The long line of sleek, new motorcycles parked under a shed illustrates the plus side of this island's abrupt about-face 3 1/2 years ago from a controlled economy under a policy of state socialism to unbridled, free-enterprise captialism.
"We used to ride to work in crowded buses, but now we have our own transport," said the hotel waiter proudly.
But the rush to captialism after the 1977 election victory of J. R. Jayawardene has produced unpleasant side effects, including a galloping inflation rate nearing 40 percent, which threatens the goal of quick industrial development using prosperous Singapore as the economic model.
Besides inflation, massive power shortages caused by the sudden influx of consumer appliances such as television sets, air conditioners and electric stoves are hampering industrialization. These new appliances, brought in during the past three years, use 30 megawatts a day, the equivalent of a small power station, according to the Ceylon Electricity Board.
Despite 5 1/2 hours a day of scheduled power cuts, the board estimates the Sri Lanka's hydroelectric power generating capacity is rapidly diminishing, with the monsoon rains that will refill reservoirs to allow more power generation still at least a week to two weeks away.
The solution appears to be increased power cuts, which will further hold back industrialization.
Yet inflation remains the major problem of Jayawardene's government, which is trying to lure industry here with the promise of cheap, $1-a-day, literate labor.
The spiraling costs fueled by an increasing bill for imported oil and the inflationary pressure of rapid industrial development that some critics label "too much, too fast" hit hard on the marginal village economy. While the costs of such basic needs as public transportation, fish and wheat have gone up, the low wages have remained stable. "People are beginning to complain that things used to be better," said one diplomat here.
Nonetheless, Jayawardene's government appears to have maintained the popular support that gave it an unprecedented -- for Sri Lanka, which specializes in close elections -- 51 percent victory in 1977.
Part of the continued popular support for Jayawardene's United National Party rests with the inability of the splintered opposition to make political captial out of the worsening inflation.
The major opposition gorup, former prime minister Sirimavo Bandaranike's Sri Lanka Freedom Party, has not recovered from its stunning 1977 defeat and Jayawardene's subsequent stripping of its leader's civil rights and the right to take part in politics because of what he called irregularities during her seven-year rule.
Bandaranaike appears to be a spent political force here, although her supporters point northward in India and recall how Indira Gandhi also appeared before she won a smashing reelection victory in January 1980.
But much of the Bandaranaike party cadre wants her to give up the party leadership. She has clung to the party presidency, however, causing disunity within her organization.
While opposition disharmony has given Jayawardene a respite, his government is under pressure to score quick economic gains, including slowing of inflation and increased employment before the next national election in 1983.
At the start of Jayawardene's rule it appeared that Sri Lanka was headed for quick economic prosperity. After decades of a slumbering economy, in which 90 percent of government spending went for welfare programs and hardly anything for development, economic growth soared to 8.2 percent in 1978. That was more than twice the growth rate of the previous two years.
But the quick acceleration stalled. The growth rate in 1979 dropped to 6.3 percent and is estimated to have gone even lower -- to 5.6 percent -- last year.
Furthermore, the agricultural sector slumped in its most important export crops -- tea, rubber and coconut. Rubber and tea production last year was the lowest in the past five years, partly because of unusually dry weather but also because of a failure to maintain the publicly owned plantations.
Jayawardene is pinning hopes for economic growth on the 500-acre free trade zone near the Colombo airport, established to lure industries to make products for export on the basis of Sri Lanka's cheap labor.
So far, 24 companies employing almost 11,000 persons have started operations in the zones and another 40 have signed contracts to open factories. Most of the factories are labor-intensive, such as shoe or clothing manufacturers. In all the zone is expected to add 35,000 jobs to the economy.
But that is a drop in the bucket compared to the official estimates of 875,000 unemployed Sri Lankans -- down, the goverment claims, from 1.2 million before it took control. Overall, the government says it added 550,000 jobs to the economy in the past 3 1/2 years but that 125,000 persons entered the labor market during that time.
To push industrial development, Jayawardene cut heavily into state welfare subsidies that gave this economically backward country an extremely high quality of life that is the envy of most developing nations.
Education is compulsory to age 16, and about 80 percent of the children attend schools. As a result, the literacy rate is more than 80 percent. Widespread health care has reduced the infant martality rate to 43 deaths per 1,000 births and pushed life expectancy to 68 years. Its population growth rate, 1.7 percent, is low for the Third World.
Recognizing those are assets, Jayawardene left health and education programs alone while cutting state subsidies for food, utilities and transport.
But the country remains poor. Its per-capita income is under $200 a year and about half its population of 14 million qualifies for food stamps.