An exhaustive and independent report into Sri Lanka’s tourism prospects by one of the world’s leading providers of global business intelligence, has confirmed that the Indian Ocean island currently offers some of the region’s best opportunities for investment.
The report by Euromonitor International is not uncritical: infrastructure still needs to be improved; airport capacity is lagging behind demand and telecom connectivity is still a problem.

But the report goes on to say that these issues are being addressed by a Sri Lankan government that has realised the golden opportunity that tourism offers the island as it emerges from years of conflict.

The findings will provide useful background for discussion at the inaugural Asia Hotel and Tourism Investment Conference (AHTIC) in Colombo in November.

The author of the report, Vishnu Vardhan, research analyst at Euromonitor, said,  “The world is slowing down economically. People are looking for economical places to travel, so there’s an interest in inexpensive destinations. Sri Lanka is one of them. Growth in the sector was by 17 per cent in 2014-15 in terms of the number of inbound arrivals. Its lower cost is a main driver of visitor growth.”

Sri Lanka’s concentration on developing the luxury hotel market is highlighted by Euromonitor. Currently there is demand for budget hotels, but the number of travellers from Western Europe and  North America is seeing double-digit growth and they tend to stay in luxury properties.

With arrivals in 2015 of 1.8m, expected to reach 2.6m by 2020, transport is a key issue. Road transport is good, but, the report points out, it will be put under considerable strain as visitor numbers grow, and the railways need urgent improvement to take some of the burden.

Colombo airport is a bottleneck, already operating above capacity, according to the report. It says expansion plans are due to be completed in 2020, more than doubling capacity. And fast road and rail links to the capital are in hand.

Euromonitor says the tax benefits on offer are good for tourism investment, and the Government’s planned tourism zones are a sensible way forward. But infrastructure improvements are a priority, not just in transport, but also in connectivity: electronic payment in some hotels is still lacking.