Tourism sector looks to 2012 target reality

By Cheranka Mendis

President Mahinda Rajapaksa in the 2013 Budget presentation may have rushed to conclusions, but with a month to go for the year’s end, the tourism industry is getting anxious about 2012’s final arrival numbers amidst a recession in traditional markets and upturn in emerging source countries.

 

Weven before 2012 has ended, in his Budget speech on 8 November, President said the tourism industry “attracted one million foreign tourists and one billion dollars in foreign earnings this year”.

In the early part of this year, encouraged by the high growth on a percentage basis from a low base, forecast for 2012 was an arrivals figure of 950,000 to one million, up from 850,000 in the previous year.

During the first 10 months of this year, tourist arrivals amounted to 774,151, up by 16%. Last year up to the first 10 months saw a 34% increase over the corresponding period of 2010.

The rate of growth has slowed, reflecting the tougher market conditions overall.

The industry remains hopeful that arrivals in November and December, two popular months in the Winter season, will be high enough to reach original targets for 2012.

When November data is available, a clearer idea will emerge as to how close or off the industry is towards achieving the psychologically important and record one million figure. Based on end October data, the country needs to draw nearly 176,000 to achieve the 950,000 tourists mark and 226,000 to surpass the one million milestone.

Some believe that the one million target is achievable, while others are adamant that arrivals are slowing down.

City Hotels Association Chairman M. Shanthikumar told the Daily FT that the industry is hopeful of a slight increase, if not the original target, given the current situation of tourism.

Noting that November was not a good year for city hotels, where a 10% drop was seen over the same period last year, Shanthikumar stated that December looks “reasonably good” with a 72-73% occupancy level.

“Even though the numbers were down in November, it did not have a big impact on revenues thanks to the minimum rate rule. However, December looks reasonably good and we think that the city will close at 72-73%,” Shathikumar said, adding, “With this, we expect the year to close with 950,000 tourists or even more by the end of the year.”

Tourist Hotels Association Chairman J. Kehelpannala wasn’t available for comment yesterday.

In 2011, the last two months produced 188,406 tourists whilst in 2010 the figure was 156,878 and 1010,173 in 2009.

So far this year, year-on-year monthly arrivals have been higher than 2011 and this trend is likely to be experienced in November and December as well. Boosted by the end of the war phenomenon in May 2009, tourist arrivals have been soaring, with 2011 recording the highest-ever with 855,975, up by 31%.

The industry has been calling for an effective and coordinated destination marketing plan as opposed to haphazard or piecemeal efforts. Another view is that since the Government has ended the war with massive investments in defence and personnel, the private sector giants in line with their growing profile must do their own brand marketing strategy globally.

However, despite industry contributing via a levy, funds haven’t been used as yet for an aggressive global marketing effort.

The Budget 2013 presented by President and Finance Minister Mahinda Rajapaksa last month did focus on destination marketing but the strategy proposed was familiarisation tours for international journalists in 2013.

“I propose to invite and sponsor media personalities, TV crews, journalists, and promoters from key up-market global travel publications to promote Sri Lanka as an up-market tourist destination. I propose to allocate Rs. 100 million for this from the Tourism Development Authority Fund, to meet the cost of their air tickets and related international transport. I expect all up-market tourist hoteliers to provide free accommodation and other facilities to such visitors to make this venture a success,” the President said in the Budget 2013 presentation. 

Under the ‘Mahinda Chinthana,’ the Government is confident and targeting tourist arrivals of 2.5 million by 2016. However, since the plan was launched, experts have expressed reservations over its reality, with some claiming the planned figure would only be reached by 2020.

The President said the Government strategy to develop the tourism industry to attract 2.5 million well-spending foreign tourists and an equally large number of domestic tourists has produced encouraging results.

The hotel industry has expanded with new room capacity, refurbishment of existing facilities, and building up of new hotels. Existing coastal tourist resorts in places such as Negombo, Bentota, Hikkaduwa, Weligama, Unawatuna, as well as new resorts in Kalpitiya, Nilaweli, Kuchchaweli, Passikudah, and Yala are positioning well for high-spending tourists.

Investments by internationally-reputed hotel companies have increased with at least seven global brands taking position in this industry, he said in the Budget 2013 presentation.