Grim winter for local hoteliers

By Shehana Dain

The tourism industry fell short of its bullish expectations as hoteliers complained of insignificant occupancy rate growth during the winter season compared to the previous year.

Although hoteliers had high hopes for the season to boost revenue targets further, many hotels in the country have ended up with empty hotel rooms. Tourist arrivals in 2015 amounted to 1.79 million, up by 17.8%, falling short of the 1.8 million target.

Industry stakeholders told the Daily FT that the continuous absence of a proper destination branding strategy negatively impacted cost the industry immensely in achieving its revenue targets.

The Hotels Association of Sri Lanka (THASL) President Hiran Cooray pointed out that the tourist arrival numbers for December failed to impress as the market seemed stagnant. 

“The winter season is not great for us. We expected it to be somewhat better but it still hasn’t done as well as we thought. It certainly can do better the way we see it.  The main reason for this is the lack of country promotion and positioning. People are still coming here on the safety and stability factor and there is a dire need for us to position the destination and to showcase the new hotel products that have come up and infrastructure development in the country. We haven’t communicated this globally. Some companies are trying to do it alone but overall campaigns have not kicked off yet.”

The southern tourism zone has been hit notably by the recent developments whilst the hotels in the Cultural Triangle, Kandy and Nuwara Eliya and Colombo city hotels have seen a growth in tourist arrival numbers. This has been primarily due to shift in trends where tourists favour round tours rather than a beach vacation.

Moreover, Sri Lanka Association of Inbound Tour Operators (SLAITO) President Devindre Senaratne added that this situation would ease during the next three months with the records of forward booking. However he noted that the situation should have been much more favourable.

“Winter season we are down. A few hoteliers informed me that their occupancy rates are lesser than last year whereas some numbers remain the same as last year. We have rooms to be sold in our beach resorts while our round tour hotels are full mostly during January to March because more people are demanding round tours. The beach only hotels and resorts are taking a hit this year and this should not be the case; we should be fully sold out,” Senaratne highlighted.

Commenting on the plans in the pipeline to market Sri Lanka, Senaratne noted that due to the void created by the lack of a suitable promotional mechanism, the Sri Lankan tourism product had been more price centric.

“Currently SLTPB is trying to do some ad hoc promotions. While it’s a lifesaver for the moment to keep the momentum going, it cannot go on like this. That’s not something we want but given the circumstances, that’s acceptable. We are trying to have a meeting next week regarding this. Our tourism product is more push concentrated than pull because we don’t have a proper marketing plan. We are currently competing in the world market using only an aggressive price strategy.” 

Galle Region Hoteliers Association President Senaka De Silva stressed that adding to its lower occupancy woes, the hotels down south were overpriced when compared to facilities provided by other popular tourist destinations in the region. “One cannot say tourism is flourishing down south or that we don’t have rooms left because our rooms are full. I think the same pattern from last year is continuing or even less. We have to do lot more things for the development of the tourism industry.”

“Our biggest problem is not adding the marketing plan to our economic system; our prices are also high. In other regions they are giving the same facilities or even more at a lower price point. There are a number of hotels coming up in the country and that’s also going to affect our prices. The number of tourists is the same and with no proper promotion, everyone is trying to give the same thing,” De Silva said.

The hoteliers in the Cultural Triangle who have seen positive results in terms of tourist arrivals however aren’t keeping their hopes up in terms of profit margins due to hefty competition.

Cultural Triangle Hoteliers Association President SaliyaDayananda said: “There are lots of new properties in the informal sector opening up in the Cultural Triangle, which has resulted in very intense competition. The formal hotel sector is losing a lot due to this. I don’t think we will make much profit this year due to aggressive price competition even with our hotels being fully booked. In areas such as Sigiriya, Habarana and Dambulla, there are new properties opening every now and then. I would say we should very carefully plan out the development without waiting till it gets out of hand. There is a lot of undercutting taking place.”