by local high net worth investor Dhammika Perera. However, the present ruling government restricted renting out space for any new casino related purposes, taking into consideration the deterioration of cultural and social values and adverse social effects which trickle down from the casino industry,” a BRS Equity Research report has said, adding that only local conglomerate John Keells Holdings is going ahead with the construction of the mixed development project minus the gaming facilities.
Following other Asian destinations such as Macau and Singapore the government legalized gaming zones in 2010 and as per external research the introduction of casinos has helped to grow the foreign tourist arrivals, specially tourists from India and China. “With high entry barriers to casino operations in India, the development of a gaming hub in the city of Colombo would have contributed to a higher growth in Indian arrivals given its geographical proximity to India and giving Sri Lanka significant competitive edge,” the report added.
The number of smaller to midsized hotels is increasing around the country, which will lead to a mini price war whereby the existing operators are pushed to lower their room rates at the cost of occupancies in order to maintain yield. “Further on the high end segment with several international brands entering the industry, we believe brand loyalty would affect occupancies of the local hotel operators in the future. However, overall service standards of the industry is set to improve along with the new competition,” the report added.
Colombo, the capital of Sri Lanka is a gateway to the country due to the presence of the international airport and the growing number of shopping options and city hotels. Colombo has eight operational malls with a built-up area of nearly 0.66 million square feet and an average vacancy rate of some 5 per cent.
“Restoration projects undertaken by the Urban Development Authority (UDA) at heritage sites such as the Independence Square and Colombo racecourse has increased the retail, cinema and dining options in Colombo. However, despite the growth in retail options the city still lacks high-end shopping malls to entice the affluent traveler by providing them a holistic retail experience within one luxury shopping mall. Sri Lanka is currently promoting itself to the growing number of Chinese tourists and studies show that most Chinese tourists are shopping centric and tech savvy with a love for major brands,” the report said.
New high end shopping malls are set to enter the city’s landscape via development projects only by 2018. The projects are undertaken mainly by companies of the likes of John Keells Holdings, Overseas Realty, Silver Needle Hospitality Group and Shangri-la.