Market Trends of Hospitality Industry In Sri Lanka
Increase in the Number of SLTDA Registered Accommodation is Driving the Market
The total number of SLTDA registered accommodation establishments, as of 31st December 2022, was 3,829. The number of classified tourist hotels was 156, and among them, 37 were five-star hotels. The presence of small and medium enterprises is a strong accommodation sector consisting of Guest Houses, homestay units, and Bungalows. It is noteworthy that Classified Tourist Hotels consist of only 4.1%. The total room inventory for 2021 was 48,120. It is noteworthy that Guest Houses had the highest inventory of 15,438 rooms. A comparison of the total number of establishments and total number of rooms in the consecutive years of 2019, 2020, and 2021 revealed that the total number of establishments in 2022 increased by 46.1% in comparison to 2019, whereas the number of rooms had increased by 19.2%. A comparison of room inventory for 2021 and 2022 revealed that the room inventory increased by 1.6%, and the number of establishments increased by 4.7%. The growth of the small and medium enterprises in these consecutive years is noteworthy. Homestay units increased by 4.6% in 2022 in comparison to 2021, while Bungalows increased in 2022 by 11% in comparison to 2021. The number of establishments in the categories of Boutique Hotels, Classified Tourist Hotels, Heritage Bungalow, Heritage Home, Hostels, and Rented Homes remained unchanged from 2021 onwards.
According to the Sri Lanka Tourism Development Authority (SLTDA), there were more than 480 tourist hotels and resorts comprising a total of 25,958 hotel rooms in Sri Lanka at the end of 2022. In Colombo, the room inventory is expected to increase by almost 4,000 rooms between 2023 and 2024, with most of the upcoming supply in the luxury segment. The room inventory on the South-West Coast is expected to increase by approximately 1,800 rooms in the next two years, with the majority of the upcoming supply in the Upper Upscale segment.
Rise in Tourism in the Country is Driving the Hospitality Industry
The rise in tourism in the country is driving the hospitality industry. In 2022, there was a significant increase in international tourist arrivals to the country, with 719,978 visitors recorded for the year, a 270.2% increase compared to the 194,495 tourists who visited in 2021. The number of tourists arriving in September was the lowest at 29,802, yet overall, there was a trend of increasing arrivals throughout the year, with fluctuations in specific months. The growth in arrivals was attributed to factors such as advances in vaccination, ease of travel, lifted restrictions, and increased consumer confidence. International tourist arrivals to Sri Lanka recovered 31% of pre-pandemic levels (2018). Europe, the largest source of tourists to Sri Lanka, enjoyed the strongest relative increase across regions in 2022, with arrivals climbing to 42.5% of pre-pandemic levels (-57.5 versus 2018). Asia and Pacific recorded 213,537 arrivals in 2022 to reach nearly 20% of arrivals recorded in 2018. Africa and the Americas recovered about 31.5% and 38%, respectively, while the Middle East reached 26% of 2018 arrivals. In the period from January to December 2022, Sri Lanka's top five international tourist markets were India, Russia, the United Kingdom, Germany, and France. India was the largest contributor of tourists, accounting for 17.1% of the total traffic. Russia followed closely with 12.7%, while the United Kingdom, Germany, and France accounted for 11.8%, 7.7%, and 4.9%, respectively. Notably, Canada and Poland also appeared among the top source markets compared to the previous year.
