Four years of occupancy, rate stress in SL’s 5 star properties
Sri Lanka’s 5-star hotels are poised to face a “stress in occupancies and rates” for the next four years in the wake of the new hotels entering the market, a tourism expert analyst said on Wednesday. Jones Lang LaSalle Hotels and Hospitality Managing Director Mandeep Lamba told the Business Times, on the sidelines of a media briefing held to announce the release of their report on Sri Lanka’s tourism industry, that in Colombo the luxury and 5 stars will continue to see stress in occupancies and rates over the next three to four years in the short term due to the new 5 stars entering the market.
The report titled “Charting an Upward Momentum: A review of Sri Lanka’s Hospitality Industry” states that it is essential that domestic brands, too, start developing a more varied product offering across different segments as all key leisure tourist destinations globally offer “a plethora of differently tiered hotels that cater to a large variety of travellers”. In this respect, Mr. Lamba explained “What we see in Colombo is a focus on upscale and luxury (hotels) and mid scale development is not in the same range”. In addition he pointed out that Sri Lanka should not be involved in focusing solely on the luxury market as it could limit the arrivals into the country.
International brands were expected to boost the tourist arrivals to the country and the expectation is for a 2.2 million target this year, it was stated. In addition, Mr. Lamba also noted that the minimum rate was a hamper on the competition in the global market.He noted that there are times when the price is higher than the competition around and the minimum pricing can be a barrier. “We think that the minimum room rate was essential when the market opened up. But today the minimum rate should no longer help the market,” Mr. Lamba explained.
The report released has made a number of key findings and it was pointed out that laws need to remain consistent to build confidence among investors; ensure further development of the road, rail, hotel and also support tourists infrastructure particularly in the east coast and other emerging regions to improve connectivity; engage in destination market and focus on alternative tourism; establish and develop tourism circuits; and improve on skilled employees for the industry. High air fares to Colombo were a concern, the report noted adding that there needs to be increased connectivity with countries from which tourists arrive.
Further, the report pointed out that sound urban planning will be critical in Colombo as it is important that the city’s road network, public infrastructure and utilities are planned in line with the large scale commercial developments that are planned. On the East coast, the government and private enterprises need to address the basic infrastructure requirements to tap their true tourism potential. The Hambantota International Airport though developed prematurely and currently underutilized presents an opportunity to drive tourism development in the Southern and Eastern coastal regions and a clear strategy must be established for utilizing this airport, the report highlighted.
Enhanced destination marketing efforts is required while measures promoting Sri Lanka’s cultural importance as a part of the Buddhist circuit as well as tapping into the huge potential for MICE tourism will help reduce seasonality in the market.A key area of concern highlighted in the report was human resources which would potentially be the “dampener to the tourism growth story if this gap is not addressed”. In this regard, focus must be given to attracting new talent, training and improving productivity levels – enhancing the quality of personnel through effective education and skills development will be critical to Sri Lanka’s long term tourism growth and competitiveness.