ISSN: 1391 - 0531
Sunday, July 1, 2007
Vol. 42 - No 05
News  

Escalating war leaves tourism in crisis

By Feizal Samath

As the country plunges further into conflict with a major battle looming in the north, Sri Lanka’s beleaguered tourism industry is in serious trouble.

With 2,000 hotel rooms closed, occupancy levels have hit an all-time low in Colombo and outside. Tourism revenues are down by 20%. 1,500 casual and contractual workers have been laid off. It is expected that this figure will rise in coming weeks; the industry said this week it was facing a ‘grave’ crisis and wanted urgent support from the government.

The Tourist Hotels Association (THASL) and the Sri Lanka Association of Inbound Tour Operators (SLAITO) wrote to Tourism Minister Milinda Moragoda urging immediate relief measures.

The associations have called for ‘some urgent and serious intervention by the government if a major social upheaval and economic crisis is to be prevented’. The association said that they were under pressure from the membership, staff and other stakeholders to obtain relief measures to keep the industry afloat. They are also requesting a meeting with the President to discuss the crisis.

They have pointed out that at least 900,000 individuals and their families are directly and indirectly dependant on tourism. “This is based on the assumptions, that there are four people in an average Sri Lankan rural family, and that the ratio of direct to indirect employment is 1:3. Since, the largest concentration of the hotels is in the south, it is obvious that the largest number of dependants is also from the southern coast.

They emphasise that occupancy levels in all regions, including Colombo and even Negombo, (which showed some resilience earlier) are falling. Presently Colombo hotels are averaging around 40% occupancy, while the circuit hotels are currently averaging 25% to 35%, which is an all-time low for this time of the year.

Statistics released by the Central Cultural Fund showed a 48% drop in revenue from entrance fees for the period of January – May 2007, when compared with the previous year’s figures. Out a total room stock of 221 rooms only 17 rooms were booked a few days ago.

The letter adds that while there are over 100 jeep drivers serving the area, not more than 20 have been able to get a hire for the entire month of June”. It is evident that the fallout is now reaching the lower, indirect supplier levels in tourism the letter states.

They have requested the Minister to implement relief measures to the industry by assisting to obtain interest free loans for the industry to sustain their businesses by way of subsidising the salaries of staff so that there will be no more retrenchment; declare a moratorium of at least two years for all tourism-related bank loans, on both interest and capital repayments and give temporary exception of VAT payable on tourism operations for a period of one year. They have further requested the government to grant the same status to the tourist industry as any other manufacturing industry so that the rebate on the 20% surcharge enjoyed by the other industries can be afforded to tourism as well.

They are also requesting approval to dispose of vehicles imported under the duty free scheme without payment of penalty duty, so as to enable some form of alternate cash generation to companies in trouble. The association calls on the government to urgently resolve the issue regarding the airport entry permits for bona-fide tourism staff for which a presidential directive has already been issued over six months ago. The letter has also addressed the issue of the closure of the airport at night which has been sorted out with the resumption of night flights today.

The letter adds that due to the drastic drop in arrivals and consequent reduction in occupancy levels to less than 40%, over 1,500 staff (casual and contractual) has been laid off from employment up to May 2007. They warn that this number will rise dramatically in the next few months and said that while permanent staff was still in employment, many companies were already finding it difficult to pay their wages. “The average monthly service charge level for May 2007 has dropped by over 35% when compared to the previous year,” the letter said.

During the past year, the private sector invested over Rs.7.5 billion in refurbishing and upgrading hotels. More than Rs. .2 billion was spent on new hotel development (Vil Uyana and Fortress Hotel), while a further Rs. 4 million was planned for upgrading / refurbishing of hotels for 2007/08. All these plans have now been postponed or put on hold.

 
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Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.