SRI LANKA’S HOTEL INDUSTRY
Sri Lanka’s hotel industry is a key driver of economic growth in the island nation. Tourist arrivals have almost doubled since the end of the conflict in 2009. The government of Sri Lanka is implementing a tourism master plan that envisages the arrival of 2.5 million tourists by 2016. This will place a huge strain on resources, especially energy and water, and will create immense challenges in the efficient use of these resources as well as disposal of solid and water waste. Given this situation, Sri Lanka’s hotel industry needs to implement immediate measures that will use resources and recycle waste with greater efficiency.
Sri Lanka Tourism Development Authority (SLTDA) classifies the tourist accommodation sector into four different categories:
- Boutique Villas and Hotels
- Guesthouses
- Home Stay Unit
- Tourist Hotels
According to the Sri Lanka Tourism Development Authority (SLTDA) Statistical Report of 2011, 906 lodging establishments with 20,794 rooms were registered with it at that time. These establishments were dominated by tourist hotels, which accounted for 70.5 percent (or 14,653) of total room capacity. SLTDA defines tourist hotels as establishments whose operations are considered to be of international standards.
Tourism has traditionally been the third-largest foreign exchange earner in the country. Sri Lanka recorded over 1.9 million tourist arrivals in 2019, a 21 percent drop from the previous year owing to the aftermath of the April 2019 Easter Terror Attacks. It is estimated that the sector earned around $3.5 billion in 2019. Approximately 570,000 tourists arrived in 2020. The effects of the global COVID-19 pandemic crippled the sector in 2020, which is currently catering almost exclusively to local tourists and international arrivals under strict “travel bubble” restrictions. Sri Lanka offers a mix of attractions including beaches, wildlife parks, rainforests, tea plantations, ancient ruins, Buddhist cultural sites, and festivals. Sri Lanka ranked 77th out of 141 countries in the Travel & Tourism Competitiveness Report 2019 of the World Economic Forum. India and the People’s Republic of China (PRC) contributed the largest number of tourist arrivals, followed by the UK, Germany, and France.
The majority of these rooms are concentrated in the Colombo and greater Colombo area. SLTDA’s grading is based on criteria set by the World Tourism Organization (WTO). The government of Sri Lanka classifies tourist hotels in five different star categories, ranging from one to five stars. Currently, the country has a high concentration of five-star rated establishments, followed by the budget two-star category.
A large number of hotel rooms in the country continue to be unclassified, with no star rating. These are mostly independently owned properties with smaller room inventories that offer less expensive but non-standard product options to tourists. Unclassified properties cater to demand that cannot be met by branded establishments, either due to high room rent or because they are sold out. They will continue to form an important part of the hotel industry in Sri Lanka.
Tourist hotels dominate tourist accommodation in Sri Lanka. The 248 tourist hotels approved by SLTDA have been categorized into two major types: classified and unclassified. Classified hotels are further categorized from one to five stars based on criteria specified by the World Tourism Organization (WTO). A large number of tourist hotels continue to be unclassified, as they do not meet these criteria. Unclassified properties cater to demand that cannot be accommodated by branded establishments due to high rentals or non-availability. They form an important part of the hotel industry in the country.
According to the SLTDA Statistical Report 2011, tourist hotels accounted for 70.46 percent of the industry’s total room capacity for that year. Of the 249 tourist hotels, 114 hotels were classified and 135 unclassified. In the classified category, 14 were five-star hotels mainly concentrated in Colombo and greater Colombo regions. Of the remaining, 15 were four-star, 15 three-star, 35 two-star, and 35 one-star hotels. These were spread across the country but concentrated in Galle, Colombo, Kalutara, Kandy, and Jaffna districts.