SL Tourism needs to look at high-yield markets

By Himal Kotelawala

If Sri Lanka is serious about being a key player on the world stage of tourism the country must look toward high-yielding travellers while keeping taxes at affordable levels and improving existing services and facilities that are currently at a less than adequate level, Executive Vice President of Shangri-La International Hotel Ltd. Michael Cottan said.

Delivering a keynote address at the tourism session of the Sri Lanka Economic Summit 2016 organised by the Ceylon Chamber of Commerce, Cottan said that while Sri Lanka had many aspects, such as its beautiful coastline, that contribute to growth in the tourism sector, it needed to strive towards being more world-class.

“Some of the services and facilities in those areas are maintained less than they should be. If Sri Lanka wants to really be on the world stage, these would have to be improved. It’s just a fact of life,” said Cottan.

“It needs to be a friendly place for customers coming in here. We need to watch out that taxes don’t get too high. We do pay our taxes, and hotels contribute a lot. But currently taxes on hotels are quite high. We can’t afford those to go a lot higher, if you want to attract more business here. You’re in a competitive tourism market,” he added.

Shangri-La recently opened a hotel in Hambantota on a 145-acre land, and hopes to open its Colombo property by mid next year.

“Our experience has been quite positive, coming in here. We were facilitated nicely. We have great partners on the ground here,” said Cottan.

However, access to the Hambantota area needs to improve, he added.

Sri Lanka is a great destination for hotel chains to move into but if the market is to continue its development trajectory the Government needs to work on improving infrastructure and it must do so quickly, said Cottan.

Commending the plans that are already underway to improve the Bandaranaike International Airport, the chain’s VP said he would also like to see the situation in Mattala improved.

“Domestic flights can open up the southern coast. That needs to happen,” he said. In addition to airlines, infrastructure should also be built to allow cruise liners to come into the country, he said, adding that in order to build up business, Colombo also needs a first-class convention centre, which it currently does not have. 

“I think the whole tour operator/travel agent model will probably have to change. You’ll get a lot of more international players here. You’ll see more international travel agents competing in this market. That may make it a bit more difficult for some of the local tour operators here as time goes on,” warned Cottan.

Chinese tourists arrive in Sri Lanka in vast numbers; however, at the moment, it’s mostly from the lower yielding market. Cottan said that efforts will need to be made to tap the higher yielding market.

Cottan also spoke of the importance of big international brands making their entry into the economy.

“The whole issue of brands is important to Sri Lanka. We’re one of the premier brands in the world, but you need a lot more brands.  We’ll be happy to see other international hotel brands here. I think it will add to Sri Lanka. It’s the same with retail brands. The Louis Vuittons and the Guccis of this world need to come into this market in a big way. It’ll good for the country. We need to facilitate that,” he said.

Elaborating on what Sri Lanka needs to in order to attract high-yielding consumers, Cottan said that designated entertainment zones à la Clarke Quay in Singapore can really add value to the experience of a tourist coming into the country. 

“To move to the higher yielding market, look into the aspirations of the clients and deliver. Bringing in higher yielding markets will benefit everyone such as taxis and limo drivers, shops and the like. The tourism board and everyone needs to work together in tapping the higher yielding market,” he said.

The level of service in human capital is another key area, he added.

“To be frank, this is fairly average in Sri Lanka. It has to be much better if you’re going to be big players on the world stage. There is a lot of room for improvement. Some of it is infrastructure development. Hotel schools need to improve. A lot of resources are needed in training and developing HR,” he said, adding that expatriates needed to be facilitated to help run those. 

“Service levels need to improve if you want to get those high-income European customers. The Government can help by adding incentives,” he added. 

Tourism Australia Director Andrew Fairley, who also spoke at the event, said that every country needed to have a vision that was motivating. 

“Every country needs to have a goal that tells visitors what distinguishes you from other destinations. It’s not just about image creation. It is critical to understand what the attributes are that make you unique. A clear, simple vision that cuts through. It’s got to be memorable,” he said. Speaking on what Sri Lanka could learn from the Australian experience, Fairley said Sri Lanka Tourism could explore celebrity endorsements, documentaries and the innovative use of social media as new and exciting ways to promote the Sri Lanka brand across the world. John Keells Leisure Sector President Krishan Balendra concurred with Cottan’s thoughts on the need for an entertainment zone, adding that there was a lot of debate regarding how to market the country. The high-end market is an emerging market for Sri Lanka, the Vice President of Intercontinental Travel DERTOUR Jorn Krausser said.

“Tourists compare destinations; they have a budget to spend. How does Sri Lanka compare to Thailand, for example, in the eyes of a tourist, in terms of hotel quality, service quality? Be conscious of the pricing. Charges such as entrance fees for heritage sites are quite high, taxes imposed are quite high. It’s okay if those taxes are spent on infrastructure development,” said Krausser, adding that a friendlier approach was needed.