Staying competitive

LATEST projections for the Asia Pacific tourism industry bring mixed prospects for Sri Lanka, with the impressive numbers being counterbalanced by stronger competition and the need to increase cooperation with regional partners.

The Pacific Asia Travel Association (PATA) last week released its forecasts for visitor numbers and for tourism expenditure for the period 2013-2017, and anticipates a strong surge in regional travel and tourism, with Northeast Asia a key driver.

Snapshots from the visitor numbers forecasts show that visitor arrivals to the Asia Pacific region will continue to grow at an average annual rate of 4.1% over the period 2013-2017 and reach 581 million by 2017. That is an impressive number indeed.

Northeast Asia will maintain a dominant position in the inbound market of Asia Pacific, and its market share will reach 53.52% by 2017 while China will continue to be the top inbound destination in Asia Pacific, peaking at 147.4 million visitors in 2017. In addition destinations such as Hong Kong will surpass the USA to be the second largest inbound destination in Asia Pacific in 2015.

Visitor arrivals to Asia Pacific from China will exceed 100 million by 2015 showing that regional synergies will be a massive growth opportunity for countries that are smart enough to position themselves to the relevant target market. Sri Lanka clearly has an eye on this source but it questionable whether they can bridge the infrastructure challenges, especially when it comes to language.

PATA has also released Asia Pacific visitor expenditure forecasts for 2013-2017. A strong upswing is expected from Northeast Asia, South Asia and Southeast Asia in the four-year period. Northeast Asia is expected to have the most significant rise from US$ 175.81 billion in 2013 to US$ 311.34 billion in 2017, which is a whopping increase of 77%. Visitor expenditure for South Asia and Southeast Asia are forecast to increase 65% and 39% respectively.

PATA has also earmarked Cambodia, the Maldives, Chinese Taipei, Bhutan and Mongolia as the top five fastest growing destinations in terms of visitor arrivals over the period 2013-2017. This has placed pressure on smaller markets such as Sri Lanka, Laos and Myanmar that are just emerging into the tourism sphere and depend heavily on tourism to spur growth, especially since all three countries have histories of conflict and clearly need revenue to boost economic growth for reconciliation purposes. These countries will have to focus more on aspects such as destination marketing to keep their arrival numbers high or lose out to seasoned and aggressive competitors.

The United Nations Economic and Social Commission for the Asia and the Pacific (UNESCAP) in a recent report titled ‘Economic Impact of Tourism in the Asian Region’ insisted that governments need to look at tourism as more than a revenue source and position the industry so that it can promote holistic growth, environmental sustainability and means to reduce income disparity. It also called on the region to increase their cooperation to foster growth.

Tourism in the Asia and Pacific region is not without problems. One issue is a large share of national tourism industries are owned by enterprises from the tourist-generating countries and a significant proportion of the benefits flow out of the local economy. At the same time, many developing economies of the region have not been able to develop their domestic industries and as a result, they have depended on imports to sustain tourism, which is another source of foreign exchange leakage.

While putting its own house in order, Sri Lanka will also have to increase regional cooperation if it wants to maintain its competitive edge.