ISSN: 1391 - 0531
Sunday, May 06, 2007
Vol. 41 - No 49
Financial Times  

Tourism: Hit again and again

Just like crises in the past, tourism became the first casualty after Tiger aircraft flew, not once, but thrice over Colombo’s airspace in the past month.

While it is the normally low season for tourists at the moment, the industry is bracing itself for an even bigger fallout in coming months but as our story suggests, the industry is putting on a brave face to meet the challenges. Again just like the aftermath of the 1983 anti-Tamil riots when the economy nosedived and ruined Sri Lanka’s chances of being another Singapore (see other story on the Sri Lanka rupee on page 10), the tourist industry has decided to rely on locals to fill hotel rooms and is preparing a comprehensive packages to overcome the crisis, at least temporarily.

“We don’t have a choice. We need to move on,” said Hiran Cooray from the Jetwing Group and head of an industry body as the group scrambled to come up with a temporary game plan to tackle yet another crisis in the industry.

Tourism sector specialists believe this is the worst crisis-ever faced by the industry in the past two decades and bigger than 2001 which led to a flurry of activity and a peace process.

In that year a combination of problems starting with garment export issues in the US, the Katunayake airbase and airport attack, the World Trade Centre blasts in the US and the Tiger attacks on the CPC refineries saw the economy record negative growth for the first time and tourism hitting rock bottom.

With their backs to the walls but the will to survive, the industry has come up with the only solution in a crisis of this magnitude – promoting domestic tourism. A combination of packages for Sri Lankans including those living overseas, the elderly, disabled and resident foreigners are being prepared to fill hotel rooms for the next few months to tide over the crisis.

This was the kind of scenario in the mid 1980s too until tourism made a slow recovery and terrorism also hit other capitals in the world making most cities prone to terrorist attacks.

However sporadic terrorist violence in the country over the years has led to highs and lows and uncertainty in the industry. The best period for the industry in fact was before 1983 and when the peace process began in 2002.

The 2004 tsunami also wreaked havoc in the industry for hotels in the south and parts of the eastern coast and as these hotels were recovering fighting intensified in the east between government troops and the LTTE which spread to Colombo through suicide bomb attacks. The past two years – until the recent changes at Sri Lanka Tourism and the Tourism Ministry – have also been spent in clashes between the industry and the authorities over the implementation of the new Tourism Act.

Thus as things began to settle down on these internal disputes, the new Tiger threat once again cripples an industry that is limping along. Having said that, the positive news is that owners of boutique hotels are going ahead with their investment plans aiming at the top end of the market where promotion is at a different level.

It’s also going to be a boon for Sri Lankan families seeking to luxuriate in upmarket tourist hotels across the island with the new packages that are to be offered.

On the economic side, the fallout would come from increased defence spending to counter the Tiger air capabilities and its impact on the budget. Rising government spending could also affect Central Bank plans to guide inflation to single digit levels by the end of the year.

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Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.