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Saturday, January 15, 2011

Sri Lanka expects US$1.5bn in hotel starts in 2011

Jan 15, 2010 (LBO) - Sri Lanka is expecting 1.5 billion US dollars of mainly hotel project starts in 2011 as investors pour money into the sector in the wake of booming tourist arrivals following the end of a war, economic minister Basil Rajapaksa said.

"We expect 1.5 billion US dollars of hotel projects to start this year," Rajapaksa said. "Investors are looking for a stable power supply, infrastructure and political stability.

"We have beaches, historical sites, wildlife. It was security that we lacked. We have invested a lot of money to bring back security."

Sri Lanka ended a 30-year war in May 2009 and defence spending has since stabilized.

The government is also cutting its budget deficit, which has kept interest rates high and the central bank has reduced printing money to cut interest rates and finance the budget.

But inflation rose 6.9 percent December partly due to US Federal Reserve money printing which is weakening the US dollar and driving up global commodity prices.

Tourism arrivals rose 46 percent in 2010 to 654,000 with steep increases from Western Europe and South Asia.

Hong Kong based Shangri La leisure group and China National Aero Technology Import and Export Corporation (CATIC), a state firm is expected to start two 500 million dollar hotel, apartment and shopping projects by Colombo's main beachfront.

The two firms have to pay 125 million US dollars for two blocks of land. Shangri La has already paid up, and CATIC is expected to pay soon, Rajapaksa said.

Rajapaksa says the project will start soon as investors who put up large volumes of money would not want to delay.

The government's tourism authority is also attracting investments into several other tourism zones. Last month Sri Lanka's tourism chief Nalaka Godahewa said 500 million dollars of bids had come for several islets offered to investors off the Northwestern coast.

Domestic business groups including, John Keells Holdings, Aitken Spence, Jetwing, Amaya are planning or has started building new properties, expanding or upgrading their properties.

source - www.lbo.lk