For a modestly sized island, Sri Lanka packs a lot into a small space. In recent times it’s been largely under the radar of international tourists – but now more there’s a growing awareness of the country’s abundant natural attractions and its rich cultural heritage.

They’re not the only ones showing interest in this Indian Ocean destination. With a promising economic outlook, strong infrastructure development and burgeoning tourist industry, Sri Lanka is attracting the attention of the global hotel brands.

According to the latest JLL report on the island country’s hospitality industry, Charting an Upward Momentum, the island will see the entry of internationally-branded hotels on a large scale from 2016, starting from on the south-west coast before spreading to the capital of Colombo and eventually to other parts of the country.

“While a large portion of the hotel inventory in Sri Lanka is owned by domestic hotel chains such as John Keells, Aitken Spence and Jetwing, international players have now started to enter the market,” says Gagan Singh, CEO – Business & Chairperson Sri Lanka Operations, JLL.

“The south-west region has also seen strong interest from international brands such as Minor International and Centara and will soon see the advent of large-scale international hotel developments, including the Riu Ahungalla (a joint venture between local chain Aitken Spence and Spain’s RIU), the Shangri-La Hambantota, a second Anantara resort in Kalutara each and the Marriott Weligama.”

Their entry is set to provide a boost to the entire south-west coast region – leading to a rise in both occupancy levels and the average room rate over time

Meanwhile, Colombo will see substantial hotel supply additions in the luxury and upper upscale segments, including the Sheraton, Shangri-La, ITC Colombo and the John Keells Cinnamon Life Integrated resort as well as additional hotels as part of mixed-use developments.

A new phase for Sri Lankan tourism

According to World Economic Forum’s Travel and Tourism Competitive Index 2015, Sri Lanka climbed18 places over the past four years, driven by a strong government focus on the tourism sector, remarkable infrastructure growth and enhanced marketing and promotional efforts for the country outside the traditional European and Indian markets.

“The growth of Sri Lanka’s hospitality sector has been driven several factors,” says Mandeep Lamba, Managing Director, Hotels & Hospitality at JLL India. “The country has a promising economic and political environment with a focus on driving investment and long term economic growth. It’s also seeing year-on-year double-digit growth in tourist arrivals along with impressive development of its infrastructure such as enhanced road connectivity with the completion of the Katunayake Expressway and the ongoing development of the Southern Expressway.”

Sri Lanka’s investment-friendly outlook and the incentives offered for large scale developments are also helping to drum up interest.

However, all this growth will not come without some challenges, specifically short-term hotel supply pressures – a projected shortage of skilled staff, limited air connectivity to key source markets, and competition from neighbouring Asian destinations.

So what do these changes mean for the country’s future? JLL’s Charting an Upward Momentum report expects that the entry of international brands on such a large scale will help to raise Sri Lanka’s profile among an international audience while hotels can be expected to fuel demand through their own marketing channels and by providing new, contemporary buildings and world class services. However, Sri Lanka also has its own work to do. According to Singh, the country needs to focus on its own destination marketing to build awareness with a new tourist base.

Lamba thinks the focus will need to be on attracting new talent and training people to improve their productivity levels through effective education and skills development. Moreover, airline connectivity to key source markets such as India will also need to be improved.

With the government now aiming for 2.2 million tourist arrivals in 2016, Sri Lanka’s flourishing hospitality industry is well positioned for growth – as well as helping the country move closer to its ambitions of being a top tourist destination.

Read more: http://www.jllrealviews.com/

Date: February 22 , 2015
Author: Sparsh Sharma
Publication: Conde Nast Traveler