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| The Hotels Association of Sri Lanka President M. Shanthikumar
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Industry leader M. Shanthikumar on Monday made a strong case for fresh support and relief for multiple-crisis-hit hotel and tourism sectors stressing that such a move by the Government will ensure a quicker revival generating more foreign exchange and securing jobs.
Speaking at The Hotels Association of Sri Lanka (THASL) post-AGM banquet, Shanthikumar who was re-elected for a second term, called for grant funding for the more impacted and vulnerable Small and Medium Enterprises in the sector, proper application of export status to the tourism industry; bringing electricity tariff on tourism sector on par with other industries resolution of litigation over 1% levy by local Government authorities and effective destination marketing globally.
“Considering its importance, we definitely need the support of the Government to come out of the crisis hoteliers are faced with today,” said THASL President at the banquet at which the Chief Guest was State Minister of Finance Shehan Semasinghe.
“It is a known fact that the SME sector has been badly affected. We would appreciate it if the Government can consider extending a grant to those registered by SLTDA in this sector, in order for them to recommence their operations.
“We are well aware there will be many challenges faced with regards to home stayers etc but the fact remains they need the most assistance as tourism is their main source of income, which has now fallen apart,” Shanthikumar emphasised. He suggested that the Government could get the assistance of donor agencies and address this issue for the industry.
THASL Chief also said that due to the non-payment of the loan capital and interest during the moratorium, the loan balances increased by 40% thereby increasing the liability. “The lack of funds is posing a challenge for hoteliers to continue to maintain the staff, the plant and to carry out even the smallest of refurbishment to welcome tourists,” he pointed out.
THASL estimates that the overall tourism sector debt is approximately Rs. 500 billion. This includes the working capital loans granted under schemes such as Enterprise Sri Lanka, Saubhagya, term loans and accumulated interest due to extended moratorium.
Noting that some of these loans are being serviced, Shanthikumar said several other accommodation units that were under construction have already decided to give up.
The impact on the top line of the hotels and tourism sector via multiple taxes, levies, licence fees was also highlighted by THASL President. “We have been without revenues for nearly 18 months yet continued to maintain the employees and the hotels. The industry will lose its competitive edge in marketing the destination with such taxes and there is no doubt it will affect the anticipated tourist arrival growth,” emphasised Shanthikumar.
“As the key foreign exchange generator, it is imperative that the tourism industry be granted the relief extended to all other export industries in the country. At least until such time we see the tourist arrivals stabilising this is absolutely critical,” he stressed.
Referring to the contentious 1% levy by local Government authorities THASL Chief said it was an unfair burden on the industry and remains unresolved.
“It is totally discriminatory to charge millions of rupees from hotels by local Government authorities when they only charge without an exception a measly sum of Rs. 6000 annually as license fees from every other industry. Why do hoteliers have to pay so much more when the industry is struggling to survive?” questioned THASL Chief.
“Whilst we ask the Government for financial support for survival, we are on the other hand spending millions of rupees for the past 14 years on litigation to get rid of an unfair local Government tax brought about by the authorities only on the hotel sector. It is disappointing to note that this has not been addressed by successive ministers,” Shanthikumar said, adding that there are over 300 cases in court filed by the local authorities against hoteliers across the country.
He also called for equal treatment when it came to electricity tariff. “The tariff rate for the hotel industry is higher than all the other sectors. Our request is for the Government to bring the Hotel Sector on par with the other industry tariffs/and not to discriminate against the hotel sector with higher tariffs. Unfortunately, we have not received a positive response to any one of these critical requests,” THASL Chief lamented.
With regard to the elusive export status for the tourism industry, Shanthikumar said due to an issue on the definition of ‘an export’ the industry has not been granted relief similar to those enjoyed by other export industries.
“We believe that the net income from Tourism is presently underestimated. This industry has the potential to achieve $ 10 billion annual revenue in the coming years,” he said, adding that most countries give a stronger emphasis to tourism and development when formulating their national policies.
Given unprecedented challenges THASL Chief also called for new thinking and policies to ensure high growth potential is realised sooner than later. “The same old models that are in textbooks may not work. We need the Government to look at exceptional financial models for the revival of tourism,” he said.
According to Shanthikumar, THASL has sent a comprehensive plan to the authorities concerned for their consideration. “We hope the Government will look at this positively with an open mind due to the importance of tourism,” he added.
