The buoyancy of Sri Lanka’s lucrative tourism industry was further reflected as sector earnings during the second quarter of 2011 posted an exorbitant growth of around 4,653% YoY, according to a recent Sector Earnings Analysis report. This Quarterly Results Review for 1QFY12/ 2Q2011 published by TKS Securities (Pvt) Ltd concluded that corporate earnings surged 45% YoY to Rs. 72.5bn during the first half of the calendar year taking a sample of 238 companies out of the 263 listed on the Colombo bourse while profits during the same period increased 28% YoY to Rs. 33.8bn.

“Tourism sector continued to play the centre stage role in earnings performance recording an outstanding 46 fold YoY growth during 2Q2011/1QFY12. Such performance was even despite it being the off season of the year on the back of seasonality been somewhat smoothened and enhanced domestic tourism with rising per capita income. The hotels & travels sector witnessed a two fold increase in earnings during 1H2011 complemented by around 51% increase in total industry Tourism revenues to Rs. 41 bn during the same period,” the report stated.

It added that the occupancies in the sector and Accounting Rate of Return (ARR) grew at a rapid pace following the end of the war being a spell of rain to the long beleaguered sector. During 2010, the country occupancy levels stood at around 82% being the highest in the history where certain months topped 90% levels underpinned by the static supply and the 46% YoY growth in tourist arrivals in 2010 (41% YoY growth in 2Q2011).

“Average spending per tourist per day stood at USD82 during the year, auguring great potential for growth. City hotels posted 107.8% YoY growth whilst resorts posted an increase of 135.6% YoY,” the report stated.

According to the report, Asian Hotels and Properties and John Keells Hotels cumulatively have contributed for around 48% of the sectoral earnings, whilst Aitken Spence was the second major contributor with a contribution of around 13% in 2Q2011.

Meanwhile, on an overall perspective, earnings growth for 1H2011 has been shouldered by Diversified and Banking, Finance & Insurance sectors.
“Diversified sector contributed circa 28% to overall corporate profits whilst the Banking, Finance and Insurance sector contributed 23% during 1H2011,” the report stated adding that the highest net profit growth rates were witnessed amongst the Hotels & Travels, Motors and Land & Property sectors during the same period.