The increase in small and medium sized hotels in the recent past is likely to trigger a mini price war, where existing operators have been pushed to lower their room rates to sustain their yields, a report by Bartleet Religare Securities said last week.

The report released recently further indicated that hotel operators would also be affected by the high influx of international brands into the tourism industry. “On the high end segment with several international brands entering the industry, we believe brand loyalty would affect occupancies of the local hotel operators in the future,” it said.

The government had earlier said it hoped to attract 2.5 million tourists in 2016. However, the report said that the target would fall short by 400,000. “The gaming centered mix development projects would have raised the inbound numbers and more importantly, their spending profile. Sri Lanka’s new government blocked new planned casinos,” it said.