Tourism:Hoping for summer after bleak winter

By Malik Gunatilleke
The New Year brings good and bad news for the tourism industry as the Government renews efforts to promote Sri Lanka as a travel destination but hoteliers continue to suffer with falling occupancy rates.
As the travel advisories issued by many European countries seem to stand firm, only Britain has shown relative leniency on travel to Sri Lanka.

‘First Choice’, one of the largest outbound tour operators in the UK is scheduled to restart its charter flights to Sri Lanka next month after suspending flights in November 2006. However, if the tour operator does not have an acceptable load factor (number of passengers) it runs the risk of reconsidering these charter flights.

According to the Tourist Hotels Association of Sri Lanka (THASL) this situation can be very advantageous to the tourism industry at the present time since the charter flights would give credibility to Sri Lanka as a destination and the operator would push to fill all seats generating volume-business.

However not everything is going smoothly for tourism in Sri Lanka as hoteliers still fight for concessions from the Government and there is no improvement in occupancy rates. The THASL has requested the Tourism Ministry for a moratorium on loans taken by hotels, which according to many hoteliers is directly targeting the hotels affected by the tsunami.

THASL has also asked for a temporary exemption from VAT payments for a stipulated period of time to enable hotels to recover from the poor turnover during the peak season. Apart from low occupancy rates, the new electricity tariff which came into force has also victimized the tourism industry.

Although the new tariff has given some relief to industries, the Government has failed to recognize hotels as one that falls into the industrial category thus excluding the hotel industry from the benefits of the new tariff. The hotel industry is widely considered a ‘thrust industry’ and almost 100% of local raw materials are converted into services and products resulting in large turnovers which are predominantly in foreign exchange.

The hotel industry is also the fourth largest foreign exchange earner for the country making hoteliers feel unappreciated by the Government’s failure to recognize them as an industry. Meanwhile, the Government’s effort to put tourism back on its feet has not been completely unsuccessful. Plans have been made in consultation with the Tourism Ministry and the national airline regarding a direct consumer campaign in Britain which is scheduled to be launched in early 2007 while another one is being finalized for China and the Middle East.

This will be a partnership with a select number of UK tour operators on 50% cost sharing basis. The Ministry and the Tourist Board has assured that the funds for this campaign will be forthcoming from the Government.

Sri Lanka is also preparing to participate in the ITB tourism fair in Berlin with the Tourist Board and the Tourism Ministry making their best efforts to have 50% of the stall charges waived for participating companies.However the current political and military situation in the country sets up the tourism industry for another roller coaster ride of ups and downs during the year.