Pirithiviraj, J.C.D.2021-12-132021-12-1320109789550481002http://www.erepo.lib.uwu.ac.lk/bitstream/handle/123456789/7966/184-20~1.PDF?sequence=1&isAllowed=yAfter the end of the thirty years long civil war, business sector is recovering and in particular tourism is developing at an accelerated rate. Sri Lanka has been a popular destination for tourism from the colonial time and tourism industry generates a huge income to Sri Lanka. Though Sri Lanka has been successful in attracting foreign tourists and Sri Lankan hotels have accommodated the expectations of international tourists, performance of domestic tourism sector has been limited. Therefore main purpose of this study is to investigate why the Sri Lankan Hotels do not focus on catering to the expectations of local tourists. Hence findings of this study would be useful to the Sri Lankan hotel sector to develop policies to cater to the requirements of local tourists and thereby develop the domestic tourism. This research was limited to the tourists of Group Hotels of Ceylon Hotels Corporation PLC. Conceptual framework was developed taking four factors in to consideration; room rate, service quality, locations & environment and staff assistance which directly influence the expectations of tourists. Quantitative methodology was adopted and structured questionnaires were used for data collection. Questionnaires were distributed to 100 domestic tourists who visited group hotels of Ceylon Hotels Corporation PLC situated in the different regions of the country. Descriptive analysis was used for data analysis. Results showed that Sri Lankan tourists are mostly concerned about the affordability of room rates and quality of service. Finally it has been recommended to adopt cost leadership strategy to incorporate the expectations of local tourists thereby domestic tourism can be improved. Key words: Room rate, Service quality, locations & environment, Staff assistanceenTourismHotel IndustryHotel ManagementManagementOther