Sri Lanka’s hotels and realty affected by construction costs and interest rates: expert
Standalone hotels are not viable in Sri Lanka due to excessive construction costs, high domestic interest rates and currency depreciation, according to Dillip Rajakarier, Chief Executive Officer of Minor Hotels and Chief Operating Officer of Minor International, who addressed the Cinnamon Future of Tourism Summit recently.
Speaking at the event, he reportedly noted that “it may be a nice thing to have a standalone hotel, for ego, but in investment perspective, I would say run away.”
Construction costs in Sri Lanka are considered exorbitant owing to high import taxes.
Accordingly, construction materials such as steel, tiles, and electrical and aluminium fittings are heavily taxed, posing a challenge for the construction industry and related sectors.
Contradictory policies are also said to generate monetary instability and currency depreciation.
Experts point out that the recalibration of domestic policies is the only way this issue can be effectively dealt with – transparent regulations that stimulate development and lower the cost of construction are the need of the hour.
Therefore, policy makers and the private sector are urged to reform and promote the industry.