COLOMBO, Oct. 30 -- Investors interested in building hotels in Sri Lanka are increasingly discouraged by high construction and energy costs, which have reduced returns and affected the attractiveness of the hospitality sector, Board of Investment (BOI) Chairman Arjuna Herath said.

"One of the problems that investors are facing at the moment, particularly in the hospitality sector, is the yield," Herath told reporters. "The investments may not be very lucrative, given that construction costs are high and energy prices remain elevated. That has become a limiting factor. Despite that, a fair number of investments are still flowing into the sector."

Sri Lanka's construction costs remain among the highest in the region, largely due to heavy ...