A British view on the future for Sri Lankan tourism

By James Exton

The events of Easter Sunday have precipitated a series of crises for Sri Lanka which can only be addressed if the Government and tourist industry stakeholders work together.

Beyond the immediate loss of life and emotional distress, Sri Lanka is facing a devastating shock and the community that had become reliant on tourism will experience significant socio-economic effects such as unemployment, business closures and depression.

On a macroeconomic level short-term loss of investment confidence and a decline in economic growth cannot be avoided following such an attack in a country where tourism is the third largest industry. But it is imperative that these short-term effects remain just that – short term. 

Reviving the tourism industry

Whilst international media attention provides emotional support to Sri Lanka, negative images and growing concerns regarding safety will continue to undermine the tourism industry for a long time. Yesterday the UK followed Australia in issuing a travel advisory against non-essential travel to Sri Lanka and it is expected that other countries will follow suit.

Risk, whether real or perceived, will be a strong determinant in the decision-making process of the travelling public for a long time. The Sri Lankan Government must therefore regain consumer confidence as soon as possible and re-establish the country as a safe tourist destination.

Fortunately, the Government is now acting as a cohesive unit and has implemented several strategies to re-assure the global community that safety of tourists is paramount. These strategies include:

• the quick arrest of suspects and the deployment of the army

• the strengthening of international intelligence sharing arrangements (Sri Lanka intelligence is now actively working with agencies such as the FBI, Scotland Yard and Interpol)

• increasing police and security presence across tourist areas, particularly at hotels and the airport

Once the security situation has settled down and the terrorist cells have been eliminated, international marketing and public relations firms should be employed by the Government and Tourist Board to assist in promoting and restoring a positive image for the country. After the October 2002 bombs in Bali, campaigns and slogans such as ‘Bali for the World’ and ‘Kuta Karnival of Life’ were introduced to emphasise the rich natural and cultural assets of the island.

Over the past few years, the Tourist Board has successfully promoted Sri Lanka as a holiday destination. It is now going to have to repeat its efforts in attending shows, holding exhibitions and inviting travel journalists to the island.

Such promotions will help repair Sri Lanka’s image, but heavy concessions will have to be offered by airlines, hotels and tour operators to lure potential clientele back to Sri Lanka. It doesn’t matter at this stage if the tourists are low spenders – the priority is to restore confidence amongst the travelling public. Once this is done, high-spenders can be lured back.

Heavy discounting will hurt profitability in the tourist industry, but Government fiscal policy offers a way of alleviating the pain. In the case of hotels, profit margins are already wafer thin so cutting corporation taxes and VAT would enable hotels to maintain staff levels whilst at the same time, reducing room rates to attract tourists.

Other policies the Government could, and should, use include lowering airfares on Sri Lankan airlines, reducing landing charges for foreign airlines and waiving the tourist visa fee (the visa requirement should be maintained for security reasons although it does nothing to prevent home-grown terrorists).

I have no doubt that the image of Sri Lanka can be re-built, but it needs the Government and private sector to work together and develop a plan of action. If this can happen, tourists will come back to Sri Lanka and the country can look forward to a brighter future.

(The writer has been visiting Sri Lanka for 20 years and lived in Colombo during the final two years of the war with the LTTE. He could be reached via email at [email protected].)