Brexit and tourism

Wednesday, 29 June 2016 00:00 - - {{hitsCtrl.values.hits}}

Brexit has pushed a new hurdle before the tourism industry. Tourists from Britain make up the largest share of travellers from Europe and they are also among the highest spenders. As the UK economy and its currency experiences volatility and citizens experience a drop in earnings, Sri Lanka’s tourism industry will have to evolve, and fast, to bridge a potential gap in their earnings.

Logically this would mean improving service levels and introducing new products. In an effort to improve service standards, the Sri Lanka Tourism Development Authority (SLTDA) this week rolled out plans to give a star rating to every tourist hotel and broaden registration of informal lodgings so that standards can be maintained better. As the global fight for lucrative tourists the Government, SLTDA and other stakeholders will have to work harder and faster to keep Sri Lanka ahead of the pack.

One of the key problems repeatedly highlighted by the industry is the lack of accurate data. For years the Government has been releasing numbers that do not differentiate between the formal and informal sectors adequately enough to understand how many foreigners are tourists, where they stay, how much they spend and their level of expectations. Without in-depth data, policymakers cannot understand the direction the industry should take, which affects the entire value chain.

Sans in-depth data, Sri Lanka has been floundering around for years without a solid branding and marketing strategy. Right now Sri Lanka does not even have a permanent ambassador in the UK. It is clear Sri Lanka lacks a cohesive marketing strategy and campaign which should be a mutually-agreed private-public partnership. There are various promotional exhibitions that have taken place in foreign capitals in the past but they are not based on a master plan to promote the market destination. There is much more work that needs to be done in this area.

Then there is the eternal argument over where Sri Lanka should price itself and where it should source tourists from. Many tourism analysts have pointed out Colombo’s minimum room rate is prohibitive and should be loosened so market forces can decide the best rates.

However, the companies have steadfastly refused and with new properties and apartments coming into the market over the next few years, the possibility of a price bubble evolving in Colombo is high. Tourists could take the option of avoiding Colombo altogether, thereby impacting revenue of other businesses.

High-spending tourists are the heart of the industry. However, Sri Lanka is internationally known as a budget destination and would require a massive increase in the quality of products on offer to compete with destinations like Thailand. Tourism also faces a huge challenge in terms of human resources and will not be able to attract high spending tourists consistently if it does not raise service levels exponentially in a short period of time.

If Article 50 is invoked, then the clock starts ticking for Sri Lanka as well, in fact one could well argue that an extended period of economic volatility in the UK will hit Sri Lanka ahead of other countries as 40% of exports also head to Britain. So it is time for both the Government and the private sector to think fast and act even faster.