GLOBAL UPDATE : DEVELOPMENT
Sri Lanka
The big boys look for deals while those already present expand and renovate . stirsUP
By Nathan Greenhalgh , associate editor
Beachside pool at Jetwing Blue Negombo , located in western Sri Lanka
The end of the 25-year-long civil war in 2009 coupled with a growing economy is spurring development in the Sri Lankan hotel market .
Largely positioned as a low-cost destination for predominantly Indian , British and German leisure travelers , major players in the island nation ’ s hotel market are trying to attract a more upscale clientele while international hotel companies are scouring for management deals .
“ All the brands are trying to get in there , but they aren ’ t trying to put money in there , so they are dependent on developers ,” says Robert Hecker , managing director at Horwath HTL ’ s Singapore office . “ The market has historically been controlled by local developers and tour operators . There is quite a traditional model of vertical integration , and for hotels , ownoperate is the predominant model .”
As Sri Lanka is experiencing a spike in international arrivals not seen in decades — 2011 saw the number surge to 855,975 from 438,470 in 2008 , according to the Sri Lanka Tourism Development Authority , with a sizable uptick in visitors from Russia — hotel companies in the market are renovating properties and expanding portfolios to meet increased demand .
Minor International , Bangkok , is looking to add two to three hotels in Sri Lanka under its Avani brand — currently it operates two , Avani Bentota Resort and Spa and Avani Kalutara Resort and Spa . Minor entered Sri Lanka in 2006 and launched its first Avani in the country last year . Now Minor is renovating the Kani Lanka Resort and Spa in Kalutara , which it bought in 2010 .
“ We ’ re doing the first Anantara in Sri Lanka , which will open in 2013 . We will own 80 % of that property ,” says Dillip Rajakarier , Minor Hotel Group CEO . “ We see Sri Lanka as an emerging destination . We are keen to invest and develop our portfolio there .”
Although the market is predominantly wholesale , Minor is increasing rate and repositioning its hotels while its portfolio ’ s RevPAR gains are driven by rate instead of occupancy .
“ At least 90 % of what is coming into Sri Lanka is wholesale ,” Rajakarier says . “ The type of tourist is still the lower-end guest . Occupancy is pretty much around the 90s , and we ’ ve seen a 40 % lift on rate over the last year . We are seeing the guest mix changing as well , but it is going to take some time .”
Domestic hotel company Jetwing Hotels , Colombo , operates 13 properties — of which it owns 10 — for a total of 535 guestrooms . Approximately 95 % of its
14 HOTELS April 2012 www . hotelsmag . com