SRI LANKA TOURISM INVESTMENT

(Reuters) - Sri Lanka's tourism industry has secured $1.2 billion foreign investment this year due to a post-war tourism boom and has raised its investment target to $3 billion within the next five years, an official said on Friday.

The end of the 25-year war in May 2009 has boosted the $50 billion economy's leisure industry, making it one of the most attractive sectors for investment due to the island's nature and tropical climate that attract more high-end Western Europe tourists.

"So far this year we have got $1.2 billion finalized," said Nalaka Godahewa, the head of Sri Lanka Tourism Authority, told Reuters in the western coastal beach town of Negombo after the launch of a five-star hotel upgraded from three-star status.

The investment includes nearly $1 billion of foreign investment into a 500-room hotel by Shangri-La Hotels Lanka Ltd., a subsidiary of Hong Kong-listed hotel operator Shangri-La Asia Ltd, and a shopping mall by China National Aero Technology Import and Export Corporation, he said.

"We are expecting $3 billion in foreign direct investment for tourism for tourism in next five years," he said.

Sri Lanka had aimed to attract $2.7 billion in investments to upgrade its post-war tourism capacity in the medium term, with the goal of growing revenue to $2.5 billion by 2016.

Arrivals have risen every month, on a year-on-year basis, since May 2009 and the number of visitors in the first five months of 2011 jumped 40.2 percent to 327,902.

"We are well ahead of our targets," Godahewa said. "Already 1,500 hotel rooms are under refurbishment or being upgraded while another 1,000 new rooms have been built. Our target is 45,000 rooms from the current 22,700," he said.

Arrivals hit a record high of 654,476 in 2010 with a 46.1 percent year-on-year rise and broke the previous record of 566,202 set in 2004, when a peace accord between the government

and the separatist Tamil Tigers was in place.

Tourist arrivals into Sri Lanka are forecast to grow by 20 percent to a record of more than 780,000 this year.

Tourism revenue rose 54.7 percent in first four months of this year to $270.6 million compared to the corresponding period last year after jumping 64.8 percent year-on-year to a record $575.9 million in 2010, the central bank's latest data showed.

The booming tourism investments have boosted 2011 first quarter foreign direct investment (FDI) to a record $236 million, the state-run investment promotion arm said this month.

(Writing by Shihar Aneez)