Breakthrough for Kuchchuveli

The high potential yet much delayed Kuchchuveli Tourism Zone has received a breakthrough with the Government deciding on the way forward in terms of leasing of land.

A decision has been made to give investors the land on a 99-year lease on upfront payment calculated at Rs. 20 million per acre as opposed to 30 year lease offered previously on an annual lease rental basis.

This decision had been conveyed at the 2011 first meeting of the Tourism Cluster of the National Council for Economic Development (NCED) chaired by Secretary to the Ministry of Finance and Planning as well as Economic Development on Friday.

The Kuchuchveli Tourism Zone (KTZ) had originally drawn proposals from 48 investors including some of the major players in Sri Lanka tourism. However due to issues with the land and its release the KTZ initiative suffered long delays.

KTZ spans around 500 acres and the 48 parties were allocated more or less 10 acres each. As per the new decision upfront lease payment on a 10 acre plot will cost Rs. 200 million or US$ 2 million. Some of the longstanding players in tourism welcomed the move saying it will weed out those who after being short-listed went around showcasing the approval to sell the land block for a higher fee. This segment were more “fly by night” land dealers and not leisure sector specialists.

This modus operandi exposed the KTZ to the danger of it possibly drawing all kinds of odd operations as opposed to a planned development.

“The new decision hopefully should enable the serious players to get on with their projects,” one source said adding that there might be prospects to acquire additional land.

However other analysts were concerned over the move sidelining the serious but smaller leisure firms. “For them the land cost as per new arrangement might make the project commercially unviable,” it was pointed out.



The environs of KTZ, located on the Trincomalee-Pulmudai road, is billed as one of the best virgin areas for new developments. The land border an 8 km stretch of white sand beach on the Eastern coast. Though the KTZ land mass could house around 5,000 rooms, the eventual number is likely to be less given the fact that some of the leading hoteliers preferring to go for quality than quantity.

Had the land and leasing issues been rectified much earlier, construction work of planned resorts in KTZ could have commenced late last year or early 2011. However the industry is hopeful that with the Government arriving at a firm and final decision, work could start by mid-2011 or latest by end 2011.

The KTZ is part of Sri Lanka Tourism’s overall push to boost the number of quality rooms to cater to an estimated 2.5 million tourists by 2016 from the 650,000 in 2009. The other projects are Kalpitiya Tourism Zone and the Paasikuda Tourism Zone.

Industry sources said that it is likely that the same process decided for KTZ be applied for the Kalpitiya Zone. If this decision is made, then a re-tendering of Kalpitiya estimated to have 4,000 to 5,000 rooms will follow. For Passikuda too several projects have been approved to build 1,000 rooms though only two resorts are being constructed at present.

No for NBT relief

THE Government last week remained firm in its position that all qualifying hotels must contribute to State Revenue via the 2% Nation Building Tax (NTB).

This was emphasised at the Tourism Cluster Meeting under the National Council for Economic Development (NCED) on Friday noting that Government needs support to revamp socio-economic infrastructure which in turn benefits the tourism sector and the leisure industry too must chip in.

The smaller hotels have been objecting to the 2% NBT on turnover but at Friday’s meeting it was categorically stated that all hotels ranging from 1 to 5 star will have to pay.

Lanka now world’s fastest growing tourist destination

 First it was the stock market and now the glory is for tourism thanks to the end of war phenomenon.

The 46% growth in tourist arrivals in 2010 has placed Sri Lanka as the world’s number No.1 destination in terms of percentage growth with the second best in terms of growth being the US (up 26%).

The sharp rise in Sri Lanka is however from a low base. Sri Lanka attracted a record 650,000 tourists in 2010 whilst target for this year is over 700,000.

With 96% gain in 2010 on top 125% return in 2009, the Colombo stock market is the world’s best performing for two consecutive years.



The United Nations World Tourism Organisation (UNWTO) last week revealed that international tourist arrivals were up by 6.7% compared to 2009, with positive growth reported in all world regions. Worldwide, the number of international tourist arrivals reached 935 million, up 58 million from 2009 and 22 million more than the pre-crisis peak level of 2008 (913 million).

Asia with arrivals up 13% was the first region to recover and the strongest growing region in 2010. International tourist arrivals into Asia reached a new record at 204 million last year, up from 181 million in 2009.

Following a year of global recovery in 2010, growth is expected to continue for the tourism sector in 2011 but at a slower pace. UNWTO forecasts international tourist arrivals to grow at between 4% to 5% in 2011, a rate slightly above the long-term average.