Tourism Ministry seeks increase in interest subsidy to refurbish hotels

Tourism Ministry seeks increase in interest subsidy to refurbish hotels

The Tourism Ministry plans to request an increase in the interest subsidy allocated to refurbish and upgrade facilities in hotels under the upcoming 2018 Budget from the Finance Ministry.
This decision has been mooted due to the high cost of construction and materials required for refurbishment projects.
Stakeholders in the hotel industry had informed the Ministry that the interest subsidy offered under the loan scheme was insufficient to meet refurbishment and upgrading cost, and after taking these comments into consideration the ministry has decided to appeal to the Finance Ministry to increase it to a reasonable amount in the upcoming 2018 Budget.
The 2017 Budget suggested providing up to a maximum loan of LKR. 25 millionto refurbish and upgrade facilities at hotels which are over 10 years, where 50% of its loan interest will be borne by the Tourism Development Ministry. This suggestion was proposed with a view to encourage hoteliers to maintain hotels with modern facilities and to be competitive in the market.
However, the ministry was unable to provide the Finance Ministry an amount for the planned increment as the amount required by hoteliers varied, with some requesting LKR 50 million for a project and others requiring LKR 100 million. The ministry planned to take an overall evaluation of the required amounts and then submit a request for a reasonable amount to the Finance Ministry.
According to the Central Bank, tourist arrivals recorded an increase of 4.5%, year-on-year, with 123,351 tourists arriving during June 2017.
On a cumulative basis, tourist arrivals grew by 4.8% during the first half of 2017 compared to the corresponding period of 2016. Following the same trend in tourist arrivals, earnings from tourism also increased to USD 211.6 million in June 2017.
Consequently, on a cumulative basis, earnings from tourism increased by 4.8% to USD 1,733.6 million during the first half of 2017.
Moderate growth in tourism earnings during the first half of 2017 could be attributed in part toa decline in tourist arrivals from the Middle East, low growth in Chinese tourist arrivals as well as the rescheduling of flights to accommodate the resurfacing of the Bandaranaike International Airport (BIA).

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It has also been reported that many international hotel chains have decided to enter Sri Lanka’s travel trade within the first quarter of 2018.
With numerous programmes planned by the Tourism Ministry to celebrate World Tourism Day on September 27th, the Ministry is reported to be confident in recording 2.5 million tourist arrivals and netting in earnings in excess of USD 3 billion by the end of 2017.
These positive developments in the country’s tourism sector coupled with the possibility of an increase in the interest subsid, provides optimistic financing and revenue options to hoteliers.

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Article Code : VBS/AT/30082017/Z_2

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