Colombo City Hotels Chief Shanthikumar shares insights into reviving tourism

• Expresses serious concern over virtually zero occupancy in city hotels for past year; warns cost of operating is colossal
• Commends Govt. for extending multiple support but urges continuity as well as long-term debt restructuring since tourism is likely to reach pre-COVID level only by end-2022
• Wants longstanding Local Government tax issue resolved as a priority 
• Welcomes $ 56 m planned investment for global marketing campaign; calls for fast roll-out
• Urges early inoculating entire hotel industry staff against COVID-19

Q: What are your views on the plans of the Sri Lanka Tourism Promotion Bureau on the global promotional campaign with a budget of $ 56 million (approximately Rs. 11 billion) for a period of 5 years?

 The proposed plan is exactly what the industry is looking at. A presentation done by the Sri Lanka Tourism Chairperson Kimarli Fernando of the forward plan was excellent and I feel we are on the right track. Especially after the pandemic, Sri Lanka urgently needs to go out to the world to promote the country. If not, there will be a serious issue in sustaining the growth of the industry. 

Sri Lanka Tourism has, after a long time, taken a strategic approach to develop the plan with some quantifiable numbers as targets and clarity on the justifications. This is what the industry stakeholders were looking at for years.

There seems to be a concern that $ 56 million is insufficient for such a promotion. Not really so. The strategy adopted by Sri Lanka Tourism seems to be in the right direction. Unlike in the past, with the development of technology and social media communication, reaching global markets can be done very effectively, combined with traditional marketing methods. These can be very cost-effective. 

We believe an effective campaign can be done with $ 56 million spend over a period of five years. If there is more funding available, I am sure they can better it. What is most important is the roll-out or the execution of this plan as soon as possible. Next is to ensure its sustenance for the next five years. We must learn from our past mistakes and never ever repeat the same. Basically, the Government leadership and all stakeholders must give their full commitment to hold the plans for the next five years if we are to see consistent results. 

Half-done campaigns yield no results and is a total waste of money. Gone should be the days of ad-hoc promotions. It brings nothing to the table and is a total waste of money. This has been our downfall. A change in the leadership at Sri Lanka Tourism, the Tourism Ministry or the Government leads to all plans changing, with new leadership and millions of dollars thrown down the drain overnight. People may have different thoughts and interests but this plan must be allowed to continue for the proposed five years. 

Q: What is the present status of the Colombo city hotels and what are your aspirations for the immediate future?

 The city of Colombo has the largest inventory in terms of a region; 20%, or 6,100, of the total number of operating rooms in Sri Lanka is in Colombo. Another 3,250 rooms are due to be opened in 2022. The workforce in Colombo is also relatively high. 

Colombo, like many other capitals of the world, has the highest number of international hotel brands operating in the city. Quite contrary to other parts of the country, Colombo hotels largely depend on the business clientele, MICE businesses, banquets/large events, entertainment business and leisure travellers to generate revenues. The smallest segment in Colombo hotels are the leisure travellers. In resorts, leisure travellers comprise over 90% of their business.

Due to the above segmentation, the average stay in Colombo City is two days. Right now we are hoping the Ministry of Health will relax the present guidelines for foreign visitors to the country, as a minimum stay of 14 days in a Level 1 hotel does not help Colombo hotels. Business travellers come for two to three days, conduct several meetings with their local business partners and then depart. Hence, the reason for only a few hotels to join the Level 1 category from the city of Colombo.

Further, the city hotels largely depend on banquet functions, such as weddings, etc. Whilst we are eagerly awaiting the relaxation of the guidelines in terms of numbers, hotels for the time being are accepting weddings/functions with limited numbers merely for their survival.

As the President of the Colombo City Hotels, I am proud to say that the hotels are strictly adhering to the health and safety guidelines, and some hotels are a model to follow as they have gone far beyond the required standards. All hotels have ensured that they avoid any kind of community spread of the virus. Even though there were a few positive cases in hotels, the commitment of the hoteliers and the processes they have put in place in line with Health Ministry guidelines and the Safe and Secure standards for hotels issued by the Sri Lanka Tourism Development Authority (SLTDA) avoided any clusters developing in hotels. Our members will continue to maintain these standards.

The occupancy in Colombo hotels continues to be virtually at 0%. This is a serious concern as the cost of operating a hotel without room business is colossal. Wedding business alone is not sufficient to sustain these large plants. It is extremely difficult for hotels to continue in this manner for 12 months with zero business

Q: What are your expectations from the Government?

 I would like to thank the Government for the support they have extended to hotels to date after the pandemic. The President, the Prime Minister, Basil Rajapaksa, our own Minister of Tourism Prasanna Ranatunga, State Minister of Money and Capital Market Nivard Cabral, Dr. P B Jayasundera, Ministry of Tourism Secretary S. Hettiarachchi, senior officials of the Treasury and the Central Bank have extended their fullest support to keep the hotel industry afloat during the last year to date.

The Sri Lanka Tourism Chairperson Kimarli Fernando has been exceptionally helpful and has given us a hearing and supported us to survive during the unexpected period. We are extremely thankful for her leadership. 

It is the support of all of these people that made us receive a moratorium on capital and interest repayments, soft loans for working capital, concessions on electricity repayments, waiver of excise licence fees, etc. We appreciate them for understanding the plight of the sector and providing immediate relief.

We are all aware the return of business is going to be slow. With the global vaccination program and our own program well underway, it can be safely assumed that business will return to pre-COVID levels by end-2022.

We earnestly request the Government to support us until stability returns with an extension of the moratorium, soft loans and most of all support the industry by way of a long-term debt restructure as this is critical for hotels’ survival for the next 10 years. 

Hotels will not be able to pay back or settle their commitments immediately. It is best to have a workable solution rather than have defaults and possible closures due to undue pressure. We need to work out a mechanism to sustain the hotels, which form a critical part of the tourism industry in Sri Lanka and should strategically work towards the $ 10 billion revenue target as envisioned by President Gotabaya Rajapaksa.

Q: What is the unresolved burning issue faced by the hotels?

 One of the burning issues which needs an immediate solution is the issue pertaining to the local government taxes. The Colombo Municipality has taken legal action on many hotels for non-payment of a tax — 1% on turnover. The issue has been going on since 2009. 

The present pandemic has worsened the situation. The reality is that hotels are just not able to pay these dues. It is a struggle to pay our own employees and keep the hotel operations running. Unfortunately, the Municipality is one of the few Government institutions that have not understood the plight of the hotels today. 

We are crying for a solution for the problem and Colombo hotels cannot settle millions of rupees to the Municipality at this juncture. There are over 150 cases in litigation in Colombo alone. It is very disappointing that for some unknown reasons the local government issue has been dragging on for the last 12 years where the hotels have been compelled to spend a colossal amount of legal fees for their lawyers. We plead to the Government leadership and the authorities concerned for a lasting solution to this issue immediately. We hope that this Government will solve this burning issue without any further delay.

We do understand the prioritisation of the vaccination program, taking the most vulnerable citizens of the country. We hope the Health Ministry will consider inoculating the entire hotel industry staff urgently as the tourism business is such that hotel staff interactions with people from all walks of life are inevitable in their day-to-day operations, exposing them to very vulnerable situations. Some hotels are operating as intermediary care centres and quarantine centres where the staff are even more vulnerable.

To come out of this crisis, the private sector and the Government leadership will have to come up with out-of-the-box solutions, as we have never faced such situations in the past. Not even during the 30-year-old Civil War!