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Strong Room Rates Propels Hotel Growth

COLOMBO – Sri Lanka’s hotel sector is seeing a return to its dynamic growth story on the heels of strong rate growth. Through mid 2014 upscale and luxury hotels are experiencing surging average room rates (ADR) in excess of 9% year-on-year.

According to hospitality consulting firm C9 Hotelworks Managing Director Bill Barnett, “the positive knock on effect of rising rates has pushed up lead indicator RevPAR (revenue per available room) over 12% when compared to the same period in 2013.

Looking at the present performance data hotel demand is now firmly outpacing supply, which is a strong fundamental for lifting up the country’s hotel sector to the next level in the market cycle, which is proving to be a temptation for investors who are evaluating Sri Lanka’s tourism potential.“

New data from leading research firm STR Global show the decline which started in 2013 and bottomed out in late 2013 and the beginning of this year have now been reversed. Currency volatility and negative international press clearly created a negative impact on hotels.

While neighboring India has been able to post higher occupancy in 2014, Sri Lanka has posted higher average room rates, which in C9 Hotelworks analysis is a reflection of a stronger supply demand scenario.

Commenting on the country’s cyclical turnaround, C9’s Barnett who is in Colombo speaking at the inaugural Sri Lanka Hospitality Investment Conference at the Cinnamon Lakeside Hotel said “after the early hopefulness of the industry in 2011, the market is decidedly back on track” according to positive numbers we have seen though the mid part of 2014.”

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