Emerging trends in tourism

Despite all the commotion over declining tourism arrivals due to the uncertain security and political climate, there are many positive things taking place in the industry.

There are new hotels coming up; hotel chains are being re-branded with a new look; acquisitions are taking place and a new privately-driven hotel school is on the horizon.

Why such a buzz in an industry that is sensitive to conflict and other political upheaval?

“That’s because conflict and terrorism is happening all over the world and Sri Lanka is not the only place where security is an issue,” says Hiran Cooray, Managing Director of Jetwing Hotels and head of an industry body representing hoteliers.

If three to five years ago, terrorism topped the agenda of the three most important issues to consider when travelling to a country; now it’s (1) the cost of fuel, (2) pandemic disease, and (3) terrorism – in that order. “Terrorism as an issue has come down the list of concerns because it’s happening everywhere and no country is safe from this. Take London, Paris or New York – it’s all over,” he said.

That’s probably the reason why all local major hotel chains in the country are re-branding their hotels and doing a general clean-up.

There is also the more ‘positive’ group of Sri Lankans who will invest whatever the crisis – in the belief that there is also a silver lining to the peace process.

The big hotel chains have spent millions of rupees on the re-branding exercise – Keells hotels with its Cinnamon brand for 5-star properties and Chaya for the second-level resorts; Heritance for Aitken Spence’s three properties at Ahungalla, Kandalama and Nuwara Eliya; the Amaya brand from the Connaisance chain and the latest entrant – Anantara from Serendib Hotels.

Apart from that companies like Keells and Aitken Spence are looking at Confifi hotels for possible acquisition while Ceylon Continental is also rumoured to be up for sale – through brokers approaching the big chains – but its chairman U.K. Sharma vociferously denies this. “That’s all wrong. People may be interested but we are not selling,” he said, adding that he was in fact also looking for a four to five acre Nuwara Eliya property to launch a boutique hotel.

Tourism is like a pendulum; rising arrivals as seen until 1982 and then a slump following the nightmarish ethnic riots of July 1983 which devastated the industry. There was a pickup once again following the peace process in 2002 and a slump in 2005 after resorts were devastated by the December 2004 tsunami.

It was climbing up in the first half of this year when the violence in the eastern sector flared up and thus saw a drop in arrivals and also cancelled bookings.

But new bookings too are coming in, says Cooray. “There are cancellations; but there are new bookings too.”

There is the other school of thought among some operators that if you are ready, you can benefit once absolute peace prevails. Operators like the Aitken Spence group are upbeat on the prospects of a positive curve in the ‘only-on-paper’ ceasefire agreement and thus have been investing in new hotels, re-branding and seeking new properties. They get a head start over others if the security situation is at more comfortable levels.

The re-branding exercise came after international tour operators began looking at Sri Lanka more positively.

At that time 5-star hotels were selling at 3-star rates and drawing that type of clientele. With better prospects after the peace process began, he big city hotels and chains began re-assessing their properties with a view to upgrading and attracting the top-of-the-market range paying 5-star rates. That’s how the big chains came into the re-branding picture In a country where there is a lot of negative thought, negative news and negative political happenings, the tourism industry deserves a pat on the back for going ahead with investment plans – while most of Sri Lanka’s private sector resort to the usual wait-and-see policy, reluctant to take risks.