Financial Times

Tourism: No sense of direction
In the late 1960s development planners deliberately selected tourism as the route to economic growth hoping it would earn foreign exchange, create employment and rapidly spread its benefits to grass roots levels rapidly.

The 10-year plan of 1968 laid the foundation towards this goal while the 1991-2001 plan became a signpost to the way forward. Today there are many schemes and draft laws conceived by experts both from government and the industry to be guided by.

One such scheme is the proposal to replace the Tourist Board by a new institutional arrangement that would not only make tourism promotion and development more efficient but would also enable experienced players in the business to have their say.

Further, the new dispensation would be independent of government funding. A cess of one percent on the turnover of tourism businesses would fund the marketing (75 percent), development (10 percent) and training functions (15 percent).

A further Rs. 500 was added to the Airport Embarkation Tax to supplement the revenue from the cess. Over 10 years in the making, the legislation is still striving to reach the portals of Parliament, frustrating the authors of the scheme and the travel industry.

Action on the funding mechanism, however, went ahead swiftly. So the funds have been flowing in from September 2003. But the old institution still survives.

It even decides on the priorities for the disbursement of the cash in the kitty! Highest on the list has been a 75 percent increase in the salaries of the staff of the Tourist Board on the pretext that it is now an A Grade corporation. The board however denies the salary hike came from this cess.

While no one grudges raising staff salaries if the intention is to ensure results, the issue here is a moral one. Shouldn't the priority be in putting funds into marketing and promotion - which would show results -- before tackling the salary issue? The Board would have been defunct, had the remaining legislation gone through Parliament. Why could it not wait until the Board was revamped to make it A Grade and to revise salaries? And where is the Board headed now?

The Board is, in fact, on a spending spree! The recently built building is to be "refurbished" using custom designed furniture and full air-conditioning. Directors of every department are to be provided with new cars. There are whispers about favourites being given contracts for refurbishing and some positions in India.

The privilege of claimed "non-accountability to the government" means that tenders are not the Board's concern. Some are asking whether revenue collected under the Finance Act No 25 of 2003 and the Embarkation Tax are not public funds.

Recently, the Board offered a voluntary retirement scheme (VRS) to the staff. Over 150 employees opted for it. Members of the drafting committee that formulated the new scheme welcomed this step because that made the Board more economical to manage until the changes came.

The VRS also gave the Board an opportunity of recruiting highly skilled staff to key positions. But now the substantial increase in salaries has negated those benefits. Indeed this move defies all logic.

The more efficient staff opted for the VRS because they were able to secure alternative employment with the compensation already in their pockets. By what method of deduction did the management conclude that those who were left behind deserved higher salaries? If the expense on higher salaries was diverted to training the novices and improving their skills, that would have been laudable.

Neither does the conversion of the Board to 'A Grade' seem justifiable on the basis of workload. Many believe the workload was heavier in the 1970s and ’80s, when tourism grew by leaps and bounds. This year, the Board had forecast tourist arrivals to reach 600,000 but the industry disagreed with this target and it was revised downward. Now that target is set for 2006.

Many international hotel chains gave up management of Sri Lankan hotels in recent years. Some examples are: Intercontinental, Oberoi, Marriott and Renaissance. It appears from reports that the quality of hotels and restaurants has deteriorated recently.

The Board should strengthen its quality control wing and invest more funds in personnel and skills in that area. According to knowledgeable sources, a room stock of 14,000 in operation does not justify counting additional requirements in thousands in order to cater to 600,000 tourists in 2006.

Recently the staff of the Board met at a five-star hotel to draft its budget. Is there any wonder that the Board wants to increase the rate of cess? The reasoning seems to be that the staff of A Grade corporations should live like kings and queens!

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