Ensuring Sustainability in
Sri Lanka’s Growing Hotel Industry
2013
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Prepared on behalf of
IFC - World Bank Group by PricewaterhouseCoopers (Private) Limited, Sri Lanka and PricewaterhouseCoopers (Private) Limited, India
Table of Contents
The Sri Lankan Hotel Industry - An Overview
1.1. Tourism in Sri Lanka’s Economy
01 03
05
05
1.2. Classification of Tourist Accommodation
06
- 07
- 1.3. Tourist Hotels
Sri Lanka’s Highly Diverse Hotel Industry
02 04
10
- 2.1. Boutique Villas and Hotels
- 12
12 13 14
2.2. Guesthouses
Over 100 New Hotels Under Construction
2.3. Tourist Hotels
15
16
2.4. Home Stay Units / Bungalows /
Rented Homes and Apartments
3.1. Boutique Villas and Hotels -
Under Construction
3.2. Guesthouses - Under Construction 3.3. Tourist Hotels - Under Construction 3.4. Resorts - Under-construction
17 17 18
Resource Utilization in Sri Lanka - An Overview
19
- 4.1. Power and Energy Sector
- 19
21 24 25
Resource Utilization in Sri Lankan Hotels
5.1. Energy and Water Consumption 5.2. Waste Generation and Management
5.3. Resource Efficiency Potential 5.4. Resource Efficiency Measures Taken by a
Few Sri Lankan Hotels
05 07
4.2. Power Sector
27
4.3. Water Sector 4.4. Solid Waste Generation
28
30 31 32
5.5. Energy Consumption Details of the Sri
Lanka National Energy Efficiency Award (SLNEEA) Winning Hotels
35
Resource Utilization Benchmarking – World Over
06
37
How to Ensure Sustainability in Sri Lankan Hotels
38
List of Figures
- Figure 1: Distribution of rooms according to star category
- 7
- 8
- Figure 2: Monthly average occupancy rate of tourist hotels in 2011 and 2012
Figure 3: Monthly average occupancy rate of tourist hotels in 2011 (Three star to five star) Figure 4: Monthly average occupancy rate of tourist hotels in 2012 (Three star to five star)
Figure 5: Location of Boutique Hotels and Villas by district
99
12 12 13 13 14 16 17 17 19 20 20 20 21 22 22 23 24 25 28 29 31 36 38
Figure 6: Location of Guesthouses in districts by grade
Figure 7: Location of Tourist Hotels (One star to five star) by district
Figure 8: Location of Tourist Hotels by district
Figure 9: Home Stay units/Bungalows/Rented Homes and Apartments by district
Figure 10: Boutique Hotels under construction by district Figure 11: Guesthouses under construction by district
Figure 12: Under construction Tourist Hotels (One star to five star) by district
Figure 13: Different sources of energy supply in 2010 (Thousand tonne oil equivalent) Figure 14: Energy consumption according to sector in 2010 (Thousand tonne oil equivalent) Figure 15: Industry sector (Thousand tonne oil equivalent) Figure 16: Household, commercial and other sector (Thousand tonne oil equivalent) Figure 17: CEB’s electricity sales in 2011 according to type of consumer (Giga watt hour) Figure 18: LECO’s electricity sales in 2011 according to type of consumer (Giga watt hour) Figure 19: Total electricity sales by CEB and LECO in 2011 according to type of consumer (Giga watt hour) Figure 20: Electricity sales to the hotel industry according to consumption in 2011 (in Giga watt hour) Figure 21: Quantity of water sold by NWSDB in 2009 according to type of consumer Figure 22: MSW collection according to province (Metric tonnes a day) Figure 23: Typical energy consumption in tourist hotels Figure 24: Typical water usage in tourist hotels
Figure 25: A typical hotel's solid waste generation
Figure 26: Energy consumption details (2011) of Sri Lanka National Energy Efficiency Award award winning hotels
Figure 27: Tourist Arrivals and Accommodation Details- 2002 to 2016
List of Tables
- Table 1: Growth trends in tourism sector over the last 10 years
- 5
11 15 16 18 26 27 35 37
Table 2: List of tourist accommodations (existing) in each district Table 3: Tourist accommodations under construction in each district Table 4: Expected addition in room capacity under each category Table 5: Expected addition to room capacity in tourist hotels (One star to five star)
Table 6: Sector specific quantity and type of solid waste
Table 7: Resource utilization in the Sri Lankan hotel industry.
Table 8: Sri Lanka National Energy Efficiency Award winner hotels in 2010, 2011 and 2012
Table 9: Resource utilization benchmarking details of hotels in various countries
List of Abbreviations
AIHE
BOD
Australian Institute of Hotel Engineering
Biological Oxygen Demand
CBSL CEB
Central Bank of Sri Lanka Ceylon Electricity Board
COD EEPEX ESCOs ETP
Chemical Oxygen Demand Enhancing Environmental Performance in Key Sri Lankan Export Sector Energy Service Companies
Effluent Treatment Plants
- EU
- European Union
- GDP
- Gross Domestic Product
GWh
HACCP
IFC
Giga Watt Hour
Hazard Analysis Critical Control Point
International Finance Corporation
- Kilo Watt Hour
- kWh
LECO MSW NWSDB
PADGO SLNEEA SLTDA SLSEA
STP
Lanka Electricity Company Private Limited Municipal Solid Waste National Water Supply and Drainage Board
Portfolio Approach to distributed Generation Opportunities Sri Lanka National Energy Efficiency Awards Sri Lanka Tourism Development Authority Sri Lanka Sustainable Energy Authority
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 An Overview
01
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
Accommodation
(No.)
Annual Room Occupancy Rate
(Percentage)
- Total Tourists Arrived
- Gross Tourist Receipts
(million USD)
Year
(No.)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
393,174 500,642 566,202 549,308 559,603 494,008 438,475 447,890 654,476 855,975
455 498 585 626 749 758 834 871 783 906
43.1 53.2 59.3 45.4 47.8 46.2 43.9 48.4 70.2 77.1
363 441 513 429 410 385 342 350 575 830
Table 1
Source
Growth trends in tourism sector over the last 10 years
Sri Lanka Tourism Development
Authority and Central Bank of Sri Lanka
Page 05
The Sri Lankan Hotel Industry An Overview
01
1.2. Classification of Tourist Accommodation
Sri Lanka Tourism Development Authority (SLTDA) classifies the tourist accommodation sector into four different categories:
Boutique Villas and Hotels
Home Stay
Units
- Tourist Hotels
- Guesthouses
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. Tourists in return will experience local customs and traditions, authentic cuisine, and other attractions of the location while staying with local hosts.
Tourist Hotels
Tourist hotels provide paid lodging, usually on a short-term basis. Facilities provided include attached bathrooms, air conditioning or climate control, telephones, alarm clocks, television, and internet connectivity. Snacks and drinks may be available in a mini-bar and facilities for making hot drinks are usually provided. Larger hotels may provide additional guest facilities such as restaurants, swimming pools, childcare, and have conference and social function services.
Our study focuses on tourist hotels, segmented under standard star category classification.
Page 06
The Sri Lankan Hotel Industry An Overview
01
1.3. Tourist Hotels
According to Sri Lanka Tourism Development Authority (SLTDA) Statistical Report of 2011, 906 lodging establishments with 20,794
rooms were registered with it at that time. These establishments were dominated by tourist hotels, which accounted for 70.5 percent (or
14,653) of total room capacity. SLTDA defines tourist hotels as establishments whose operations are considered to be of international
standards.
The majority of these rooms are concentrated in the Colombo and greater Colombo area. SLTDA’s grading is based on criteria set by World Tourism Organization (WTO). The government of Sri Lanka classifies tourist hotels in five different star categories, ranging from one to five stars. Currently, the country has a high concentration of five-star rated establishments, followed by the budget two-star category. A large number of hotel rooms in the country continue to be unclassified, with no star rating. These are mostly independently owned properties with smaller room inventories that offer less expensive but non-standard product options to tourists. Unclassified
properties cater to demand that cannot be met by branded establishments, either due to high room rent or because they are sold out. They will continue to form an important part of the hotel industry in Sri Lanka.
Distribution of rooms as per star category (percentage)
22.04
3,230 1,784 1,178 2,022 1,171 5,268
Five star
35.95
Four star Three star Two star One star
12.17
Unclassified
8.04
7.99
13.80
Figure 1
Source
Distribution of rooms
SLTDA
according to star category
Statistical Report 2011
Page 07
The Sri Lankan Hotel Industry An Overview
01
Figure 2 shows the occupancy rates of tourist hotels by month during 2011 and 2012. Occupancy rates from October to December 2012 are not yet available.
Monthly average occupancy rate of tourist hotels in 2011 and 2012
100%
90% 80% 70% 60% 50% 40% 30% 20% 10%
0%
- *
- *
- *
- Jan
- Feb
- Mar
- Apr
- May
- Jun
- Jul
- Aug
- Sep
- Oct
- Nov
- Dec
Figure 2
Source
Monthly average occupancy rate of tourist hotels in 2011 and 2012
SLTDA
Monthly Statistical Bulletin
- 2011
- 2012
*
Data not available
Page 08
The Sri Lankan Hotel Industry An Overview
01
Figure 3 and Figure 4 show monthly occupancy rates of three star to five star tourist hotels during 2011 and 2012. In Figure 4, occupancy rates from November to December 2012 are not yet available.
Monthly average occupancy rate of tourist hotels in 2011 (Three star to five star)
100%
90% 80% 70% 60% 50% 40% 30% 20% 10%
0%
- Jan
- Feb
- Mar
- Apr
- May
- Jun
- Jul
- Aug
- Sep
- Oct
- Nov
Figure 3
Source
SLTDA
Monthly Statistical Bulletin
Monthly average occupancy rate of tourist
hotels in 2011 (Three star to five star)
- Five star
- Four star
- Three star
Monthly average occupancy rate of tourist hotels in 2012 (Three star to five star)
100%
90% 80% 70% 60% 50% 40% 30% 20% 10%
0%
- Jan
- Feb
- Mar
- Apr
- May
- Jun
- Jul
- Aug
- Sep
- Oct
Figure 4
Source
SLTDA
Monthly Statistical Bulletin
Monthly average occupancy rate of tourist
hotels in 2012 (Three star to five star)
- Five star
- Four star
- Three star
Page 09
Sri Lanka’s Highly Diverse Hotel Industry
02
The Sri Lankan hotel industry is concentrated around Colombo, the economic and
financial hub as well as the gateway to the rest of the country. The southern region
comes second as hotel owners take advantage of Sri Lanka’s beach attractions, followed by ancient cities. The newly liberated eastern and northern regions have the potential to grow and contribute more to this industry. The industry primarily consists of tourist hotels and other establishments that include boutique villas/hotels,
guesthouses, inns and youth hostels approved by SLTDA.
Table 2 has mapped all types of existing tourist accommodation by districts.
Page 10
Sri Lanka’s Highly Diverse Hotel Industry
02
Home Stay Units / Bungalows / Rented Homes and Apartments
Boutique Hotels/Villas
- Guesthouses
- District Name
- Tourist Hotels
000060200022001000010000
000030110011002010211010
010030021012001000211000
010020752045012100011120
020090442013011110410100
23
001015 1380015001100500000
004010 0100014001000200100
000010010000000000000000
1
Ampara
00001011 22023001000401000
01013010 00011012101000100
05
26
010100331020000100010010
2
Anuradhapura
- Badulla
- 7
3
11 1
17
- 5
- 0
4
Batticaloa Colombo Dambulla Galle
9
5
25 0
39
- 0
- 0
6
28 21 8
7
23 27 5
28 32 10 3
8
Gampaha Hambantota Jaffna
9
0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
2
15 13 1
22 25 9
22 14 8
Kalutara Kandy Kegalle
- 0
- 9
- 21
8
Kurunegala
- Matale
- 6
- 10
13 5
- 5
- 12
6
Matara
1
Monaragala
Negombo Nuwaraeliya Polonnaruwa Puttalam Ratnapura Trincomalee Vanniya
- 0
- 0
- 0
- 4
- 11
6
5
- 4
- 6
- 4
- 7
- 4
- 0
- 7
- 6
- 4
- 3
- 5
- 0
- 2
- 0
Total Units
- 27
- 23
- 228
- 259
- 14
- 14
- 15
- 15
- 35
- 35
- 135
- 41
- 24
- 2
Table 2
Source
List of tourist accommodation (existing) in each district
SLTDA
Page 11
Sri Lanka’s Highly Diverse Hotel Industry
02
2.1. Boutique Villas and Hotels
Boutique villas and hotels are spread across various districts of Sri Lanka. SLTDA has, to date, approved 27 boutique villas and 23