Despite the government’s tourism promotion agency proudly proclaiming that tourist numbers visiting the country is witnessing record highs, both month on month and year on year, the incremental tourism numbers are not trickling down to niche and upmarket tourist hotel operators, industry experts point out.
Citing a recent example, they say that despite tourist arrivals recording a 14% increase during the first half of this year compared to year 2014, the rise had not been reflected in the quarterly financial performance of John Keells Hotels PLC (JKH).
JKH, one of the biggest players in the hospitality industry in Sri Lanka recorded a meager increase of 1% in both its revenue and net profit during the recent quarter ended June 30, 2015, financials showed.
“One point of view is that the incremental number of tourists are only benefiting to the growth in the informal sector of hoteliers while eating into the market of the inbound tour operators. This is a valid argument given that with the advent of online bookings, there has seen an exponential rise in the informal sector during the last few years and they now play a key role in catering to the needs of the value for-money seeking holidaymakers visiting the country,” a top analyst said on the condition of anonymity.
However, the analyst cautioned that as financial results of Aitken Spence Plc, another key player in the leisure sector has not been released as yet there is still an iota of suspicion whether the results of JKH could be reflective of the industry. On the other hand, Jetwing Hotels, which is another major player in the leisure and hospitality industry, does not publish accounts as it is not a Public Listed entity.
John Keells Holdings (JKH) is Sri Lanka’s biggest hotel operator with properties also in the Maldives. Under the umbrella of JKH, John Keells Hotels operates three city hotels in Colombo and 11 resort hotels at prime locations in Sri Lanka and the Maldives.
Meanwhile, Vice President of the Tourist Hotels Association of Sri Lanka (THASL), M. Shanthikumar said the informal sector of hoteliers were eating into the formal market and called for their regulation.
“What we can say is that the number of tourist arrivals does not tally with the room nights. That is because of the boom of the informal sector. The recent growth of the informal sector, while increasing the tourist arrivals has had a hit on the hotel bookings,” Shanthikumar said.
Sri Lanka has a room capacity of 29,103 from those registered with the Sri Lanka Tourism Development Authority (SLTDA).
SLTDA officials stated that moves were afoot to increase the room capacity by at least 2,000 by next year. However on the other hand, it is learnt that the informal sector is estimated to have a room capacity of around 38,000 where bookings are carried out online. “These places are not registered with the tourism authorities and therefore do not pay taxes. They can afford to provide rooms at very cheap rates,” Shanthikumar added.
SLTDA earlier stated that a mobile service would be launched to locate, and register the rooms and villas with the SLTDA.