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Sri Lanka hotels hike rates despite lower occupancy: consultancy

ECONOMYNEXT – Sri Lanka’s hotels had pushed up room rates most among Asian nations so far in 2016 despite days with occupancy above 80 percent falling, a leisure advisory and analytics firm has said.

Up to October hotel demand has increased 3.5 percent but supply had also increased 4.2 percent with 900 new hotel rooms added to the market, data released by STR, a leisure sector consultancy said at a tourism forum in Colombo showed.

Though overall occupancy had slipped 0.7 percent from a year earlier to 66.3 percent days with occupancy above 70 percent (called compression), had increasing to 100 this year from 79 in 2015, STR Asia Pacific Director Jesper Palmqvist told the Asia Hotel & Tourism Investment Conference held in Colombo.

But days with occupancy above 80 percent (high compression) days, had fallen to 23 from 45.

During compression nights of 80 percent occupancy and higher, Sri Lanka’s average daily rate (ADR) had increased 8.2 percent compared to non-compressed nights. Average revenue per available rooms (RevPAR) had increased by 4,026 rupees.

During the compression nights of 70 to 80 percent occupancy, the average daily rate had increased 9.3 percent.

Compression allows hoteliers to push up rates, Palmquivst said.

Revenue per available room was higher on weekends.

Sri Lankan hoteliers were now learning to manage revenues better Palmqvist said.

Unlike contracts with travel agents, hotels that sell online, can vary rates quickly to boost revenue management.

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Helped by more luxury room opening Sri Lanka’s average daily rate had grown 15.6 percent to 15,854 rupees, and RevPAR to 10,512.

"This growth in ADR was helped by the recent opening of new luxury properties, changing the market’s hotel landscape as more of the rooms available are being sold at higher prices," STR said.

Sri Lanka had been able to grow room rates higher than key Asian markets including India, Thailand, Vietnam and Malaysia. Indonesia had shown negative rates.

It was not clear what role exchange rates played. From around June 2015 the rupee started to collapse sharply from around 132 to the US dollar to around 148 in October 2016. (Colombo/Dec05/2016)
 

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