Louise Fernandez has visited Sri
Lanka about five times in the past decade, drawn by its white
sandy beaches, tea plantations and historic temples. The South
Asian island is about to give her more reasons to return.
Sri Lanka’s parliament is due to approve in coming weeks a
tax amnesty for the island’s first foreign casino venture, a
$350 million investment backed by Australian James Packer’s
Crown Ltd. (CWN) The 400-room waterfront project will join a growing
lineup of luxury Colombo hotels, including a $400 million
beachfront Shangri-La, the Taj group’s upgraded five-star
Samudra Colombo, and a John Keells Holdings Plc. gaming resort.
“I’ve been coming back to Sri Lanka for its beaches and
cultural heritage sites,” Fernandez, a 42-year-old Mumbai
resident, said while shopping with her daughter and husband at
Odel, a department store in a wealthy Colombo enclave
recommended by the Lonely Planet as a place to shop with the
glamorous. “Casinos will be another reason.”
For decades a destination for backpackers, religious
pilgrims and beach lovers, Sri Lanka is building high-end hotels
and casinos to woo wealthier tourists from India and China as it
seeks to emulate the success of Singapore and Macau. The push is
part of a drive to spur an economic revival after the government
ended a 26-year civil war against the separatist Tamil Tigers in
2009, and takes aim at the growing affluence of Asian travelers.
Lawmakers Debate
Sri Lanka’s lawmakers will debate and pass an order to give
a 10-year tax exemption to the Crown venture in the D.R.
Wijewardena Mawatha waterfront area close to the capital’s
financial district, according to the parliament office, which
had earlier said the decision was due today. A gazette on the
project was submitted to the legislature yesterday and a date
for the debate will be set later, said Anil Hewawasam, principal
officer of the parliament’s table office.
Australian billionaire Packer’s gaming resort, which will
also include fine dining restaurants, could almost double Sri
Lanka’s tourism revenue to $1.7 billion a year, according to
Capital Alliance Ltd.
“This is what Sri Lanka tourism needs: mega projects
bringing in a new brand of tourists,” said Sanjeewa Fernando,
an analyst at CT Smith Stockbrokers Pvt. in Colombo. “Tourism
revenues will be driven up and it’ll bring in relatively richer
tourists. Just like with the casinos in Singapore, the Crown
project will bring Sri Lanka tourism to a new phase.”
There is a growing market. Wealth among Asia-Pacific
millionaires may top North America’s as soon as next year,
according to a report published last month by Cap Gemini SA (CAP) and
Royal Bank of Canada. Asians with at least $1 million in
investable assets are set to see their riches climb to $15.9
trillion by 2015, the 2013 Asia-Pacific Wealth Report says.
Beach Front
Hong Kong-based Shangri-La Asia Ltd. is building an
upmarket resort on Colombo’s main “Galle Face” beach front.
Taj Hotels Resorts and Palaces is spending $21 million to
upgrade the Samudra Colombo to be on par with its luxury brand
of hotels, according to Sujit Samant, director of sales in Sri
Lanka.
The government in July offered tax concessions for a more-than $650 million integrated resort by John Keells, Sri Lanka’s
biggest diversified company. Located across the Beira Lake from
the Crown project, it will include a luxury hotel as well a
shopping mall and gaming and entertainment facilities, according
to a government gazette. The tax breaks are also due for
parliamentary approval in the coming weeks.
“Sri Lanka (SNGPYOY) was, on account of its problems, off the radar,
and now it is on the radar,” Vikram Madhok, managing director
of luxury travel company Abercrombie Kent India Ltd., said in
New Delhi. The company has entered a joint venture in Sri Lanka.
Risk Averse
Sri Lanka is a latecomer compared with other Asian
destinations, after years of conflict put off risk averse
visitors and hampered infrastructure development.
Macau, which is half the size of Manhattan, earned $38
billion in casino revenue last year, six times more than the Las
Vegas Strip. The city is the only place in China where casino
gambling is legal and it gets two-thirds of its gaming revenue
from high-rollers.
In Singapore, Las Vegas Sands Corp. (LVS) and Genting Singapore
Plc (GENS) poured more than $10 billion into the two gaming resorts
that opened in 2010 after the country lifted a casino ban. The
nation’s economic growth surged to a record of almost 15 percent
that year.
Sri Lanka isn’t alone in planning to follow Macau and
Singapore. A Japanese lawmakers group plans to submit a bill
with the aim to legalize casinos.
Falling Behind
The South Asian nation risks falling behind if its tourism
projects are delayed, said Bimanee Meepagala, a Colombo-based
analyst at NDB Aviva Wealth Management Ltd.
“Sri Lanka is facing tough competition in this spectrum,”
she said. “We’ve got to get the product out fast, as our
economy can’t afford delays.”
The government is pushing ahead even as local newspapers
reported criticism for the Crown-backed project from the main
opposition party, which is cited as being against tax breaks for
gaming operations.
Services accounted for about 59 percent of Sri Lanka’s
gross domestic product in the second quarter. The nation’s $59
billion economy is forecast by the government to grow 7.5
percent this year.
Visitor Boost
Elsewhere, Australian consumer confidence slipped in
October, a private report showed today. Industrial production in
the U.K. fell from a month earlier in August. In the U.S.,
President Barack Obama will nominate Federal Reserve Vice
Chairman Janet Yellen to head the central bank, a White House
official said in an e-mailed statement.
Integrated resorts like Singapore’s can help Sri Lanka
attract more tourists, according to Purasisi Jinadasa, an
analyst at Capital Alliance in Colombo. The Crown project could
help the island attract a targeted 2.5 million visitors by 2016,
he said.
A market is close at hand in India, where laws limiting
gambling make Sri Lanka an attractive venue for tourists like
Fernandez.
Tourist arrivals in Sri Lanka, one of Conde Nast
Traveller’s destinations to watch in 2012, rose 17.5 percent to
a record 1 million last year. Arrivals climbed 14 percent to
711,449 in the eight months through August from a year earlier,
according to the tourist board. Visitors from India, Sri Lanka’s
biggest market, increased 29 percent in August from a year
earlier, and those from China jumped 74 percent.
Jetwing Travels, a unit of the island’s biggest resort
operator, started employing Chinese nationals as tourists from
the East Asian nation surged, said manager Tharindu Punchihewa.
Some of these visitors are arriving on private jets, he said.
“We have seen a development in the individual travel
segment, with families that don’t want to join groups, but are
willing to spend more for better hotels and comforts,”
Punchihewa said. “With branded hotels and the casino project,
Sri Lanka can tap the high-end traffic.”
To contact the reporter on this story:
Anusha Ondaatjie in Colombo at
anushao@bloomberg.net
To contact the editor responsible for this story:
Stephanie Phang at
sphang@bloomberg.net
Beach in Colombo
Brent Lewin/Bloomberg
People stand on a beach in Colombo. For decades a destination for backpackers, religious pilgrims and beach lovers, Sri Lanka is building high-end hotels and casinos to woo wealthier tourists from India and China as it seeks to emulate the success of Singapore and Macau.
People stand on a beach in Colombo. For decades a destination for backpackers, religious pilgrims and beach lovers, Sri Lanka is building high-end hotels and casinos to woo wealthier tourists from India and China as it seeks to emulate the success of Singapore and Macau. Photographer: Brent Lewin/Bloomberg
John Keells’ Gaming Resort
John Keells Holdings Plc via Bloomberg
An architectural model of John Keells Holdings Plc’s gaming resort on Beira
Lake in Colombo, is seen in this undated handout photograph released to the
media on Oct. 9, 2013.
An architectural model of John Keells Holdings Plc’s gaming resort on Beira
Lake in Colombo, is seen in this undated handout photograph released to the
media on Oct. 9, 2013. Source: John Keells Holdings Plc via Bloomberg
Shangri-La Hotel in Colombo
Ishara S. Kodikara/AFP/Getty Images
Foreign tourists walk past a billboard advertising the Shangri-La hotel in Colombo. Beyond Colombo, Shangri-La is building a 304-room resort and spa in Hamabantota in Sri Lanka’s south, due to be opened in 2015.
Foreign tourists walk past a billboard advertising the Shangri-La hotel in Colombo. Beyond Colombo, Shangri-La is building a 304-room resort and spa in Hamabantota in Sri Lanka’s south, due to be opened in 2015. Photographer: Ishara S. Kodikara/AFP/Getty Images
Beach in Colombo
Lakruwan Wanniarachchi/AFP/Getty Images
Foreign tourists walk along a beach in Colombo. Integrated resorts like Singapore’s can help Sri Lanka attract more tourists and charge higher room rates, according to Purasisi Jinadasa, an analyst at Capital Alliance in Colombo.
Foreign tourists walk along a beach in Colombo. Integrated resorts like Singapore’s can help Sri Lanka attract more tourists and charge higher room rates, according to Purasisi Jinadasa, an analyst at Capital Alliance in Colombo. Photographer: Lakruwan Wanniarachchi/AFP/Getty Images
Sri Lanka Targets Wealth in Singapore-Style Casino Push
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