Tourism: The true picture

By Cheranka Mendis

Stakeholders of tourism are the people of the world. There is no one rightful owner, no one person who could claim it as his own baby.

Going along with the popular saying ‘too many cooks spoil the soup,’ the local tourism industry seems to be caught up in a bowl of mouth-burning soup. Many parties bring to the table their own theories, creating havoc at the receiving end.

All this is likely to be changed, yet again, soon. Chairman of Sri Lanka Tourism Dr. Nalaka Godahewa, who holds the reins for four separate bodies listed under the ‘Sri Lanka Tourism’ tag, on Wednesday revealed what he called the “true picture of the tourism industry,” which is totally different from the picture that was painted by other parties in the recent past.

Saying ‘no’ to number one

Contradicting the view of pushing tourism to be the number one revenue earner, which many term a ‘must do’ and a ‘can do’ situation, Godahewa said that he would not press on it.

“It is my view that tourism should not be brought to the number one industry in Sri Lanka. I really do not wish for that to happen,” Godahewa said, speaking at the 5th CIM Talking Point on ‘Sri Lanka Tourism in the New Economy’.

Giving the reason for this statement, he claimed that with the industry being brittle, getting to the numero uno position would put the country’s economy at risk. “With the industry being categorised as fragile one, if tourism becomes number one moving up from the current sixth, people will be heavily dependent on it.” If and when the fragility is tested, the heavy dependents will be thrown off balance.

He stated that one must look at both sides of the coin when it comes to tourism. When assessing the potential benefit of the industry, it is seen as a mechanism to increase income and standard of living, new employment opportunity generation, increasing tax base, improving infrastructure and facilities and increased protection of natural resources.

On the flip side, the cost will go for seasonal employment, increasing cost of living, increasing traffic and congestion, negative impact on cultural and natural heritage, increase in crime rate and negative influence on social value.

 

Barriers to overcome

According to research conducted by Canadian Market Research company Insignia in 2009, 10 barriers to market growth have been identified. The list, made in 2009, is still as relevant as ever, the Chairman claimed.

The list identifies that Sri Lanka is still below the radar as a tourist destination, has poor understanding of the local tourism product and has significant competition from neighbouring countries while the brand itself is not clearly differentiated.

Moreover, lingering concern due to the 30-year conflict still remains with the international traveller, while interactive tour operators are unaware of opportunities backed by a poor air services from emerging markets such as China and Russia.

“Also local reps on overseas missions need more autonomy in expenditure while the Sri Lanka Tourism website needs improvement.”

Sri Lanka tourism is purely a Europe driven market with UK, France and Germany among the priority markets we look at for marketing and such other purposes. “However it must be understood that the trend is fast changing. Arrivals in 2009 shows India as ranking on top with 83, 634 arrivals; with UK, Maldives, Germany and Australia following close behind.”

He stated that even though China had not reached the top 10 list as yet, within the next five years it would be a major destination for Sri Lanka. “The problem is that there were no direct flights to and from China to Sri Lanka till recent times. The few flights that operate now shuttle between the two nations in full capacity. Charter flights are encouraged to support the demand,” Godahewa asserted.

With closer to home markets looking attractive and easier to capture, Sri Lanka must not overlook Western markets either. “Europeans spend more time in Sri Lanka, unlike Asian travellers. They spend an average of nine to 10 days in Sri Lanka.”

Research also shows that awareness levels of local products are quite low.

Numerical targets

Stating that the target of 2.5 million tourists by 2016, as given by President Mahinda Rajapaksa was “obviously not a well-calculated number,” Godahewa said that to accommodate the targeted number, 50,000 hotel rooms are needed along with a workforce of 500,000 persons (375,000 new employees.) To achieve this, a growth rate of 35% per year for the next few years must be sustained.

When taking into consideration the natural growth of tourisms for 2011 without much campaigning and marketing, it is estimated that 850,000 tourists will set foot in Sri Lanka. When this number is reached, the industry will run out of capacity.

Therefore, Godahewa is adamant that no large scale promotional and marketing activities should take place in Sri Lanka during the next two years. “Before we get the tourists, we must get our product right. Building the necessary infrastructure to house the large number of guests will take some time. At least two years will pass to get all the approvals right and the construction of new hotels will commence in the third year. When all this is over, Sri Lanka at least needs three to four years to be able to welcome this number of guests,” Godahewa said.

The economic contribution of tourism for 2016 with the expected 2,500,000 arrivals shows that a 5:1 ratio of arrivals to employee will be seen in 2016. Currently the ratio is mentioned as 3.6:1.

Out of the 500,000 total employment, 225,000 will be given direct employment and 275,000 will be indirectly employed by 2016. Dependents per employee will remain at three, which is the current ratio as well.

Overall, 1,500,000 will be dependent on the industry by the said year; currently the total dependence on tourism is 347,910 persons. Number of dependents from total population which was 1.8% in 2009 will increase to 7% in 2016.

Total income expected from the industry by 2016 is US$ 2.75 b. The income earned by the industry in 2009 was US$ 360 m.

Initiatives and goals

“Tourism-related investments we would promote and facilitate within the next few months/years include, among other things, adding a few more large hotels in main cities, resort hotels with 200 room capacity, boutique hotels with more than 25 room capacity, and upgrading small hotels and rest houses,” Godahewa said.

A few more large shopping malls of international standards in Colombo and other main cities, primarily targeting the Indian market, are also in focus. SLT is keen to facilitate investments regarding such issues and is also promoting a large convention and exhibition centre close to city hotels, theme parks and water parks, tourist entertainment zones, investments into golf courses, hot air ballooning, water sports and other tourism sports as well as domestic airports and aviation and a yacht marina, preferably in Galle.

Initiatives taken by the STDA as at now consist of a cabinet paper approved to expedite land acquisition process. A land acquisition team has already been set up to look into the issue. Current investors are also given strict time targets and failure to adhere will lead to termination of lease contracts, he further said.

Citing an example, Godahewa stated the Taj Hotel, which had 100 un-refurbished rooms, had now started redoing 60 of them following a warning being passed that if this was not done, a portion of its land would be taken by the Government.

He also showed interest in setting up a one-stop-shop for investment promotions involving BOI, SLTDA, UDA, CCD, CEA, ED, etc., at Sri Lanka Tourism. If all goes as planned, this would be a reality by early this month.

Godahewa, who has identified the importance of web and internet marketing, has already allocated US$ 1 million for web development for 2011 and has employed international room booking engines to technologically drive the industry forward.

Monthly promos

Godahewa also has plans to have a product offer like no other during the coming year. Each month of the year will focus on one aspect of tourism, urging different types of travellers to come to Sri Lanka.

Laying out a rough plan which had not been fully authorised, Godahewa said that in 2011, in January, the month would be dedicated for nature and wildlife; February – beaches, March – sports and adventure, April – people and culture, May – pilgrims, June – weddings and honeymoons, July – culinary, August – heritage, September – health, October – agriculture and fishing, November – MICE and December – shopping and entertainment.

The market segmentation based on benefits sought is fairly justifiably distributed with 24% being authenticity seekers, 22% insecure travellers, 20% as luxury seekers, 14% resort seekers and 20% coming for fun and excitement seekers, diversifying the products offered on a monthly basis would bring in a diverse range of customers.