str nzhic 2019 -...

© 2019 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively “STR”) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR.

No strategic advice or marketing recommendation is intended or implied.

Sri Lanka

Emerging Stronger Through Crisis

23rd September, 2019 |Colombo | Cinnamon Grand

Vidhi Godiawala |Business Development Manager |Central & South Asia

[email protected]

© 2019 STR. All Rights Reserved.

APAC: Market Snapshot

Recovery Stories: Lessons From Other Markets

Sri Lanka: Hotel Performance & Crisis Impact

Agenda


STR | The world’s largest hotel performance sample


Reliable & Trusted Source of Hotel Data

Tourism Associations

Global & Domestic Hotel Operators

Government Tourism Agencies & Destination Management Organisations


3.8% 3.5% 3.2% 2.9%4.4% 2.0% 3.9% 2.7%

2018 2019 2018 2019

Supply Demand

Demand slowing down in generalTotal APAC & Central & South Asia, Supply & Demand Growth, YTD August 2018 – 2019

Supply

Asia Pacific Central & South Asia


Philippines

India Indonesia

South Korea

MaldivesSingapore Japan

Australia

New Zealand

Mainland China

Malaysia

Thailand

Hong Kong SAR

Vietnam

Sri Lanka

-20%

-16%

-12%

-8%

-4%

0%

4%

8%

Mixed bag for APACAPAC Selected Key Countries, RevPAR Growth, YTD August 2019, Local Currency


Recovery Stories: Accommodation SectorLessons From Other Markets


Europe: Series of AttacksResilient To Terror Attacks?


60

80

100

120

140T-

1Te

rro

rT+

1T+

2T+

3T+

4T+

5T+

6T+

7T+

8T+

9T+

10

T+1

1T+

12

T+1

3T+

14

T+1

5T+

16

T+1

7T+

18

T+1

9T+

20

T+2

1T+

22

T+2

3T+

24

T+2

5T+

26

T+2

7T+

28

T+2

9T+

30

T+3

1T+

32

T+3

3T+

34

T+3

5T+

36

T+3

7T+

38

T+3

9T+

40

T+4

1T+

42

T+4

3T+

44

Europe: Hotels Show Increased Resilience to Terror AttacksRevPAR indexed to month before terror, 12 months rolling, Local Currency

No notable impact:Barcelona, London, Berlin

Terror Attack


60

80

100

120

140T-

1Te

rro

rT+

1T+

2T+

3T+

4T+

5T+

6T+

7T+

8T+

9T+

10

T+1

1T+

12

T+1

3T+

14

T+1

5T+

16

T+1

7T+

18

T+1

9T+

20

T+2

1T+

22

T+2

3T+

24

T+2

5T+

26

T+2

7T+

28

T+2

9T+

30

T+3

1T+

32

T+3

3T+

34

T+3

5T+

36

T+3

7T+

38

T+3

9T+

40

T+4

1T+

42

T+4

3T+

44


Terror AttackRecovered: Istanbul, Nice, Brussels, Tunisia


60

80

100

120

140T-

1Te

rro

rT+

1T+

2T+

3T+

4T+

5T+

6T+

7T+

8T+

9T+

10

T+1

1T+

12

T+1

3T+

14

T+1

5T+

16

T+1

7T+

18

T+1

9T+

20

T+2

1T+

22

T+2

3T+

24

T+2

5T+

26

T+2

7T+

28

T+2

9T+

30

T+3

1T+

32

T+3

3T+

34

T+3

5T+

36

T+3

7T+

38

T+3

9T+

40

T+4

1T+

42

T+4

3T+

44


Just recovered: Paris

Terror Attack


60

80

100

120

140T-

1Te

rro

rT+

1T+

2T+

3T+

4T+

5T+

6T+

7T+

8T+

9T+

10T+

11T+

12T+

13T+

14T+

15T+

16T+

17T+

18T+

19T+

20T+

21T+

22T+

23T+

24T+

25T+

26T+

27T+

28T+

29T+

30T+

31T+

32T+

33T+

34T+

35T+

36T+

37T+

38T+

39T+

40T+

41T+

42T+

43T+

44

Barcelona London Berlin Istanbul

Nice Brussels Tunisia Paris


No notable impact:Barcelona, London, Berlin

Just recovered: Paris

Terror AttackRecovered: Istanbul, Nice, Brussels, Tunisia


Daily Data Shows Short-Term Declines With Quick ComebackAlso, the attacks did weakened the occupancy, but the ADR still stands strong

Total London, Occupancy & ADR Growth, Daily Data, 01 March – 30 June 2017, GBP

Occupancy ADR

March April May June

Westmister Attack22 March 2017 London Bridge Attack

03 June 2017


Paris Took More Than 36 Months to Completely Recover!Paris saw the lowest growth RevPAR ever due to the attack

Total Paris, RevPAR vs Demand Growth, R12 January 2013 – August 2019, EUR

-11%

-22%

10%

16%

-30%

-20%

-10%

0%

10%

20%

2013 2014 2015 2016 2017 2018 2019

RevPAR Demand

Paris Terror AttacksNovember 2015


Transient & group demand plummeted after the attacks

Total Paris, Transient vs Group Demand, R12 January 2014 – August 2019

-20%

-10%

0%

10%

20%

30%

2014 2015 2016 2017 2018 2019

Transient Group

Paris Terror Attacks November 2015


Efforts by French Government to Revive TourismFrance Tourism Revival Measures


Turkey’s Years of Attacks & Political InstabilityYears: 2015 – 2017

June 2015Political

Uncertainty

November 2015Jet shot down

October 2015Ankara Suicide

Bombing

July 2016Coup d'état

January 2017NYE Firing


-60%

-40%

-20%

0%

20%

40%

60%

2015 2016 2017 2018 2019

International Visitor Arrivals Hit Rock BottomTotal Turkey, Monthly Absolute IVAs Growth, January 2015 – July 2019

Source: Turkey Ministry of Culture and Tourism


The coup d'état put highest pressure on Istanbul hotel performanceOccupancy was quick to recover, ADR’s shot up at the back of a weak currency

Total Istanbul, Monthly Absolute Occupancy & ADR Growth, January 2015 – August 2019, TRY

-100%

-50%

0%

50%

100%

150%

2015 2016 2017 2018 2019

Occupancy ADR

Turkish coup d'état attemptJuly 2016

Turkish Lira Depreciation


How do the local government revive the tourism performance?Turkey Tourism Revive Measures


New York 9/11 Attacks

Mumbai 26/11 Attacks


70

80

90

100

110

120

130

Incident 1Y 2Y 3Y 4Y 5Y

Occupancy ADR RevPAR

Occupancy recovered faster, ADR recovery sluggishlyNew York Market Recovery – September 2001 Attacks

Total New York, Occupancy, ADR, & RevPAR Performance (Indexed to Month Before Incident), USD


50

60

70

80

90

100

110

Incident 1Y 2Y 3Y 4Y 5Y 6Y

Occupancy ADR RevPAR

Occupancy took 5 years to recoverMumbai Market Recovery – November 2008 Attacks

Total Mumbai, Occupancy, ADR, & RevPAR Performance (Indexed to Month Before Incident), INR

Egypt Revolution & CrisisTook a long time to recover


It took longer time to recoverEgypt Revolution, Crisis & Political Unrest Impact to Hotel Performance (2011 – 2014)

Egypt vs Cairo, Monthly R12 Demand Growth, January 2011 – August 2019

-60%

-40%

-20%

0%

20%

40%

60%

2011 2012 2013 2014 2015 2016 2017 2018 2019

Egypt Cairo

Egypt RevolutionJanuary 2011

Presidential ElectionJune 2012

Egyptian coup d'étatJune 2013

Metrojet Flight Bombing

October 2015


EGP Devaluation helped to push RevPAR, but not the real growthEgypt Revolution, Crisis & Political Unrest Impact to Hotel Performance (2011 – 2014)

Egypt vs Cairo, Monthly R12 RevPAR Growth, January 2011 – August 2019, EGP

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

2011 2012 2013 2014 2015 2016 2017 2018 2019

Egypt Cairo

Egypt RevolutionJanuary 2011

Presidential ElectionJune 2012

Egyptian coup d'étatJune 2013

Metrojet Flight Bombing

October 2015

EGP DevaluationNovember 2016


Emergence of Terror Tourism & Medical Tourism

New York Twin Towers

• Ground Zero, or the site where the Twin Towers stood, and crashed, has become a tourist site, complete with walking tours

Mumbai Café & Building

• Terror tourism has developed in the city, with tourists visiting Leopold Cafe and Nariman House— two of the places hit during the three-day long terror strike

• The cafe has decided to keep the bullet holes since they continue to attract tourists

Egypt: The Hepatitis C Campaign

• Promoted by football stars Lionel Messi and Dani Alves, for USD 8,000, patients can spend a week in Egypt receiving the treatment for the virus and touring the country.

Sri LankaHotel Market Insights


1. Market SourceIt’s not only about Mainland Chinese


26.7% 19.8% 17.8% 14.0% 3.2% 10.3%1000

1500

2000

2500

2013 2014 2015 2016 2017 2018

Tho

usa

nd

s

IVAs at an all-year high during 2018Total International Arrivals to Sri Lanka, FY 2013 – FY 2018

Source: Sri Lanka Ministry of Tourism


But, significant drop was seen after April 2019Total International Arrivals to Sri Lanka, Monthly Data, January 2018 – August 2019

Source: Sri Lanka Ministry of Tourism

0

50

100

150

200

250

300

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Tho

usa

nd

s

2018 2019


India & China source markets witness highest dropInterestingly, Russia as a source market continues to grow

Top 10 Source Market, Sri Lanka International Visitors Arrivals, YTD August 2018 vs 2019, Source: Sri Lanka Ministry of Tourism

0

100

200

300

India UnitedKingdom

China Germany France Australia Russia UnitedStates

Maldives Canada

Tho

usa

nd

s

2018 2019


-3.3% 11.7% 29.1% -3.3% 4.7% 6.4% 38.7% 0.3% 34.3%0

1

2

3

4

5

6

7

Thailand Japan SouthKorea

Vietnam Singapore Malaysia Cambodia Indonesia Philippines

Mill

ion

s

Shifting travel choices for Mainland ChineseMainland Chinese Key Outbound Countries – Top 10 APAC

YTD June 2019, Source: PATA & Tourism Authorities


Current Challenges – Mainland Chinese

Growth in domestic tourism

Trade – war between US & China

Weakened Yuan


2. Sri Lanka Hotel Performance Recovery Challenges

-23.1%

+9.9%

-15.5%

-28.9%

+7.8%

-23.4%

Total Sri Lanka & Colombo, All KPIs Growth, YTD August 2019, LKR


Demand Growth Flat to Negative Before Terror AttacksSupply growth also seen tapering after two years of uptick

Total Sri Lanka, Supply & Demand Growth, R12 January 2014 – August 2019

-20%

-10%

0%

10%

20%

2014 2015 2016 2017 2018 2019

Supply Demand

April 2019 Attacks


ADRs Growth Driver Since 2015Supply growth put pressure in Occupancy performance

Total Sri Lanka, Monthly Absolute Occupancy & ADR Growth, January 2016 – August 2019, LKR

-75%

-60%

-45%

-30%

-15%

0%

15%

30%

2016 2017 2018 2019

Occupancy ADR April 2019 Attacks


Rs. 15,000

Rs. 17,500

Rs. 20,000

Rs. 22,500

40%

50%

60%

70%

2016 2017 2018 2019

Upper Tier Hotels

ADR Occupancy

ADRs Drive Growth Across Classes

Total Sri Lanka, Upper Tier vs Lower Tier Hotels, Occupancy & ADR Performance, YTD August 2016 – 2019, LKR

Rs. 8,000

Rs. 10,000

Rs. 12,000

Rs. 14,000

40%

60%

80%

100%

2016 2017 2018 2019

Lower Tier Hotels

ADR Occupancy


Regional Hotels RevPAR Outperforms Colombo

Total Sri Lanka, RevPAR Growth - Colombo vs Sri Lanka Regional, R12 January 2017 – August 2019, LKR

-20%

-10%

0%

10%

20%

30%

2017 2018 2019

Colombo Sri Lanka Regional

April 2019Attacks


6,300 rooms are coming to Sri LankaAMPM – STR Tool for Census & Pipeline, As of September 2019

Colombo63%

Opened by 20203,200 rooms


Not all attacks have the same impactRecovery depends on destination’s demand driver

In Summary

Impact of attacks clear on Sri Lanka hotel marketImpact seen on entire country’s hotel performance

ADR deterioration always tougher to bring back at parWith demand stimulus, occupancy can rebound relatively quickly

Important to have power and control over pricingIf you loose rates, it always takes longer to recover

Sri Lanka hotels seen as ADR outlier;rates holding up despite crisis

© 2019 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively “STR”) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR.

No strategic advice or marketing recommendation is intended or implied.

Thank You

Vidhi Godiawala

[email protected] | +91 22 62885831

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