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Tuesday April 16th, 2024

Stand-alone hotels unviable in Sri Lanka due to high construction, capital costs

ECONOMYNEXT – Standalone hotels are not viable in Sri Lanka due to excessive construction costs, high domestic interest rates and depreciation, an international leisure executive has said.

“It may be a nice thing to have a standalone hotel, for ego, but in investment perspective, I would say run away,” Dilip Rajakarier, chief executive of Thailand based Minor Hotel group said.

Rajakarier was speaking at the Cinnamon Future of Tourism Summit 2019 in Colombo.

Sri Lanka taxes steel to high levels to give super profits to politically connected ‘domestic producers’. Other construction materials including tiles, electrical and aluminum fittings are also taxed, according to critics. Some taxes have been reduced in recent years.

Different types of steel are taxed at 30 and 15 percent import duty, with 15 percent value added tax, 7.5 percent, 2 percent nation building tax and a 15 rupee per kilo cess generating taxes on taxes.

Meanwhile Rajakarier said large hotels have to look at alternative revenue streams.

“You sell residences, you sell timeshare, and you sell, office, retail spaces and all those things. And then the hotel model becomes much more sustainable,” Rajakarier said.

He said domestic interest rates were high and the rupee also depreciated.

“The cost of capital is quite high, if you borrow in Sri Lanka rupees, and the currency’s devaluing as well. So they it’s a double edged sword. So you need to be careful as to how you fund.”

Sri Lanka’s structurally high interest rates are a natural result of currency depreciation which comes from to contradictory policy which generate monetary instability and currency depreciation, critics have said.

Sri Lanka’s monetary instability had worsened since 2012. The rupee fell from around 4.70 to the US dollar in 1950 to about 113 by 2012.

From 2012 to 2019, the rupee has fallen to 180 to the US dollar though three currency crises, with a more acute fall from 131 181 since 2015. (Colombo/Sept25/2019)

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  1. CNW Pathirana says:

    Though Tourism grown almost 5 Times from 2009 to now ( around 350,000 tourists to 2 Million) in 10 years, many hotels never make good profits as yet. Look at accounts of Hotels in the share market..Very Surprising…

  2. yo yo honey says:

    we should think about tourism in a different angle. people only talk about building hotels and blah blah. first of al do a research and see. every tourist coming to sri lanka expect to connect with nature, expect to expirience an exotic feeling. whatever these people are doing they are not doing it for that purpose. yes sri lanka will have a boost in tourism if we build more hotels. but that will only lasts for a few years. we should think beyond that.

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Your email address will not be published. Required fields are marked *

  1. CNW Pathirana says:

    Though Tourism grown almost 5 Times from 2009 to now ( around 350,000 tourists to 2 Million) in 10 years, many hotels never make good profits as yet. Look at accounts of Hotels in the share market..Very Surprising…

  2. yo yo honey says:

    we should think about tourism in a different angle. people only talk about building hotels and blah blah. first of al do a research and see. every tourist coming to sri lanka expect to connect with nature, expect to expirience an exotic feeling. whatever these people are doing they are not doing it for that purpose. yes sri lanka will have a boost in tourism if we build more hotels. but that will only lasts for a few years. we should think beyond that.

IMF urged Sri Lanka to preserve “hard earned gains” after economic crisis: State FinMin

ECONOMYNEXT – The International Monetary Fund has urged Sri Lanka to preserve the hard earned gains after an unprecedented economic crisis under the global lender’s programme, State Finance Minister Shehan Semasinghe said.

The Sri Lankan delegation led by Shehan Semasinghe met Kenji Okamura, the Deputy Managjng Director of the IMF on the first day of the IMF and  World Bank Spring meeting.

“Mr. Okamura commended the Sri Lankan authorities on strong programme implementation and excellent reform progress. He emphasised the need to preserve the hard earned gains Sri Lanka has experienced since the beginning of the IMF programme and continue strong ownership,” the State Minister said in his X (Twitter) platform.

He said the Sri Lankan delegation including Central Bank Governor Nandalal Weerasinghe and Secretary to the Treasury Mahinda Siriwardana explained the recent socio-economic developments to Okamura.

He also affirmed the IMF top official on the authorities’ commitment to ensuring continuity and consistency of macroeconomic policies and reforms undertaken under the programme. (Colombo/April 16/2024)

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Sri Lanka State FinMin meets BCIU in US; discusses post-crisis investment prospects 

ECONOMYNEXT – Sri Lanka’s State Finance Minister Shehan Semasinghe met Business Council for International Understanding( BCIU) in Washington on the sideline of the IMF/World Bank Spring Meetings late on Monday and discussed investment prospects in the island nation which is gradually recovering from an unprecedented economic crisis.
“Our discussion centered on the potential that Sri Lanka offers for international investors. Explored various sectors, including education, tourism, renewable energy, agriculture and technology, where strategic investments can drive sustainable economic growth and development,” Semasinghe said in his X (Twitter) platform. 
“We reviewed the current macro-economic landscape of Sri Lanka, including recent reforms that have transformed to results. Glad to concluded the forum by marking constructive dialogue and a shared commitment to support the economic development of Sri Lanka.” 
“We thank participants, stakeholders holders and global partners for the significant interest shown in unlocking the full potential of the Sri Lankan economy and fostering greater international understanding and cooperation.” (Colombo/April 16/2024) 
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India allows Sri Lanka to import 10,000MT of onions

ECONOMYNEXT – India has relaxed an export ban allowing 10,000 metric tonnes of onions to be shipped to Sri Lanka, the Indian High Commission in Colombo said.

“The exemption for Sri Lanka reiterated India’s Neighbourhood First policy, adding to the Sinhala and Tamil New Year festivities here,” the statement said.

Onion prices went up in Sri Lanka after India and Pakistan banned exports.

The Directorate General of Foreign Trade has issued a notice allowing National Co-operative Exports Limited to ship 10,000 MT of onions.

The UAE has also been allowed to import 10,000MT of onions on top of 24,400MT already permitted.

A large Indian and South Asian expat community lives in the UAE. (Colombo/Apr15/2024)

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