Post-war journey of Sri Lanka Tourism

Stakeholders highlight importance of what has been done and outline what is left to do

 By Cheranka Mendis

Tourism has been always been identified as a thrust industry which will grow exponentially in the face of economic revival. With the industry bracing itself to welcome 2.5 million tourists by 2016, stakeholders must unite and drive the promotion and marketing of the destination to upmarket travellers with big money to spend.

Speaking at the 47th Annual General Meeting of The Hotel Association of Sri Lanka (THASL) Immediate Past President Anura Lokuhetty listed out the important milestones achieved by the industry over the past two and half years during his tenure, while Sri Lanka Tourism Development Authority Director General Vipula Wanigasekera expanded on Government concerns and plans for the industry.

Lokuhetty handed over the reins of THASL to Jayantissa Kehelpannala, Executive Vice President and Sector Head of Resort Hotels, Keells Hotels Management Services. Kehelpannala declared that he would work to form ‘one voice’ for the sector which is facing exciting times with the many new prospects lined up for the local tourist hotel industry.

Global scenario

Giving a synopsis of world tourism, Lokuhetty revealed that the number of tourists has increased from 938 million in 2010 to 981 million in 2011, increasing earnings from tourism to US$ 1.3 trillion. The industry is known to generate approximately US$ 3.4 billion a day.

From the increase of 43 million, 29 million tourists were Europe bound, which shows Europe receiving almost 50% of arrivals for the first time despite recession and other similar crises.

“When looking at our region, it has grown from 180 million to 204 million tourists in 2010 which is 13.4% increase. In 2011, the growth increased by 6% from 204 million 215 million.” He noted that the low percentage of growth could be attributed to the recession in European countries as well as natural disasters in the region.

Achievable target

From the Asian region, South Asia is recorded as having the highest growth figures. China received 53 million tourists, Malaysia received 26 million, Thailand received 19 million, Singapore received 17 million and Vietnam received 5.3 million and Cambodia 2.4 million tourists last year.

“When analysing the figures, we can see that reaching 2.5 million tourists by 2016 is not a dream and is an achievable target,” Lokuhetty said.

Checklist item 1: Marketing plan

For the industry to develop further and sustain its growth momentum, the industry must embark on a major promotion campaign, he asserted. “If not, the increase we have seen over the last two years cannot be sustained until 2016.”

There is now a need for a consorted effort and proper methodology to take the growth forward. A proper marketing plan is therefore a top priority for the industry in order to avoid missing the window of opportunity.

Lokuhetty stated that adhering to a request made by the Government, a master plan for marketing Sri Lanka Tourism was prepared by SLAITO and THASL with contributions from industry stakeholders, which was presented to the new Chairman of Sri Lanka Tourism Bashwara Gunaratne and Economic Development Minister Basil Rajapaksa two weeks ago. “We are confident that with the new chairman, we will be able to embark on this promotion with immediate effect.”

While thanking the Government for improving the country’s image among foreign investors, thereby attracting international chains such as Shangri La, Movenpick, Ritz Carlton and many other regional groups, he noted that this will also improve the country’s exposure in the international market and help the international campaign in a big way.

The big question

The ongoing question in positioning Sri Lanka Tourism’s product is whether the country should position itself as a cheap destination or an expensive destination.

“I personally believe it is better for us to attract the high-end tourists considering the compactness, authenticity and diversity of the country,” he said but at the same time warned that this will not happen overnight.

“We will have to go through the cycle to become an upmarket destination which requires considering all aspects of tourism including HR. In order to find proper human resources, providing the necessary training will be an ongoing challenge for Sri Lanka.”

Checklist item 2: HR training

Necessary steps have been taken by the Sri Lanka Hotel School to expand the facilities to meet the HR demand and to cater to the targeted arrivals by 2016. It is an encouraging fact that even other large companies in the hospitality industry have come forward in expanding the training in travel and tourism.

“I further believe that if you offer exclusive incentives to those individuals who have left Sri Lanka, they will certainly come back with their extensive knowledge. Considering all this, we must not unnecessarily get frightened.”

Sustainability of tourism will also depend on effective community participation in the development of the industry. Emphasis must also be placed on training the people to run the industry in the future without resorting to short term solutions which could discourage people from seeking employment in the tourism sector.

‘Cheap’ tag off

However, according to the foreign tour operators, Sri Lanka is no longer a cheap destination. When comparing the price structure of Malaysia and Thailand with Sri Lanka’s, the local rates are much higher than the rates charged by those countries.

Lokuhetty observed that the reasons behind the low prices offered by said countries was due to the high number of rooms available in those countries and other related cost factors.

Listing out the reasons for the high pricing, Lokuhetty attributed it to the high cost of running hotels which includes the high cost of electricity and even food items. “It is imperative to get the electricity rates and cost brought down to the rates that are paid by hotels in the region in order to be competitive in the international market.” The high cost of construction and land prices are also part of the equation in rising rates, he added.

“With international chains developing hotels in Sri Lanka, it is evident that the standards required to cater to the high-end tourists will be achieved very soon.” The island’s compactness, authenticity and diversity will certainly highlight the country as an upmarket destination.

Checklist item 3: Ideal tagline

It is therefore important to embark on a nation branding exercise along with all export oriented industries within the country.

Lokuhetty, speaking of the slogan that was constructed during Former Sri Lanka Tourism Chairman Dr. Nalaka Godahewa’s tenure, ‘Refreshingly Sri Lanka, Wonder of Asia,’ asserted that the slogan was the ideal one for the country.

“I believe that we must now work towards ensuring the consolidation of this position rather than looking at new things,” he said. “I believe our tagline is as good as ‘Incredible India,’ ‘Amazing Thailand,’ or ‘Malaysia – Truly Asia.’ What is necessary is to take it forward and concentrate on an effective marketing campaign.”

Checklist item 4: Liquor sorted

He also thanked the Government for settling the liquor license issue that was becoming a major threat for developing tourism in Sri Lanka. Timely action in resolving this increased the confidence of the investors, he said and the new regulation will help the investors and avoid unwarranted liquor shops springing up in areas where there are schools or places of religious worship.

The regulation brought in 2008 stated that there will be no liquor licenses issued to hotels within a 500 metre radius to schools or places of worship. The new gazetted regulation ties up with investment and gives approval for investors to construct new hotels while preventing small liquor shops coming up in villages.

Checklist item 5: Third party foreign currency acceptance

Another landmark achievement for the industry was the approval of third party payments to be carried out in foreign currencies. This facility will help industry stakeholders obtain foreign currency loans to build new hotels or to upgrade existing hotels.

“As you know as we are unable to obtain loans in rupees and use it for investment as interest rates are too high to make it a viable project,” Lokuhetty said. “The new measure will support the industry in its plan to expand and grow.”

Checklist item 6: Local authority taxes resolved

The issue of local authority taxes have been an ongoing discussion for several decades. With the support of the Ministry of Economic Development, the Treasury Secretary and other officials of the Government, the issue has been sorted out to a certain extent. “It is not totally resolved yet,” he added.

It has now been decided to charge taxes from the hotels based on a new formula which will serve to regularise the anomalies caused due to different local authority charges imposed in different regions.

The new formula consists of charging a maximum of Rs. 50, 000 or 1% of the total turnover, whichever is less, and through this local authority taxes would help generate more revenue for the Government and create a uniform system in collecting taxes countrywide.

Things to do

“We must remember that tourists don’t come to Sri Lanka because of hotels but because of nature, culture, heritage and other natural resources. We must safeguard the product that attracts the tourists.”

He noted that a positive thing that happened during war is that the country did not become a concrete jungle like Malaysia and other destinations. However, upgrades must be done to justify the prices charged.

“In this aspect, we have already requested the authorities to provide duty free concessions for the essential items that need to be imported for such refurbishments. This is important as refurbishment could cost more than building a new hotel – this concession would certainly help to improve standards,” Lokuhetty said.

 Pix by Upul Abayasekara