Sri Lankan hotels

CHAPTER 2
LITERATURE REVIEW

2.1 Revival
2.1.1 Background of the Sri Lankan Hotel Industry
In a country like Sri Lanka booming tourism industry plays a significant role in the generation of income/ foreign exchange and provision of employment opportunities which results in improving the country 's macro-economic performance. The Ministry points out that refurbishment of hotels, building of new hotels etc indicate the spread of the impact of tourism sector to other economic sectors.
The hotel sector in Sri Lanka had been performing below its potential for the last few years mainly due to the unfavourable security condition that prevailed in the island, natural disasters like tsunami and negative travel advisories. Hotels suffered for years with low earnings owing to low arrivals, rising fuel and other costs such as interest rates(Stockbrokers, 2010).The below figure 2.1 shows that it’s perceived that there would be great potential in the hotel sector investments in Sri Lanka with the war coming to an end as 1/3 rd of the island adding to the countries tourism scope.

Therefore the hotel sector has shown significant signs of recovery where the Government of Sri Lanka has made foreign direct investment agreements as shown in table 2.1 in order to boost the hotel sector in Sri Lanka.
Global Hotel Chain Giants like Sangrilla Hotels to start in Sri Lanka
One of the Sri Lanka’s Top Investors Mr Dammika Perera has decided to setup two 5-Star
Hotels, one in the Southern Coastal belt with 620 Rooms and the other in Negombo with
380 rooms (very close to Airport)
Aitken Spence will setup a 5-Star Hotel in Colombo at D. R. Wijewardena Mawatha with an investment of US$ 30 Million
Aitken Spence and Six Senses (Joint Venture) will put up a Hotel in Ahungalla (Southern
Coastal belt) with an investment of US$ 40 Million
Sri Lanka Insurance Company will setup a 5-Star Hotel in Hambanthota with 200 rooms

Table 2.1: Forecast for investment in Sri Lankan hotel

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