Sri Lanka is unlikely to achieve the planned target of 2.5 million tourists by 2016 due to the lack of sufficient rooms.
Asked whether the much-touted plan of reaching 2.5 million arrivals by 2016 is possible (though there is a lack of rooms), Economic Development Deputy Minister Lakshman Yapa Abeywardena, during an interview with the Business Times, said in a lighter vein, “that is also propaganda.”
He said that Malaysia was able to achieve only 70% of their target and similarly Sri Lanka too might be able to achieve 80% of the given target. It was pointed out that in view of the projected 40,000 number of required rooms by 2016 the country will be able to achieve over 30,000 by the given period as some hotels are still undergoing construction and renovation. “I don’t think it will be successful,” the minister said adding that construction work is slow and going forward some problems do persist at times.
However, the minister said the government will “try our best” to achieve these targets inspite of the challenges.
Currently the country has a capacity of 15,000 rooms and in a bid to increase the rooms the government has opted to go ahead with the home-stay concept. According to the plan currently the government has received 464 applications and approved 169 amounting to a total of 6000 rooms.
Under the government initiated One Stop Unit, Sri Lanka has been able to receive 112 applications with final approval granted for 20 while 17 are still pending under the Environmental Impact Assessment (EIA) and four rejected.
In this respect as of April 30 this year, the government has been able to attract large projects worth US$850 million. Shangri-La has invested US$350 million with 500 rooms for its hotel in Colombo while the other in Hambantota is worth US$150 million with 300 rooms while CATIC hotel from China has invested US$350 million with 500 rooms in the capital.
Investment data also indicates that the highest concentration of hotel projects in the pipeline amount to 99 with the Western, Southern and Eastern Provinces generating the highest number amounting to 33, 23 and 22, respectively.
Statistics indicate that a total of 16,500 potential rooms is expected to be achieved by 2014 with the breakdown as follows: 1, 250 in 2011, 5,800 in 2012, 7,150 in 2013 and 2,300 in 2014. It has been observed that as tourism is a private sector-driven industry and the investment is primarily coming from the private sector there should be over US$2 billion to construct all the 40, 000 rooms required to cater to the 2.5 million tourists. Curently investment as of year to date April from applications received is at US$784.75 million with additional rooms numbering 5,938.
Speaking of the private sector involvement the minister noted that the government is providing tax concessions to some extent to those in the tourism sector.
This is mainly within the first 2-3 years until land acquisition and construction is completed, he noted.
Minister Abeywardena noted that while tourist arrivals had increased over 40% in April with South Asia recording a 13% increase and Asia gaining by 10% a drop is expected in May.
He noted that Sri Lankan should achieve its end-of-the-year target of 800,000 arrivals.
New regulations to overcome ills of tourist influx
The Government is gearing up to implement a host of new regulations within three months impacting on all stakeholders in the industry.
This is expected to create a number of key developments for the tourism industry going forward from simplifying the tax process to addressing environmental problems and new areas for hotel development to whale watching. Sri Lanka Tourism Promotion Authority Chairman Dr. Nalaka Godahewa told the Business Times that these regulations will be brought in “due to the influx of tourists.”
Economic Development Deputy Minister Lakshman Yapa Abeywardena explained that under the new regulations one of the main issues addressed will be the availability of lands from the current buffer zone of the wildlife parks that will be open for new investments.
He pointed out that these buffer zones will provide space for investors to construct new hotels under the wildlife guidelines with proper approvals.
It was observed that currently there are investors interested in setting up projects in these lands as they are in close proximity to the wildlife parks and will be a key attraction to tourists.
Land will be provided for the construction of about 25-30 hotels, the minister said.
He further pointed out that with taxes being levied under the provincial councils, central government and Pradeshiya Sabhas in the future this process will be simplified.
This will provide for stakeholders in the industry to have a simple tax regime without too many complexities, Minister Abeywardena said. |
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