Tourism unlikely to return to troubled war times-Bartleet Stock brokers report

With Sri Lanka now targeting upmarket tourists backed by adequate resources, it is unlikely the industry will roll back to the war era when the industry was heavily affected, says a top broker.

But, the report by Bartleet Stockbrokers noted, the key aspect would be how effectively Sri Lanka markets itself as a destination.

The broking firm in its report on the Confifi Group of Hotels, said this group’s hotels being refurbished or upgraded after the tsunami with all facilities being restored are in a better position to provide quality services at premium prices and would no doubt attract its client base from the European region.

“The situation in the country would no doubt play a major role in the revival of the industry which would have a direct impact on the group’s bottom line,” it said.

The group has four hotels -- Eden, Riverina, Confifi and Club Palm Garden – all in and around the southern Beruwela beach.

The report said that just when tourism appeared to be heading in the right direction with good first half 2006 arrivals, a resumption in hostilities has bought about lingering worries among tourists, which would no doubt have a ‘behavioural impact on the industry.’

It said aid workers kept the industry alive at least for the first six months this year while a recovery was expected in the final four months during the tourism peak season with almost all resorts posting positive earnings.“A sphere of hope was evident in the first half of 2006 with arrivals improving by 17% year-on-year largely led by the Asian region mainly India while the second largest destination continues to be the European region led by UK. Although, the months of June and July saw a marginal decline of 3.6% & 2.45% mainly due to the growing tension in the country,” the report said.

This five star hotel in the Confifi stables began operations in 1995 and saw a slow but steadily growing segment in the tourism industry. Eden was operating at 100% occupancy during the pre-tsunami period but suffered an Rs. 80 million damage from the tsunami and had to close the hotel for three months of the peak season.

“With leisure tourists not flocking in as expected after the tsunami Eden failed to generate profits during the first three quarters of FY 2005/06 but saw a strong comeback during its final quarter generating a profit of Rs.21 million thus minimizing the total loss to Rs.13 million,” the report said.

This was the first among the Confifi group of hotels to obtain a listing on the Colombo bourse way back in 1983. It is also one of the most famous hotels in the region being rated as one of the most exclusive resorts down south.

Post-tsunami refurbishment of the hotel cost Rs.189 million. The hotel was however quick to recover with operations resuming within three months of the tragedy with most services being available to guests.

The hotel which earns most of it’s profits from providing accommodation has over the years always performed up to expectations except in certain years where the tourism industry as a whole has suffered intensely mainly due to the northeast conflict.

Club Palm Garden

This hotel provides a different experience and concept with it’s “All inclusive Concept” becoming popular among foreign & local tourists. Occupancy here to fell after the tsunami resulting in a loss of Rs. 40 million for FY 2004/05. However the loss was minimized to Rs.21 million during the financial year 2005/06 as a result of increased occupancy levels during the 2005/06 winter season.

Confifi Beach Hotel

With occupancy levels of 30% not being up to expectations, the management has decided to demolish the existing building which consists of 73 rooms and construct 32 luxury villas with the intention of catering to up market tourists.

The company expects the project to cost Rs.600 million and hopes to commence operations no sooner the environment becomes conducive for the tourism industry, the brokers’ report said.