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Ensuring Sustainability in Sri Lanka's Growing Hotel Industry

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Ensuring Sustainability in Sri Lanka's Growing Hotel Industry Ensuring Sustainability in Sri Lanka’s Growing Hotel Industry 2013 IFC Disclaimer “This publication may contain advice, opinions, and statements of various information providers and content providers. IFC does not represent or endorse the accuracy or reliability of any advice, opinion, statement or other information provided by any information provider or content provider, or any user of this publication or other person or entity.” Prepared on behalf of IFC - World Bank Group by PricewaterhouseCoopers (Private) Limited, Sri Lanka and PricewaterhouseCoopers (Private) Limited, India Table of Contents 01 The Sri Lankan Hotel Industry - An Overview 05 1.1. Tourism in Sri Lanka’s Economy 05 1.2. Classification of Tourist Accommodation 06 1.3. Tourist Hotels 07 02 Sri Lanka’s Highly Diverse Hotel Industry 10 2.1. Boutique Villas and Hotels 12 Over 100 New Hotels 2.2. Guesthouses 12 03 2.3. Tourist Hotels 13 15 Under Construction 2.4. Home Stay Units / Bungalows / 14 3.1. Boutique Villas and Hotels - 16 Rented Homes and Apartments Under Construction 3.2. Guesthouses - Under Construction 17 3.3. Tourist Hotels - Under Construction 17 3.4. Resorts - Under-construction 18 04 Resource Utilization in Sri Lanka - An Overview 19 Resource Utilization in Sri 4.1. Power and Energy Sector 19 05 4.2. Power Sector 21 Lankan Hotels 27 4.3. Water Sector 24 5.1. Energy and Water Consumption 28 4.4. Solid Waste Generation 25 5.2. Waste Generation and Management 30 5.3. Resource Efficiency Potential 31 5.4. Resource Efficiency Measures Taken by a 32 Few Sri Lankan Hotels 5.5. Energy Consumption Details of the Sri 35 Lanka National Energy Efficiency Award (SLNEEA) Winning Hotels 06 Resource Utilization Benchmarking – World Over 37 07 How to Ensure Sustainability in Sri Lankan Hotels 38 List of Figures Figure 1: Distribution of rooms according to star category 7 Figure 2: Monthly average occupancy rate of tourist hotels in 2011 and 2012 8 Figure 3: Monthly average occupancy rate of tourist hotels in 2011 (Three star to five star) 9 Figure 4: Monthly average occupancy rate of tourist hotels in 2012 (Three star to five star) 9 Figure 5: Location of Boutique Hotels and Villas by district 12 Figure 6: Location of Guesthouses in districts by grade 12 Figure 7: Location of Tourist Hotels (One star to five star) by district 13 Figure 8: Location of Tourist Hotels by district 13 Figure 9: Home Stay units/Bungalows/Rented Homes and Apartments by district 14 Figure 10: Boutique Hotels under construction by district 16 Figure 11: Guesthouses under construction by district 17 Figure 12: Under construction Tourist Hotels (One star to five star) by district 17 Figure 13: Different sources of energy supply in 2010 (Thousand tonne oil equivalent) 19 Figure 14: Energy consumption according to sector in 2010 (Thousand tonne oil equivalent) 20 Figure 15: Industry sector (Thousand tonne oil equivalent) 20 Figure 16: Household, commercial and other sector (Thousand tonne oil equivalent) 20 Figure 17: CEB’s electricity sales in 2011 according to type of consumer (Giga watt hour) 21 Figure 18: LECO’s electricity sales in 2011 according to type of consumer (Giga watt hour) 22 Figure 19: Total electricity sales by CEB and LECO in 2011 according to type of consumer (Giga watt hour) 22 Figure 20: Electricity sales to the hotel industry according to consumption in 2011 (in Giga watt hour) 23 Figure 21: Quantity of water sold by NWSDB in 2009 according to type of consumer 24 Figure 22: MSW collection according to province (Metric tonnes a day) 25 Figure 23: Typical energy consumption in tourist hotels 28 Figure 24: Typical water usage in tourist hotels 29 Figure 25: A typical hotel's solid waste generation 31 Figure 26: Energy consumption details (2011) of Sri Lanka National Energy Efficiency Award award winning hotels 36 Figure 27: Tourist Arrivals and Accommodation Details- 2002 to 2016 38 List of Tables Table 1: Growth trends in tourism sector over the last 10 years 5 Table 2: List of tourist accommodations (existing) in each district 11 Table 3: Tourist accommodations under construction in each district 15 Table 4: Expected addition in room capacity under each category 16 Table 5: Expected addition to room capacity in tourist hotels (One star to five star) 18 Table 6: Sector specific quantity and type of solid waste 26 Table 7: Resource utilization in the Sri Lankan hotel industry. 27 Table 8: Sri Lanka National Energy Efficiency Award winner hotels in 2010, 2011 and 2012 35 Table 9: Resource utilization benchmarking details of hotels in various countries 37 List of Abbreviations AIHE Australian Institute of Hotel Engineering BOD Biological Oxygen Demand CBSL Central Bank of Sri Lanka CEB Ceylon Electricity Board COD Chemical Oxygen Demand EEPEX Enhancing Environmental Performance in Key Sri Lankan Export Sector ESCOs Energy Service Companies ETP Effluent Treatment Plants EU European Union GDP Gross Domestic Product GWh Giga Watt Hour HACCP Hazard Analysis Critical Control Point IFC International Finance Corporation kWh Kilo Watt Hour LECO Lanka Electricity Company Private Limited MSW Municipal Solid Waste NWSDB National Water Supply and Drainage Board PADGO Portfolio Approach to distributed Generation Opportunities SLNEEA Sri Lanka National Energy Efficiency Awards SLTDA Sri Lanka Tourism Development Authority SLSEA Sri Lanka Sustainable Energy Authority STP Sewage Treatment Plant T.D. Time of Day TSS Total Suspended Solids WTO World Tourism Organization Summary Sri Lanka’s hotel industry is a key driver of economic growth in the island nation. Tourist arrivals have almost doubled since the end of the conflict in 2009. The government of Sri Lanka is implementing a tourism master plan that envisages the arrival of 2.5 million tourists by 2016. This will place a huge strain on resources, especially energy and water, and will create immense challenges in the efficient use of these resources as well as disposal of solid and water waste. Given this situation, Sri Lanka’s hotel industry needs to implement immediate measures that will use resources and recycle waste with greater efficiency. This paper, commissioned by IFC, lists a number of ways in which some hotels are already engaged in this. Most hotels can easily adopt these best practices. At the same time, authorities have already sanctioned over a hundred hotels that are currently under construction in various parts of the country. These new hotels, which plan to open for business in the next two years, will have to adopt resource efficient measures from the outset. As the hotel industry continues to grow rapidly, authorities need to encourage sustainability practices by recognizing and promoting hotels that implement energy saving and recycling measures in their operations. Experience shows that sustainability translates into profitability. Best practices are often subsequently rewarded. With this growth, it becomes important that Sri Lanka's pristine environment does not suffer. Through joint efforts from the government and industry, this growth can be planned and systematic to achieve sustainability. This will result in a reduction in the emissions of millions of tons of greenhouse gases into the atmosphere, which can have irreversible effects on Sri Lanka’s fragile ecology. The Sri Lankan Hotel Industry 01 An Overview 1.1. Tourism in Sri Lanka’s Economy Sri Lanka has witnessed unprecedented economic growth since the end of its three-decade long civil conflict in May 2009. The tourism sector has emerged as a frontrunner in Sri Lanka’s economic activities. According to Central Bank of Sri Lanka (CBSL), the hotel industry contributed around two percent to the country’s gross domestic product (GDP) in 2011. Sri Lanka is on its way to becoming a major tourism destination in South Asia. Table 1 shows the huge growth of the tourism industry, which has nearly doubled in the last three years. Establishments Providing Annual Room Total Tourists Arrived Accommodation Occupancy Rate Gross Tourist Receipts Year (No.) (No.) (Percentage) (million USD) 2002 393,174 455 43.1 363 2003 500,642 498 53.2 441 2004 566,202 585 59.3 513 2005 549,308 626 45.4 429 2006 559,603 749 47.8 410 2007 494,008 758 46.2 385 2008 438,475 834 43.9 342 2009 447,890 871 48.4 350 2010 654,476 783 70.2 575 2011 855,975 906 77.1 830 Table 1 Source Growth trends in tourism Sri Lanka Tourism Development sector over the last 10 years Authority and Central Bank of Sri Lanka Page 05 The Sri Lankan Hotel Industry 01 An Overview 1.2. Classification of Tourist Accommodation Sri Lanka Tourism Development Authority (SLTDA) classifies the tourist accommodation sector into four different categories: Boutique Villas Home Stay Guesthouses Tourist Hotels and Hotels Units Boutique Villas and Hotels Boutique hotel is a popular term to describe sometimes luxurious or unique and unusual hotel environments. Boutique hotels differentiate themselves from larger chain/branded hotels and motels by providing personalized accommodation and services/facilities. There are no standard classification criteria for boutique villas and hotels. Boutique hotels are standalone and unlikely to be part of large hotel chains. They focus on tranquillity and comfort rather than gadgetry. A 24-hour hotel staff often attends to guest services. Many boutique hotels have on-site dining facilities and offer bars and lounges, which may also be open to the public. The concept of boutique or designer hotels is becoming increasingly popular in Sri Lanka. Guesthouses A guesthouse is similar to a hotel or bed and breakfast facility. A guesthouse in Sri Lanka is normally an accommodation unit with five or more bedrooms. Home Stay Units/Bungalows/Rented Homes and Apartments The main aim of these facilities is to provide clean, comfortable and affordable supplementary accommodation to tourists.
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