Luxury hotel room rates in Sri Lanka are approximately 20% higher than those in other countries across the region, mainly due to high operational costs and a limited supply of rooms, according to a report by HNB Stockbrokers.
The report notes that while the elevated rates reflect the country’s premium hospitality standards, they have made it challenging for Sri Lanka to compete effectively for mid-range and high-end tourists when compared with destinations such as Thailand and Vietnam.
The average price of a five-star hotel room in Sri Lanka currently ranges between USD 160 and 240. In contrast, regional competitors like Thailand offer a wider range of luxury experiences at similar or lower prices. Hanoi, Vietnam, records the lowest hotel rates in the region, supported by its low cost base, abundant room availability, and a tourist mix focused on price-sensitive domestic travellers.
Meanwhile, the Maldives continues to maintain the highest room rates in South Asia, reflecting its exclusive resort model and tightly controlled accommodation capacity.
On the demand side, the report highlights that steady tourist arrivals and limited new hotel developments have enabled select Sri Lankan hotels to achieve occupancy rates of 70% or more, especially in popular urban and coastal areas. However, the nationwide average occupancy rate in 2024 was only 45%, around 25% below pre-pandemic levels.
Analysts suggest that for Sri Lanka to return to pre-COVID performance levels, room rates must become more competitive while the country focuses on attracting higher-spending travellers rather than primarily budget-conscious or short-stay tourists.
By comparison, Thailand, Cambodia, and Vietnam currently record occupancy rates exceeding 70%, supported by diversified visitor markets and robust tourism promotion efforts.
