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attract, but there was a serious gap in the market for the existing budget traveller. As someone who enjoys a lot of travelling and also backpacking in this fantastic country, I found out that we have a lot of young backpackers coming to our island and the market was clearly not providing the required standards in terms of service, safety and a complete solution for this segment. The potential for Sri Lankan to create a strong foothold and grow this sector was obvious and that is why we choose to invest in it.
Q: Before Colombo City Hostel, were budget tourists coming to Sri Lanka? How do you think setting up a professionally-run hostel has impacted these numbers?
A: Yes, there have been budget tourists coming to Sri Lanka for a very long time; in fact this market was a major contributor to our tourist numbers during the war years as this segment was less sensitive to the negative media and the increased security status.
The difference now is that since Hostels Lanka opened there are about four new players and this has lifted the bar on what is given to the guest. The standards have risen and competition within the market now keeps us on our toes and continuously improving. The future looks bright for the budget market, provided the country stays on track with its development plans and of course there needs to be continuous stability.
The customer of today is online, doing research to find value. If operators in the budget market work together and Sri Lanka Tourism continues to improve its positioning of the country, the market will grow.
What we need is to create a comprehensive and integrated strategy for a Sri Lanka brand that covers all aspects of this magnificent island and targets all the segments that are out there which we can tap into and not sell ourselves short by focusing on 20% at the detriment of the other 80%.
Q: What has been your experience in terms of the growth potential of budget tourism in Sri Lanka?
A: These are not the stereotype ‘broke hippies’. Backpacking is a choice, not just based on budget but more for the experience that it affords to meet people, experience culture at its roots and discover things ‘off the beaten path’.
The traveller of today pays over $ 800 to fly to a country like Sri Lanka, bringing their smart phones and laptops and showcasing the country throughout the online world. University or college backpackers are tomorrow’s five-star customers, all of whom fall in love with the country in a completely different way that makes them want to come back.
The growth of budget tourism can be seen in places like Mirissa, Arugam Bay, Hikkaduwa, Kalpitiya, etc., these are not five-star tourist locations but there is a lot of volume. Through budget tourism we are able to sow the seeds for a bright future for higher end tourism.
Q: Do your guests usually come directly to you or do you work in partnership with tour operators to target your audience? What role do partnerships play in developing this sector?
A: Well, we are not just a company selling a bed for a backpacker; we are a bit more than that. We try to give a full experience for our guests by arranging tours, doing trips and giving any possible advice. Obviously this is not without help from local companies, like tuk-tuk/motorbike city tours, bus hires, surfing lessons, and so on. In this way we get what we want and help locals to add up some extra income.
Though 70% of our sales come from booking engines, around 10% from travel agents and significantly the other 20% comes through word-of-mouth or returning guests. So yes, even though we try to grasp all of it, partnerships and cooperation are really important in this business, I believe like in any other business.
Q: What are the key changes that have been made to your strategy since opening the first hostel in Colombo and then expanding out?
A: When we opened one-and-a-half years ago, we didn’t expect to grow and expand so quickly, however our model worked out well, so we thought ‘why not?’ We were one-of-a-kind at that point, leading the way and opening the door to the new market, so we took the chance and expanded faster than planned. Another key thing we realised is that budget tourists also look for providers who can create the right experience for them, and this became a key focus point for us.
I believe love for our country and passion for what we were doing kept us innovating to provide what customers want.
Q: There seems to have been a boom in professionally-run hostels in the last year. What are your thoughts on the increasing competition and the trend you seem to have sparked?
A: The word competition might sound scary; however, we see it as a challenge, which keeps us constantly on our toes. Competition keeps us innovative and brings new ideas; how can we do things better, what can we add? Moreover, it is a pleasure deep down, to see how the market evolved from us being the only ones and now having so much to compete with. I guess we did something right at the end.
Q: What’s next for City Hostels?
A: Well, we did expand quite quickly; in a year-and-a-half we managed to open three very different properties, led by the same goals and concept. However, for Hostels Lanka, it’s not all about growing and expanding; our priority is our customers. Next for Hostels Lanka is to further concentrate on our guests’ needs and give them more than 100%, explore our beautiful island and share it with others in innovative new ways and most importantly never stop improving and learning.
