City hotels hope to end 2012 with 85% room capacity

By Cheranka Mendis

Given the anticipated growth in tourism, the country is likely to see an 85% average occupancy rate and 35% revenue growth in Colombo city hotels in 2012.

Colombo City Hotels Chairman M. Shanthikumar yesterday told the Daily FT that the occupancy level so far has recorded a growth of 65-70%, which is expected to rise up to 95% in the September-October period due to the T20 matches and a telecommunication conference that has been organised.

“What we have achieved so far is reasonably good,” Shanthikumar added.

Statistics released by Sri Lanka Tourism Development Authority show a steady growth of tourist arrivals over the last few months, to record 543, 205 by end July. In the same period last year the number recorded was 465,324.

“By the end of the year we are confident of recording average growth of 85%, which is an increase over last year as we ended with 70%.”

Commenting on revenue, he noted that since 2009, hotels have achieved a Rs. 2 billion increase YoY due to the minimum rates imposed. The growth percentage wise is 35%.

“The minimum rate has contributed to the YoY increase of Rs. 2 billion, which will continue this year as well.”

He noted that there were no revisions planned for the minimum rate as at now and it was likely that the rate would be maintained for at least another year.

“The country has gained in terms of taxes and the stakeholders have seen improvement as well. The staff has benefited as the service charge has increased by 75%. Therefore it is highly unlikely that the rate will be revised anytime soon.”As at now the minimum rate stands at US$ 125 plus applicable tax for five star hotels, US$ 95 plus applicable tax for four star hotels, US$ 75 plus applicable tax for three star hotels and US$ 55 plus applicable tax for two star hotels. The tax component is made up of 12% VAT, 10% Service Charge, 1% TDL and 2% Nation Building, Shanthikumar said.

As at now Colombo hotels house 3,500 rooms and another 3,000 rooms will be added to the portfolio by 2014/2015 when the likes of Shangri-La are completed along with the completion of new rooms currently under construction in existing hotels.

Shanthikumar also acknowledged that the joint marketing campaign to promote Sri Lanka would get off the ground within the next few months with the support of Sri Lanka Tourism, Sri Lanka Association of Inbound Tour Operators (SLAITO) and the Tourist Hotels Association.