Tourism gets bearish as arrivals slow

Tuesday, 11 October 2016 00:01 -     - {{hitsCtrl.values.hits}}

  • Revises down 2.5 m target to 2.2 m, changes track and mulls keeping minimum room rates for two more years

  • Eyes $ 3.5 b earnings by 2016 end

  • Charter flights and travel fairs to boost destination visibility 

  • Officials bank on MICE tourism as latest frontier

lead-picTourism Development Minister John Amaratunga - Pic by Lasantha Kumara


By Charumini de Silva

Despite buoyant confidence, Sri Lanka Tourism yesterday revised down the 2016 arrival target to 2.2 million from 2.5 million, and changed track on rolling back the minimum room rate policy saying it could continue for the next two years, contrary to an earlier announcement it would end in March 2017.  

Tourism Development, Christian Religious Affairs and Lands Minister John Amaratunga remained upbeat over the industry’s progress, which is expecting revenue of $ 3.5 billion by the end of the year. As of August, earnings stood at $ 2.5 billion, retaining its spot as the third-highest foreign exchange earner.

However, the Minister acknowledged the closure of the Bandaranaike International Airport and SriLankan Airlines pulling out from key European destinations would have a negative impact on arrivals next year. 

“It is not a very comfortable situation for the tourism sector,” he admitted. “There were proposals made to remove the minimal rate of Colombo City Hotels. We said we will consider it and we will implement it. However, we have not decided anything on it. We were expecting feedback from different angles whether we should implement it or not. Currently, the view is that it should remain for at least another couple of years,” the Minister added in a clear change of stance since the ministry announced it would end minimum room rates in Colombo in July. 

Tourism analysts have long been calling for a market-oriented policy that would allow competitive pricing and encourage tourists to spend longer days in Colombo.  



By the end of September tourist arrivals had reached over 1.5 million, an increase of 15% compared to 2015. “The winter season is just beginning and we have three months left. We could reach this target of 2.2 million,” he quipped. The Government had earlier been bullish on reaching the 2.5 million target initially set out under the administration of former President Mahinda Rajapaksa but slowing numbers had resulted in a reality check. 

The Government has pinned its hopes on increased charter flights from Sri Lanka and Colombo hosting the annual French Travel Conference to maintain numbers. Nearly 500 top travel agents from France will be here next month and it was noted that around 30,000 tourists will arrive in Sri Lanka as a result of this conference.

The Ministry is planning to host a ‘Gateway to South Asia Travel Fair’, which will be a major travel agents forum next year in Colombo to promote Sri Lanka as a tourism destination.

With the aim of making Sri Lanka a quality destination and streamlining various aspects of the industry, all apartments and guest houses will be registered under the Ministry, allowing those earnings to be formally accounted for. Officials expect about $ 1.5 million additional revenue to show up in the books next year as formalisation digs in.

Sri Lanka Convention Bureau Chairman Prema Cooray said the Meetings, Incentives, Conferences, and Events (MICE) segment had probably the greatest potential in Sri Lanka and was largely an untapped area of tourism.

At the moment the MICE segment brings around 15% of the arrivals and it is expected that by the end of this year the country will attract around 300,000 in the MICE segment.



“Our biggest market is India and we have covered India in the last nine months. According to one of the major operators in India, Sri Lanka’s potential in the next few years is around million MICE tourists only from India. However, we need to work towards it and to cater to that market we need capacity.” 

He said that according to City Hoteliers statistics, Sri Lanka was only able to provide capacity for 5% of the demand. 

Pointing out the fact that the MICE segment was a very price-sensitive market, Cooray emphasised that Sri Lanka needed to have three to four stars hotels. In Colombo we all talk of five-star hotels, but we also need a fair complement of three to four star hotels in order to absorb the full potential of MICE tourism.

“In addition to India, we are concentrating on the incentives market from the Europe. Incentives market is huge and we plan a lot of business. It is where the big companies want exciting destinations and Sri Lanka is at the forefront of that,” he added.

It was noted that Sri Lanka is mostly known for Kandy, Colombo and Bentota but the diversity of Sri Lanka had to be marketed very much more in order to get MICE tourists to Sri Lanka. 

In terms of visa facilitation, he said all MICC clientele had to apply for it the traditional way under a tourist visa and now it could be done online which was encouraging.  

“We were unable to identify MICE tourists with the traditional visa procedure but with the implementation of the online system, we could project how many MICE would come to Sri Lanka.”

Cooray stressed that weddings, which also come under the banner of MICE, is increasing in Sri Lanka, especially for visitors from India. “It has become a fashion and a big business for hoteliers, not only in Colombo but mostly stretching down to the South Coast.”