Charting path to 5 m tourists by 2030: Heads of Tourism share key insights to visionary plans

Tuesday, 21 May 2024 01:35 -     - {{hitsCtrl.values.hits}}

By Charumini de Silva

Tourism Minister Harin Fernando  

  Sri Lanka’s top  tourism officials  highlighted a strategic blend of resilience, innovative marketing, efforts to boost year round tourism,  sustainable  development and  skill development aimed at revitalising and expanding the tourism sector. In an exclusive  interview with Daily FT, Chairmen from the Sri Lanka Tourism Development  Authority (SLTDA) Chairman Priantha Fernando, Sri Lanka Tourism Promotion Bureau (SLTPB)  ChalakaGajabahu and Sri Lanka Convention Bureau (SLCB)  Chairman Thisum Jayasuriya and  Sri Lanka Institute  of Tourism and  Hospitality  Management (SLITHM)  Chairman Shirantha Peiris shared their insights on the  remarkable recovery of the tourism sector post-multiple crises.  They discussed the growth trends,  promotional activities, capacity building and future directions aimed at boosting  Sri Lanka’s position as a premier tourist  destination. Following are excerpts of the interview:

SLTDA Chairman 

Priantha Fernando 

Q: What is your view on the growth of tourism in 2023 and to date in 2024?

A: In 2023, we saw over 100% growth in tourist arrivals from 718,000 in 2022 to almost 1,500,000 arrivals. More than year-on growth, or comparing it with the best year we had, we must look at it in the light of global tourism recovery or more importantly the recovery within the South Asia region, post-COVID. One needs to factor the crisis we had to undergo in 2022, almost crippling the tourist industry and bringing it to a complete halt by end May 2022. There was a lot of damage controlling and re-building work to be done from mid-2022 to mid-2023. Most major tourist generating markets had severe travel warnings, advising tourist to avoid Sri Lanka. – There were about 18 travel advisories and warnings. The number of airlines operating to Sri Lanka had dwindled to just under 30 by mid-2022 from around 52 prior to COVID.

Under the conditions that were prevailing, Sri Lanka tourism did extremely well to reach almost 1.5 million tourist arrivals in 2023. The growth in 2023 over the previous year was above the regional growth rate as well. During the first four months of 2024, we have managed to post 784,651 tourist arrivals. Apart from April 2024 where the arrivals were 148,867, over the first quarter have exceeded 200,000 arrivals each month. The overall growth during the first four months in comparison to 2023 is over 80%. The target set for tourist arrivals for 2024 is 2.3 million tourists and if ground conditions within Sri Lanka remain unchanged, we are confident of exceeding the set arrival target.


Q: How do you see the rest of the year?

A: Now with the announcement of Presidential elections in September 2024, we could expect a slight dip in tourist arrivals during September, October and November. Not been negative, but based on past experiences, is to be expected.


Q: Are these arrival figures reflective in hotel occupancy across the country?

A: Yes, the arrival figures are reflected across the country. There has been improved occupancy registered in all types of accommodation units. It is not only in the formal sector, even in informal sector accommodation units, the occupancy has improved. Talking of revenue recorded through the establishments in the accommodation sector, extremely happy with the yield. 2023 recorded over $ 2 billion in tourism earnings and during the first four months of 2024, tourism earnings have exceeded $ 1.25 billion. The Colombo city hotels managed to record an average occupancy of close to 70% during the period October 2023 to March 2024. The yield improvement has been over 33%. With Colombo Star class hotels increasing their rates by over 40%, there was a cascading effect benefiting the hotels on the outskirts of Colombo. With a base rate set by the city hotels, it allowed the resort hotels to increase their rates at high occupancy levels. The multiplier effects did help hotel staff with swelled service charges after being in the doldrums for many years. Talking of tourism sustainability, yes, 2023 and 2024 has proven successful with benefits going down to grassroots levels. 


Q: Do you feel Sri Lanka has the opportunity to increase prices in hotels?

A: Going by tourist reviews and feedback received, Sri Lanka has been a value for money destination over the last 16 to 18 months. The tourists have had the benefit of the depreciating Rupee. You will agree with me that price conveys an indirect message about the product. From a marketing perspective too, we should perceive exactly where we are planning to position Sri Lanka on the global tourism map. In this respect and even if you take the marketing mix “Price” is a key decisive element. If you are talking about the hotels, quite often, what’s been purchased by a “would be” tourist is a promise. They attach quality, standards and service to the expected price. We need to ensure continuous value for money. When a product is priced cheap, the quality is questioned, and the image gets downgraded. Now that a realistic base has been established, stakeholders need to ensure that they maintain rates at a competitive level. Adopting under cutting strategies, including the economy, all will lose. I feel the associations have a major role to play in this regard. Look at what has been achieved from October to March and adopt strategies to maximise income. I have always advocated for the industry stakeholders to have an understanding among themselves and adopt open economic policies without any Government intervention on rates. 

Q: Are today’s prices able to sustain the huge debt taken by hotels and the rising cost of operations?

A: This is exactly the point that I am making. Say 5 years ago, the direct cost of hotel operations (on a general basis) was around 20-30% of the turnover registered. In the current context, it has gone up to about 40% despite an increase in income. The overhead cost which was in the region of 45-55% has gone up to around 50-65%. The average operational profit which ranged between 40-25% has dwindled to levels around 15% or below. How the ratios could be controlled is by increasing rates or trying to decrease costs which are a herculean task in the current context. When provision is made for depreciation and depending on the borrowings of individual hotels and the cost of borrowings, in general, there is hardly a profit for the investors/ owners. It is difficult to sustain the operations under such conditions. After the moratorium, matters have got exacerbated with the addition of accumulated interest, interest on interest etc. As you are aware, the interest rates at one stage were touching almost 30% per annum. Therefore, it is important to maintain realistic rates. Yes, for some by reducing rates will assist with short-term relief, mainly to support the cash flow. In the long-run it will only add greater burden. This is something that SME’s in hospitality need to bear in mind and seek professional advice rather than repenting later. If there is unity and understanding among all hospitality sector stakeholders, addressing the pricing issue in a professional manner will assist to mitigate the financial burden. Tourism is an industry that is of utmost importance to the economy. Under ideal conditions, the Government should have supported the tourist industry to bail themselves out of the predicament they are in. Unfortunately, the economy is in bad shape and this cannot be expected.


Q: The minimum room rate introduced for a Colombo hotels, has it paid off? 

A: For certain the MRR has paid off to a great degree. You should pose this question to Colombo hoteliers or the associations. What I have explained above is explanatory. Even from an overall economic perspective, it has helped to increase the foreign exchange earnings. Even from many parts of the island there are requests coming in for the authority to intervene and introduce minimum room rates in those areas as well. Removing the MRR by the end of this month is under consideration and trust the hoteliers will be able to devise their own mechanisms to maintain rates. – It is in the interest of all. Even the DMC’s will be better off as they normally work on a commission and then, the staff and overall the economy. The industry stakeholders need to act in a responsible manner. The Minister of Tourism has expressed his thinking, going to the extent of stating that he is prepared to call a meeting of hoteliers and DMC’s to usher an amicable settlement between the parties enabling them to move forward from thereon.


Q: If yes, in what sense?

A: As mentioned above, it benefits all. I think you should talk with a cross section of hoteliers, hotel staff and do some basic research and calculations. As an example, if a five-star property was selling at $ 65 a room and having 50% occupancy, compared with 70% occupancy at $100 per room, you could calculate for yourself the direct benefit, the additional benefit to the staff by increased service charge, additional benefit to the economy by way of taxes etc. Even from a marketing perspective, we have managed to attract a higher percentage of travellers who are spending more than the backpackers. Policy wise, we are looking at positioning Sri Lanka as a destination for high spending tourists and if we are to achieve it by 2028, we must make a start somewhere. Objectively we are targeting 5 million tourists by 2028 with at least 50% belonging to the category of high-end tourists, spending over $ 500.0 per day.


Q: Has the change in the visa process and the increase impacted arrivals?

A: The increase in visa fee for sure is making a negative impact on tourism. From reports that are been received from all quarters, it is very clear of the damage it has inflicted. It is only a few weeks and we cannot come to conclusions on the real impact it has created. Hopefully, we should be able to resolve any differences and create an environment that is conducive for tourism by establishing a proper visa policy.


Q: Will this not slow down the tourism growth

A: Yes, unless properly addressed immediately, it will impact on arrivals. The President has appointed a committee to investigate the visa policy and make recommendations. Until then the free tourist visa authorised for the 7 countries will remain valid. The 30-day tourist visa for other countries has been reintroduced at $ 50. Hopefully this will mitigate the negative effect.


Q: What plans do you have for development to up the tourism offering in Sri Lanka?

A: There are many plans from a tourism development perspective. If the current trend continues, the rooms in the formal sector will not be enough by the end 2025. A major challenge that we are faced with is the mushrooming of the informal sector. There are many more issues that we need to focus on. However, the available resources are also a major concern. The authorities are trying to run a race with their hands tied behind them. Nevertheless, we will be adopting a positive approach and will take on all challenges. This is not something that SLTDA or Sri Lanka Tourism could do single handed. We need the understanding and support of all tourism stakeholders as well as most agencies and ministries that cut across tourism. There needs to be a holistic understanding among all and a joint effort. Certainly, SLTDA will provide leadership and play the role of a catalyst where it is the private sector as well as foreign investors who need to fuel the industry with greater vigour.

SLTPB Chairman 

Chalaka Gajabahu 

Q: Are you happy with the tourist arrivals to Sri Lanka over the past 12 months?

A: Absolutely. The numbers speak for themselves. When we took over the office in June, the last tourist was leaving the country. The industry was at an all-time low, grappling with multiple challenges in the aftermath of the Easter attacks in 2019, the global COVID-19 pandemic in 2020-2021 and a severe economic crisis in 2021-2022. However, despite these challenges, we managed to end the year with nearly 720,000 visitors. In 2023, our target was 1.5 million and we were just about 10,000 short, mainly due to global factors beyond our control. This year, we have set an ambitious target of 2.3 million arrivals, matching our benchmark year of 2018. Given the current pace of growth, with over 850,000 visitors’ year-to-date (YTD), we are confident in achieving this goal.

Q: What promotions did you do to get such a growth?

A: Our initial focus was on our neighbouring giant, India. We initiated influencer programs and conducted roadshows to tap into this crucial market. Given the negative global media coverage right after the economic crisis, it was essential to start with low-hanging fruits. Once we established a strong presence in India, we targeted our traditional markets in the West. We only participated in key trade shows like the World Travel Market (WTM) in London and the InternationaleTourismus-Börse (ITB) in Germany. In the past, we participated in around 40-50 trade expos annually, but due to budget constraints, we strategically focused on fewer, more impactful events. In addition to business-to-business (B2B) efforts, we also concentrated on business-to-consumer (B2C) initiatives through influencer and media familiarisation programs. We hosted around 300 media personnel from 15 countries, showcasing Sri Lanka’s readiness to welcome tourists. This led to significant accolades from prestigious platforms like Forbes and CNN as well as via social media platforms like Instagram in enhancing our global image.

Q: What plans do you have for the future in terms marketing?

A: Our future marketing strategy involves a mix of Above the Line (ATL), Below the Line (BTL) and Through the Line (TTL) approaches. We will combine digital marketing, influencer partnerships and participation in trade expos. Our focus remains on Europe, particularly key markets such as the UK, France and Germany. In Europe, we also aim to penetrate emerging markets like Italy, Poland and the Netherlands which gave us good traffic during the first quarter. Additionally, we plan to explore the Scandinavian and Middle Eastern markets, which are known for high spenders. In terms of wellness and culture tourism, we will focus on Japan and South Korea which are identified as crucial markets to boost the sector. The diversified approach I hope will help us tap into various segments and sustain our growth momentum.

Q: To sustain this growth momentum it is said that there is a need to roll out a digital communication campaign. Could you explain?

A: The global campaign is primarily focused on digital and public relations (PR). We have allocated 90% of our budget to these areas. The first phase of the campaign was launched in November 2023 and the second phase is scheduled for June, with a two-stage rollout in June and July. Although it was originally planned to be implemented from May, the tender procedure delayed the execution. Each market has different tender applicants and the evaluation process is rigorous. Now, it is nearly complete. Our aim is to create a consistent and recognisable brand footprint for Sri Lanka, ensuring the campaign’s longevity and effectiveness across various markets. This approach has been well-received globally whenever we have presented and we are excited about its potential impact.

Q: What initiatives do you believe were most effective for increasing tourism?

A: Our 360-degree strategy, encompassing PR, digital marketing, mainstream influencers and media familiarisation tours, has been instrumental. For instance, NAS Daily created three specific videos highlighting Ceylon Tea, investment opportunities and Sri Lanka as a must-visit destination. We have also focused on promoting Ceylon Cinnamon and sports tourism, leveraging our Minister’s dual role as the Sports Minister. These efforts have positioned us as one of the fastest-growing markets globally, according to the travel index. I believe our strategy of integrating various marketing tools and creative approaches has yielded impressive results.

Q: How do you plan to sustain and enhance tourism’s role in the economy?

A: Our Tourism Master Plan aims for 5 million arrivals by 2030, focusing on sustainability rather than mass tourism. We aim to increase the average daily spend per tourist from the current $ 180 to $ 500 by 2029-2030, drawing inspiration from destinations like the Maldives. We seek to develop infrastructure and attract high-spending tourists. Sri Lanka is naturally made and it is not an artificial destination. We do not want 10-15 storey hotels coming up in places like Anuradhapura and Sigiriya even if we have the numbers. This is why we involve promoting boutique villas, bungalows and five-star hotels rather than large, impersonal establishments. Our goal is to make Sri Lanka a sustainable destination that offers a unique and authentic experience, avoiding overcrowding and preserving our cultural and natural heritage.

Q: The President states that he wants to make Sri Lanka a destination for the top end traveller who will pay big dollars. What plans do you have to target these clients?

A: Over the next five years, we plan to target high-end travellers through our global campaign. We expect half of our 5 million target to be high-end tourists, with the other half from middle-income groups. Backpackers and middle-income tourists are essential as they are the future leaders in the world in respective fields. Their early positive experiences in Sri Lanka will likely bring them back at higher spending levels or as investors in the future. This strategy aligns with the President’s vision of achieving $ 500 daily spend per tourist. It is also important to note that 33% of our tourists are repeat visitors. If they come once, they fall in love with the charm in Sri Lanka. We aim to create a balance between attracting high-end visitors and catering to middle-income travellers, ensuring a sustainable and diverse tourism sector.

Q: Are there any new markets you plan to target?

A: Yes, indeed. We are launching a Buddhist trail, targeting Southeast Asian markets like China, Japan, South Korea, Vietnam, Cambodia, Thailand and Indonesia. This initiative will promote pilgrimage travel and attract Buddhist pilgrims, similar to the Ramayana trail. We have already started working on this project starting on this Vesak festival. We are hosting influential groups from Vietnam and Indian media crews specialising in culture and Buddhism. This initiative aims to highlight Sri Lanka’s rich Buddhist heritage and attract tourists interested in cultural and religious tourism. We are also planning media and influencer campaigns to support this effort and expand it to Western markets as initiative progresses to the second phase. The Buddhist trail will be a key part of our global campaign.

SLCB Chairman 

Thisum Jayasuriya 

Q: Since taking over office, do you see the MICE segment having great potential for Sri Lanka?

A: Yes, the Meetings, Incentives, Conferences, and Exhibitions (MICE) segment holds tremendous potential for Sri Lanka, given its strategic location at the crossroads of East and West, rich cultural heritage and rapidly improving infrastructure. The diversity Sri Lanka offers attracts the MICE clients from the region as well as from the other parts of the world.


Q: What initiatives have you taken to push this segment to the country?

A: We have implemented targeted marketing campaigns, upgraded MICE infrastructure, offered attractive incentives to event organisers, and actively participated in international MICE trade shows to establish Sri Lanka as a premier MICE destination. Locally Sri Lanka Convention Bureau conducted MICE training and awareness programs targeting the regional hoteliers as well as the students who are following Tourism/Event management degrees. Additionally, we have launched the MICE EXPO brand to highlight different regions’ MICE capabilities and we have successfully organised MICE Expos in Colombo, Jaffna, and soon in the southern region. Furthermore, the Convention Bureau has started to aggressively promote Sri Lanka as a prime location for destination weddings.


Q: Which are the key focused markets of the Conventions Bureau?

A: Our primary target markets include India, China, the Middle East, and Europe, all of which demonstrate high demand for corporate events and international conferences.


Q: Have you seen good growth in the MICE business in the past 12 months?

A: Yes, we have witnessed a notable increase in MICE activities over the past year, hosting several high-profile events and conferences in Sri Lanka. The collected data shows that the MICE arrival comes to 9.5% in 2023 compared to the overall tourist arrival and we expect this percentage to grow up to 12% this year. 


Q: Do you attribute this to the effectiveness of the promotions you have carried out overseas?

A: Absolutely. This growth is largely due to our strategic promotional efforts across the globe, significantly raising awareness and interest in Sri Lanka as a MICE destination.


Q: Are you happy with the earnings per delegate?

A: While the earnings per delegate have been satisfactory, there is always room for improvement. We continually seek ways to enhance the value proposition for MICE delegates to maximise returns. SLCB has stepped up efforts to establish the country as a year round destination, with a particular focus on boosting arrivals and earnings from the MICE segment to over $ 550 million by the end of 2024. We aim to develop a comprehensive 2024-2026 MICE tourism blueprint that aligns with the 10 year Tourism Master Plan, leading up to 2035. The objective is to boost revenue generation from this lucrative segment. SLCB aspires to achieve $ 1.36 billion in earnings and attract 10% of total arrivals through MICE tourism by 2026. The bureau’s bold vision for 2026 includes generating 20% of tourist arrivals through MICE activities, projecting an 11% increase in MICE arrivals from 2023. MICE travellers spend three times more than leisure and other tourist segments.

Q: The President is keen to attract higher-paying clients to the country. How do you propose to make this shift, which will phenomenally increase forex earnings from MICE?

A: We plan to attract higher-paying clients by upgrading our luxury and premium MICE offerings, investing in state-of-the-art conference facilities, providing bespoke services, and forming strategic partnerships with global MICE organisers to bring exclusive events to Sri Lanka. We are currently in discussions with the Exotic Wedding Planners Conference (EWPC) organisers to host this prestigious international event in Sri Lanka in 2026. These initiatives and strategic focuses are designed not only to grow the MICE segment but also to ensure it significantly contributes to Sri Lanka’s economy.

SLITHM Chairman 

Shirantha Peiris

Q: You’ve been very active in increasing the number of trainees in the hospitality sector. Can you elaborate on the initiatives taken?

A: SLITHM has continued to offer subsidised programs across all schools in each of the nine provinces. Besides these programs, we have introduced new courses such as pastry and bakery and multi-skilled programs. We also offer executive diplomas for industry professionals at the supervisory level and above who lack formal academic qualifications, which we noticed as a major drawback for them to climb up in their careers. Additionally, we have introduced a specialised pizza-making program, which has become a significant revenue generator for the institution. Beyond these initiatives, we have launched short-term hospitality training programs targeting students from all 25 districts. Last year, with the support of the Asian Development Bank (ADB), we trained 1,762 young men and women from across the country. This project, which ran from October to December 2023, had a financial commitment of around Rs. 30 million from the ADB. We also completed training for another batch of youth to cater to the hospitality needs in the Kataragama area, funded by the Devalaya.

Q: Have you seen growth in student intake?

A: Yes, certainly. In 2022, we exceeded 5,000 enrolments. In 2023, our target was 6,000, but we surpassed 8,000. This year, we aim for 10,100 enrolments. It is important to note that these figures represent enrolments, not the number of students graduating each year. For instance, if a student enrols in multiple courses, they are counted multiple times. On average, we send about 3,000 students into the industry annually, though this number can rise to 4,000-5,000 when including revenue-generating programs like pizza-making and bakery courses. Our subsidised programs alone account for around 2,500 students. This growth is encouraging, and we are also in the process of introducing a degree program next year, in affiliation with a top global hospitality university.

At present, we are in discussions with some of the top global hospitality universities in Switzerland, France and Australia. We also need more space as our schools, except for those in Jaffna and Batticaloa, are currently overflowing. Anuradhapura, for example, was full last year for the first time in 31 years. 

Q: What training opportunities are available for SLITHM students at present?

A: Our students have the opportunity to secure internships locally and globally, in countries such as the United States, various parts of Europe, the Middle East, the Gulf countries, the Far East and Australia. These international internships allow our students to gain valuable experience abroad before returning to continue their studies or enter the workforce.

Q: How do you ensure that students return after their internships abroad?

A: We have successfully managed internships in the Gulf countries, where students typically return. For internships in the US and Europe, we are exploring a system where students sign a contract and a bond, with legal responsibilities placed on their parents or guardians. This way, we can mitigate the risk of students using these opportunities to stay abroad permanently.

Q: With hotel staff leaving for overseas jobs, how do you plan to address the gap in the local industry?

A: The industry is indeed flourishing, with service charges sometimes reaching three to four times the basic salary. However, many skilled workers perceive greater opportunities abroad and decide to leave. While we cannot stop this migration, it is our duty, along with other institutions like VTA and NAITA, to ensure we have enough trained personnel to meet the demands of our growing tourism sector. We aim to instil a sense of loyalty and patriotism among our trainees, hoping they will return to contribute to Sri Lanka after gaining international experience. Asia is the future, and we believe many will return after realising the value of their homeland.

Q: How is SLITHM’s collaboration with other education institutes?

A: In the past, institutions operated independently, but now SLITHM works closely with VTA. We have aligned our curricula to improve the competencies of other recognised institutions and to gradually elevate their training standards to match ours. This collaborative approach ensures consistent training and development, leading to the best outcomes for our students.

Q: There is a social stigma regarding the tourism industry, particularly affecting female participation. How can this be addressed?

A: We need to create a respectful and supportive environment for women in hospitality. This involves educating those already in the industry to foster respect and understanding. Women in general should be viewed respectfully, not as objects and this teaching must be instilled from their childhood from parents before teaching them anything else. Recent study also showed the lack of support in the middle management to climb up the career ranks. By supporting middle management and providing clear career paths, we can show parents and society that there are viable and respectable opportunities in the tourism industry. However, this cultural shift requires sustained effort over 15-20 years to truly change perceptions and encourage more women to join the industry.