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Sri Lanka’s untapped potential

​​​​​​​​​​​​01 Oct 2014

Sri Lanka's untapped potential

Sri Lanka continues to witness tremen​dous growth. Visitor arrivals have almost tripled over the last decade and more international hospitality brands appearing in the capital, Colombo.

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Falling like a tear from India's flank, Sri Lanka's otherworld beauty has moved many visitors down the centuries. Known to Arab traders as Serendib – fitting source material for the word 'serendipity' – and British colonists as Ceylon, the island nation, with its tropical bounty of paradise beaches, jungle clad mountains and tumbling waterfalls, is as visually stunning as any on earth.

The country is now at peace after a protracted civil war that ended in 2009 and the government headed by President Mahinda Rajapaksa is making sustained and tangible efforts to improve transport and airport infrastructure. Given the enticing nature of the product, it is not difficult to see why investors and developers regard Sri Lanka as a potential heavyweight destination for luxury tourism in Asia.

We feel very bullish about Sri Lanka,” says Dilip Rajakarier, Chief Executive Officer of the Bangkok-based Minor Hotel Group, which has the Anantara and AVANI brands as part of its portfolio.

"We entered the country when the civil war was still raging so we took a long term view to which is now paying off. We launched 2 AVANI properties over the last few years and our pipeline is strong".

The debut of the luxury Anantara brand in Sri Lanka is due in the third quarter of 2015 with the Anantara Tangalle Resort slated to open on the country's south coast. The Anantara Kalutara, adjacent to the existing AVANI Kalutara Resort, also on the south west coast of Sri Lanka, is also scheduled to commence operations at the same time.

"I always compare Sri Lanka with Thailand," continues Rajakarier. "They have similar attributes in terms of landscapes – spectacular mountains with cooler weather and classic tropical beaches – plus there is a rich Buddhist culture and friendly people. Also, everyone who visits Sri Lanka loves it."

Commenting on the untapped potential of a country that is only now experiencing sustained peace Rajakarier adds: "While countries like Thailand advanced over the last 20 or 30 years, Sri Lanka stood still. There are many factors for this, the civil war not the least of them. There's a lot of scope for tourism here, and we are seeing more big brands invest to drive up the standard of the property inventory."

The roll call of international hospitality names targeting Sri Lanka is certainly impressive. Sheraton, Hyatt and Moevenpick have all announced hotel projects in the capital, Colombo, while other big hotel firms with their sights set on the country include Shangri-La and Marriot. The addition of these major players will complement an existing hotel sector that has been burnished by the presence of several acclaimed independent boutique hotels as well the award-winning Amangalla and Amanwella run by the Aman Resorts group.

Peter Henley, CEO of Onyx Hospitality, a Thailand-based hotel group, is another who is hugely optimistic about the prospects for Sri Lanka. Onyx debuted its OZO brand in Colombo in 2014 with plans to open a further two properties in Sri Lanka's second city Kandy and the historic town of Galle in the south of the country over the coming two years.

Enthusing about his company's entry into the market, Henley predicts a productive return for investors in Sri Lanka.

Infrastructure has been an issue in the past, but the government has taken steps to bring up the standards.”

Sri Lanka now has three international airports, Bandaranaike and Ratmalana near Colombo and the Mattala Rajapaksa Airport in the southern hub of Hambantota. Meanwhile, new highways such as the Colombo – Katunatyake Expressway, a fast airport link between the capital and Bandaranaike Airport that opened end 2013, have cut journey times significantly.

Infrastructural issues remain. Sri Lanka's east and southeast coast is widely held to have the best beaches in the country, but experts say it will be another few years before it is attractive to investors. "It needs one major player to go in and lead the way," confides Rajakarier. Meanwhile, rebuilding and road construction is on going in the north and northeast of the country, the areas worst affected by the civil war.

Despite some challenges, the tourism sector in Sri Lanka continues to witness tremendous growth. Visitor figures have almost tripled over the last ten years from around 500,000 in 2003 to 1.3 million in 2013. The Sri Lankan Tourism Development Authority (SLTDA) has set a target of 1.5 million tourists in 2014, and a long-term target of 2.5 million annual arrivals in 2016, which amounts to a compounded annual growth of over 25% year on year. While Sri Lanka earlier depended heavily on European tourist traffic, there has been a recent increase in tourist inflow from the Asia Pacific region, particularly from India and Mainland China. Many visitors, meanwhile, are using Sri Lanka as part of a twin centre holiday due to its proximity to the Maldives.

"It will continue to evolve as a tourist destination I have no doubt," concludes Henley. "The infrastructure and hotel inventory is improving all the time while the destination itself offers fantastic beaches, vibrant cities and plentiful wildlife and nature."