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Friday, 12 February 2016 00:05 - - {{hitsCtrl.values.hits}}
By Shehana Dain
If the two earmarked Integrated Resorts (IR) in the making are permitted to conduct gaming operations, the hospitality sector could add as much as $ 1.2 billion in revenue whilst adding $ 550 million as direct income by 2018.
The upcoming Cinnamon Life and Shangri La integrated resort properties are likely to attract an estimated $ 330 tourist in addition to the base of $ 266 if the proposition remains unchanged, a report by Capital Alliance Holding’s (CAL) research arm observed.
Further, the report projected that Gross Gaming Revenue (GGR) on two IRs comprising 770 rooms by 2018 is expected to amount to $ 550 m. The earnings will be distributed at an average drop of $ 1,350 at one IR and $ 610 at another, and captures only foreign guests due to anticipated restrictions on local patrons.
The report also noted that foreign walk-in clients to spend on average $ 600 at the casinos for the duration of stay in the city.
If strategically developed IRs come into play CAL estimates graded city hotel occupancy to increase by 146% by 2018 from 62% if the proposition remains the same. The firm expects 3,400 room additions by 2018 within city limits and if the opportunity to operate casinos is provided the dual attraction of the city for experience seekers and gaming patrons are expected to drive demand for graded rooms up by 6,800 to 10,200.
Moreover, CAL expects Colombo’s leisure offering to strengthen as high spending tourists are attracted by the IRs, which in turn also increase non-gaming tourists spend. IRs could contribute up to a further $ 611 million due to resorts adding to experiential offerings, of which $ 238 million would be generated from IR guests and $ 373 million from other guests.
A seven day package can increase by 50% to $ 2,000 with one family stop at an IR the report observed. “Thus a family of four visiting Sri Lanka would make a longer stop in Colombo due to the attraction of the service offerings at an IR. We expect individuals who visit Sri Lanka for no gaming reasons to spend a majority of money at shows, events and high-end restaurants than gamble,” said CAL Head of Research Purasisi Jinadasa.
According to data apart from gaming operations, an IR will have ancillary businesses offering experiences, including food and entertainment. The average cost for two at regional destinations offering similar products is Rs. 31,000 for dinner and Rs. 13,000 for a performance/event.
Elaborating on job opportunities erected from IRs, the independent research firm reflected that one 800 room IR can result in an estimated 4,200 direct and indirect jobs. CAL assumes a new IR will employ approximately 1000 staff, which is in line with the Colombo 5-star city graded hotel staff to room ratio of 1.3 fold. Further, the IFC (International Finance Corporation) estimates on average, indirect employment is threefold the hotel job creation in similar countries globally. As a result, one IR with 800 rooms may generate 4,200 in new employment opportunities in Colombo.
Placing local hoteliers in a fix, Tourism Development Minister John Amaratunga on Wednesday raised a question asking why their investments to Maldives to set up resorts are crowding when plenty of opportunities available in the eastern coast of
Sri Lanka.
At an industry forum, the Minister said that even Maldivian hoteliers are viewing Sri Lanka’s tourism product to be a far superior one.
“The east coast of this country is a virtual paradise but not many are aware of this gold mine. On a recent visit there I discovered that the beaches are identical to those found in the Maldives. In fact a Maldivian entrepreneur has discovered this similarity and has already opened a luxury property in Pasikudah. He has realised how much more Sri Lanka has to offer than his own country.”
In that context, the Minister asked: “This begs the question as to why our own nationals are flocking to the Maldives when a richer experience can be had in their own country at a fraction of the cost and minus the hassle of travelling. The east coast and the Kalpitiya peninsula are ripe for investment. This is the time to seize the opportunity that Sri Lanka is offering.”
Elaborating on why Sri Lanka is begs to differ from Maldives, he noted: “Unlike the Maldives which can only offer the sun and sea, we have a 2,500-year history to showcase to the world and the eight World Heritage Sites we boast of, offer an unparalleled window into much of this rich culture and history.” (SD)
