Peace, informal sector to boost Sri Lanka '11 tourism 20 pct

By Shihar Aneez


COLOMBO (Reuters) - Tourist arrivals into Sri Lanka are expected to grow by 20 percent to a record of more than 780,000 this year, thanks to growing homestays and apartment rentals to accommodate a post-war influx of visitors after the end of a 25-year civil war.

The Indian Ocean island, once referred as one of the more dangerous tourist destinations due to occasional bomb blasts during its conflict with the separatist Tamil Tigers, has attracted more than 250,000 foreign visitors so far this year.

Arrivals have surged 34 percent in the first three months after the island, famous for white-sand beaches, attracted a record 654,476 tourists last year, boosting foreign exchange earned from the industry to a record $575.9 million.

"This is higher than the original projections," Nalaka Godahewa, the head of Sri Lanka Tourism Authority, told Reuters in an interview, referring to the first quarter arrivals.

Tourism is one of the main foreign exchange earners for Sri Lanka's $50 billion economy along with remittances from abroad, garments and tea.

"This year we estimate about 20 percent growth given that World Tourism Organisation projections for the Asia Pacific region would be around 11 percent," Godahewa said.

The 20 percent surge will see post-war Sri Lanka receiving a more-than-expected 785,372 tourists in 2011, he said.

Though existing bed capacity can cater for 900,000 tourists yearly, the Tourism Authority has acknowledged that it should be increased rapidly to attract high-spending tourists with a goal of 2.5 million tourists a year and $2.5 billion revenue by 2016.

MORE BEDS COMING

More than 2,500 hotel rooms are currently under construction, and 3,000 more are pending approval, Godahewa said. Sri Lanka has 22,735 hotel rooms and 1,500 rooms will undergo refurbishment this year.

The country has also attracted nearly $1 billion of foreign investment for a 500-room hotel by Hong Kong-listed hotel operator Shangri-La Asia Ltd (0069.HK) and a shopping mall.

"A hotel like Shangri-La will raise the benchmark in terms of quality of the product and the service delivery which will help further improving the image of the industry," Godahewa said.

But in the absence of new beds at hotels, other alternatives are springing up to cater for both tourists and expatriate Sri Lankans coming home to visit.

"An informal sector of tourist accommodation is growing which includes solutions such as homestay programmes, apartments and staying with friends and relatives," he said.

Godahewa forecast this year's revenue to be around $600 million, only a 4.2 percent gain year-on-year as the room rates garnered from the informal sector are less than standard ones.

Sri Lanka in 2011 has imposed $20 tax per room night on five-star hotels if they fail to charge a minimum rate of $125.

Despite ambitious plan, Godahewa said land acquisition for investment has been slower than expected, since most of the areas identified for development have not yet been released by the relevant government authorities.

The Ministry of Economic Development is primarily focusing on a few projects in the range of $200-500 million each. Sri Lanka aims to attract $2.7 billion into tourism investments.

source - www.reuters.com/