Sri Lankan Hotel Industry Faces Opportunities and Challenges (Round Table Discussion)

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Lounge chairs on the beach in front of Amari Galle Sri Lanka. Photo Credit: Onyx Hospitality International.

Hotel Industry News

Sri Lanka’s travel industry has been dealt a devastating blow as church and hotel bombings on Easter Sunday result in hundreds of deaths and injuries in the country’s worst violence since the Sri Lankan civil war ended 10 years ago. An analysis of the country’s hotel industry follows.

Background

Sri Lank’s tourism industry was on the rebound following a lengthy civil war, which began in July 1983.

The Tamil Tigers sought to create an independent Tamil state in the north and east of Sri Lanka, an island in the Indian Ocean.

The Tamils were an ethnic minority in a country that was predominately Singhalese.

The Tigers were finally defeated in May 209, following a 26-year military campaign.

At least 207 people have been killed and 450 injured in a  series of eight bombing, which were targeted at three churches and three hotels on Easter Sunday.

Among the dead were at least 35 foreigners, including American, British, Chinese, Dutch, Japanese, and Portuguese tourists.

The three hotels were all located in Colombo, the nation’s capital. They included the Cinnamon Grand, the Kingsbury, and the Shangri-La.

So far, no one has claimed responsibility for the attack.

Round Table Discussion

The following post was published o 3 December 2018.

Sri Lanka’s travel industry is on a roll, registering strong growth in tourism arrivals despite devastating floods that plagued the country early in the year. What opportunities and challenges does the industry face? Two hotel group leaders voice their views in an exclusive round-table discussion.

Sri Lanka’s tourism industry got off to a robust start in 2018, and industry insiders are expecting the year to end on a positive note with double-digit growth in the number of foreign tourists visiting the country.

Sri Lanka’s tourism industry experienced growth of 3.2% in 2017 compared to 2016, the Hotels Association of Sri Lanka reports. Total arrivals for the year reached 2,116,407 up from 2,050,832 the year before.

The increase took place despite heavy monsoonal rains in the second quarter, which caused floods and earth slips, sending shock waves through the tourism industry. A large number of cancellations were reported.

India continued to be Sri Lanka’s largest supplier of tourists, which is not surprisingly, considering India’s close proximity to the island nation. Arrivals grew by 7.8% to 384,628. China was the second largest market, with arrivals declining by 1% to 268,952.

Western Europe as a whole continued to be the third largest supplier of tourists, with Britain, Germany, and France accounting for the lion’s share.

The United Kingdom was the third largest tourism market, with 188,159 visitors in 2017, followed by Germany, with 133,275, and France, with 97,282.

With a 9.1% increase in arrivals to 81,281, Australia leapfrogged into Sri Lanka’s sixth largest supplier of foreign tourists.

With the introduction of direct flights between the Sri Lankan capital of Colombo and Melbourne, Australia’s second largest city, the number of Australian visiting the country is expected to continue to grow.

The Maldives was next, with 79,271, followed by the Russian Federation, with 59,191, and the United States, with 57,479.

The Netherlands rounded out the top 10 with 51,148 arrivals.

According to Fitch Ratings, the number of tourists visiting Sri Lanka will continue by an average of 15% per year over the next four years, fueled by a continued rapid increase in the number of Indian and Chinese tourists visiting the country.

Over the last five years, the number of tourists visiting the country from these two markets tripled, accounting for more than 30% of arrivals in 2016.

“We expect government’s destination-promotion campaigns, which are directed primarily at Asian markets to boost arrivals from Indian and Chinese regions, to outpace European traffic over the medium term,” Fitch says.

I interviewed top executives in the hospitality industry about the opportunities and challenges facing the travel and tourism industries in Sri Lanka, particularly in the hospitality sector.

Geography

Formerly known as Ceylon, Sri Lanka is an island nation located in the Indian Ocean southeast of India.

Sri Lanka has a population of 21.2 million people. Colombo is the nation’s capital and largest city. It has a population of 561,315 people.

Sri Lanka has a total land mass of 65,610 square kilometres, with a coastline measuring 740 kilometres in length.

In addition to the main island, there are dozens of off-shore islands, which account for only 342 square kilometres of land.

Sri Lanka has 103 rivers, 51 waterfalls, 45 estuaries, and 40 lagoons. The country has a mangrove ecosystem measuring 7,000 hectares.

Coastal areas of Sri Lanka were occupied by the British in 1798. The country was granted independence in 1948.

Tourism

Sri Lanka has a myriad of tourist attractions, ranging from sandy beaches and national parks to ancient ruins, tea plantations, botanical gardens – the list goes on.

The country’s top three top attractions include …

  • Whale and dolphin watching along the Southern, Eastern, and  Western coasts;
  • Yala National Park, which is home to Asian elephants, leopards, and beautiful birds;
  • Sigiriya, an extinct volcano that was declared a world heritage site in 1982 because of its palace ruins, which include gardens and reservoirs, among other wonders.

Accommodation

Sri Lanka has a wide range of tourist accommodations, ranging from graded hotels to supplementary establishments, guest houses, camping sites, home stays, and bungalows at tea estates in the hill country.

Climate

Sri Lanka has a tropical climate, with warm to hot weather throughout the year in most of the country.

The country is divided into wet and dry zones. The wet zone gets up 2,500 millemtres (98.4 inches) of rain per year. The dry zone get up to 1,900 millimetres (75 inches) of rain per year.

Temperatures are milder in the hills of the country.

Transport

Sri Lanka has 19 airports, including three international airports.

Bandaranaike International Airport, a.k.a. Colombo International Airport and Katunayake Airport, are the country’s primary international airports.

Bandaranaike Airport is the portal through which most foreign tourists enter the country. The airport is located 27 kilometres north of Colombo.

Sri Lanka has an extensive road network. Buses are the most popular mode of domestic transport. There is also an intercity network of railroads

Visas

Citizen of Australia, Canada, China, France, Germany, India, Japan, the Maldives, the Russian Federation, the United Kingdom, the United States, and dozens of other countries can apply for visas on line.

More than 97% of visa applications are granted within 24 hours for stays of up to 30 days from the date of arrivals.

Passports must be valid for at least six months from the arrival date.

Visitors from the Maldives, Seychelles, and Singapore do not need to obtain visas in advance. They will be granted visas on arrival at no charge.

Onyx Hospitality Group

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Lobby of the Ozo Colombo Hotel in Colombo, Sri Lanka. Photo Credit: Ozo Hospitality Group.
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A dramatic sunset lights up the skies over the Amari Galle Sri Lanka in Galle, Sri Lanka. Photo Credit: Onyx Hospitality Group.
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Ozo Kandy Sri Lanka in Kandy, Sri Lanka. Photo Credit: Onyx Hospitality Group.

Russell Cool – Area General Manager, Sri Lanka, Onyx Hospitality Group. Russell spoke with the Accidental Travel Writer about the opportunities and challenges facing the Sri Lankan travel and tourism industry.

Excerpts of the interview follow:

When did Onyx enter the Sri Lankan market and how many properties does it have there?

The Onyx Hospitality Group first entered the Sri Lankan market in 2014 with Ozo Colombo Sri Lanka, followed by Ozo Kandy Sri Lanka in 2015. In July 2017, we opened our first Amari property in the historic southwest coastal city of Galle – Amari Galle Sri Lanka.

Does Onyx have any more properties in the pipeline?

Just a few months ago, we announced the launch of a brand-new Amari hotel in the Sri Lankan capital, Colombo. This new property, Amari Colombo, will be a 180-key property and is slated to open in mid-2019.

To date, we have a total of four properties in Sri Lanka, including the one in the development pipeline.

What are your target markets?

Our main target markets continue to be Europe, especially the UK and the Scandinavian countries.

We have also noticed a shift in travel patterns with more tourists now coming in from the East.

Therefore, we have widened our net to include markets such as India, Southeast Asia, and Australia.

Does your hotel group have any other new hotels under development in Sri Lanka?

We are excited to be in partnership with Winil Holdings in bringing a new Amari to Colombo, the capital city of Sri Lanka.

Upon completion in mid-2019, the 24-storey property will offer 180 rooms and suites along with signature Amari features including the street food market style Ahara Gourmet Gallery, Breeze Spa, and Voyager Lounge.

Other highlights will include a rooftop pool, a bar, a recreation centre, and an elevated Thai specialty restaurant, all offering unparalleled views of the ocean and the city skyline.

The hotel will also offer dedicated executive floors with access to an executive lounge.

Where will the be hotel located?

The hotel is located on 254 Galle Road at the junction where Colombo Plan Road (formerly known as Marine Drive) meets Galle Road.

The Amari Colombo is also perfectly situated for direct access to the planned underground highway linking this vibrant Colombo 3 district to the businesses and attractions of the downtown Fort area.

What are your plans for Sri Lanka?

Onyx has remained committed to the Sri Lankan market since the launch of our first hotel in this Resplendent Isle in 2014.

We have built up a network of three hotels in three unique destinations within the country – Colombo, Kandy, and Galle.

As the tourism industry continues to boom, together with the destination’s growing popularity, we see strong potential in this market, and therefore we will continue to expand our footprint in the Pearl of the Indian Ocean.

Do you have any goals (such as # of properties within # years)?

As part of the journey to become the best mid-sized hospitality company in Asia, the Onyx Hospitality Group aims to achieve a portfolio of 99 properties by 2024.

Sri Lanka will continue to contribute to this vision as this emerging market is growing and more opportunities will arise. 

How has the industry been performing this year in comparison to last year and previous years?

Tourism is a growing industry in Sri Lanka. According to TripAdvisor, the number of people searching for Sri Lanka content has grown by 12% globally.

In addition, data released by the Sri Lanka Tourism Development Authority recorded total tourist arrivals of over 2.1 million in 2017, with a 3.2% year-on-year growth.

Although the growth has slowed down a bit when compared to 2016, the figure was an all-time high despite the setbacks to the tourism industry throughout the year, including the partial closure of the country’s major airport and the flood situation.

Is the launch of new aviation services having an impact on the tourism industry?

With the launch of more direct flights to Sri Lanka (Sri Lankan Airlines late last year launched the Colombo-Melbourne service and recently announced the plan of adding five flights to India; Indigo Airlines also began direct flights from Chennai and Bengaluru to Colombo in January), enhancing the country’s connectivity to the rest of the world, together with the strong marketing effort in promoting what this beautiful island has to offer, it is expected that the growth within the industry will remain positive this year.

We also expect to see the stock of rooms across the country continue to grow as more international chains are now seeing the value of the destination.

For us at Onyx we are expecting to see significant growth in the MICE business for Amari Galle. The leisure segment will also remain as our main focus, with both Ozo Colombo and Ozo Kandy continuing their growth out of their key feeder markets.

Can you say something about the potential of Sri Lanka’s tourism industry?

Sri Lanka is one of the most popular destinations in the region, as it comprises a variety of attractions such as golden beaches, rare and unique wildlife, stunning landscapes, and a rich cultural heritage.

According to the World Tourism Organization, Sri Lanka has the advantage of having 49 sites classified as unique attractions, 91 rare attractions, seven world heritage sites, and six of the world’s 300 ancient monuments.

What about the tourism infrastructure?

On the tourism infrastructure side, the government is investing heavily on the development of projects such as highway networks to Kandy and the south coast, the port city in Colombo, and airport enhancement.

All of these things will attract more major global players to Sri Lanka, and as a result, bringing more tourists from around the world to the country.

Are there any particular challenges facing the industry?

Some of the key destination cities have seen room night supply growth in the last few years.

It is expected that more than 11,000 hotel rooms will come online by end of this year, which may lead to a potential oversupply of hotel inventory and pressure on hotel occupancies.

The other challenge within the hotel industry in Sri Lanka is the shortage of skilled human resources.

In addition, the salary level is also hampering required talent from different industries (and across all levels) to move to the hospitality industry.

What about the opportunities?

MICE [meetings, incentives, conferences, and events] out of Southeast Asia and Australia, with incentives in particular, as well as destination weddings, will be key opportunities for Sri Lanka’s hospitality industry to grow.

What about sustainable travel?

Another area where we see opportunity is ecotourism. Sri Lanka possesses a high degree of biodiversity.

The country has been identified by Conservation International as one of the world’s 34 biodiversity locations. In addition, the Sinharaja Forest Reserve, the country’s last viable area of primary tropical rainforest, has been designated as a UNESCO World Heritage Site.

Eco tourism is a constant in Sri Lanka, where most people want to experience the surroundings in its natural form, such as pristine beaches, wildlife, history, and culture.

A lot of rules need to be followed when traveling; littering is prohibited as is destruction of properties or the feeding wild animals.

Have your properties been doing anything to support eco-tourism in Sri Lanka?

Our properties have been playing an important role in supporting Sri Lanka as an eco-tourism destination, with initiatives to reduce energy and water consumption such as reusing linen and giving guests the option of reusing their towels, sourcing environmentally sustainable production and buying produce from local organic farmers, and incorporating culture and Sri Lanka’s history into the overall guest experience and educating guests on the culture and environment through in-house and online marketing efforts.

Amari Galle even operates a biogas plant for the production of green energy, efficient waste management and energy conversion.

Destination weddings have been a growing trend in Asia. What kind of opportunities do they offer the industry?

A new and unique trend that we have observed is the increase in combining two stunning destinations such as Sri Lanka and the Maldives into one single wedding.

Some of the couples now would host their wedding in Sri Lanka with the presence of their friends and relatives, followed by a honeymoon in the Maldives.

I know that you have properties in Sri Lanka. What about the Maldives?

For us at Onyx, since we have a presence in both Sri Lanka and the Maldives, this can be arranged easily for the couples.

Our hotels often collaborate in destination marketing and trade show participation.

This is also vital to the tourism industry as a whole for hotels to collaborate to promote the two places as wedding destinations.

  • Russell Cool – Area General Manager, Sri Lanka, Onyx Hospitality Group.

Shangri-La Hotels and Resorts

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Timothy Wright – Vice President and General Manager, Shangri-La Hotel, Colombo. Timothy spoke with the Accidental Travel Writer about the hotel and the opportunities and challenges facing the Sri Lankan travel and tourism industries.

Excerpts of the interview follow:

Can you give me a brief overview of the hotel?

The Shangri-La Hotel, Colombo, opened on 16 November 2017 and is situated at the most exclusive address in the heart of the business and entertainment district.

The hotel offers the finest collection of 541 guestrooms, suites, and serviced apartments, with stunning views of the Indian Ocean, Beira Lake, or the cityscape.

There are six innovative restaurants and bars and the city’s largest and most stylish event spaces.

With Shangri-La’s signature Chi, The Spa, a Health Club, and a pool overlooking the ocean, Shangri-La Hotel, Colombo, is the ideal choice for your stay whether on business or leisure.

When did Shangri-La enter the Sri Lankan market and how many properties does it have there in total?

Shangri-La Hotels and Resorts entered the Sri Lankan market in June 2016 with the opening of Shangri-La’s Hambantota Golf Resort and Spa on the south coast of Sri Lanka. Together with Shangri-La Hotel, Colombo, we currently have two properties in Sri Lanka.

Why did you decide to enter the market when you did?

The tourism outlook for Sri Lanka is very positive with tourist arrivals to Sri Lanka seeing substantial year on year growth over the last eight years. This gives much confidence for a global brand such Shangri-La to enter the market, and the response thus far has been extremely encouraging.

We also believe that with international brands such as Shangri-La in Sri Lanka, the marketing of the destination increases and attracts segments such as MICE which may not have considered the country in the past.

What is your target market (can you give an approximate share of foreign vs domestic and the share of your most important foreign markets)?

Our ratio of foreign versus domestic target market is in the ratio 60:40. Our key foreign markets are China, India, and Europe. Our restaurants and catering venues are very popular with the local domestic market.

How has the industry been performing this year in comparison to last year and previous years?

The tourism industry has seen consistent year-on-year growth over the past eight years.

What are your expectations for this year?

Tourist arrivals to the country will continue to rise, especially from Asia. The Asian region has a huge appetite for travel with China and India leading the way. The Middle East too is showing promising growth levels with good connectivity to Colombo.

How important is the wedding/honeymoon sector for your hotel?

This segment is huge both for local weddings as well as increasing interest from Indian destination weddings. Shangri-La Hotel, Colombo, has the largest and most luxurious event spaces in Sri Lanka.

With the diversity of Sri Lanka, from the vibrant city of Colombo to the stunning beaches or the beautiful mountainous tea growing regions of the country, few places offer such a range of experiences, making this a popular destination for honeymooners.

Can you say something about the potential of Sri Lanka’s tourism industry?

Global interest in the destination is high with recent accolades for Sri Lanka including Asia’s Leading Destination at World Travel Awards 2017 and Conde Nast Traveller, Top 12 of Best Countries in the World to Visit for 2017.

Over the next couples of years, Sri Lanka will find her deserved place in the global landscape of tourism.

In addition, I am honoured to say that Shangri-La Hotel, Colombo, was selected by Travel + Leisure magazine, amongst thousands of hotel openings around the globe, to be included in the “It List” of hospitality game changers.

Are there any particular challenges facing the industry?

Colombo Airport is reaching capacity, which will limit the opportunity to increase arrivals into the country. This is a major concern for many in the industry.

Are there any interesting developments in or challenges facing the hotel industry in Sri Lanka you can tell me about? 

Infrastructure development in connectivity over the next two years in Sri Lanka will give convenient and speedy access to all key tourist destinations. This will significantly improve guest experience especially for round trips of the country.

sri-lanka-shangri-la-colombo-hotel-gm-timothy-wright

  • Timothy Wright – Vice President and General Manager, Shangri-La Hotel, Colombo.

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Sri Lankan Hotel Industry Faces Opportunities and Challenges (a Round Table Discussion) is the latest in an occasional series of Round Table Discussions with industry leaders in the global travel, tourism, and hotel sectors.

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