News
State Tourism Chief proposes major restructuring but big hotels oppose plans
A new tourism bill has proposed the setting up of an industry consultative committee that will provide guidance to the Sri Lanka tourism authorities, but major hotels are opposing it on the basis of lack of transparency.
“The intention is to gain more inclusive input from the private sector,” said Sri Lanka Tourism Development Authority Chairperson Kimarli Fernando.
The private sector raised objections recently over Cabinet approval given to the move to amalgamate the four local tourism institutions into a single institution–the Sri Lanka Tourism Authority.
Tourists arriving at the BIA
At present, the only private organisations with seats on the Board are the Sri Lanka Inbound Tour Operators (SLAITO) and the Hotels Association of Sri Lanka.
The tourism’s market’s small and medium scale enterprises (SMEs) segment was underrepresented.
“Only about 2500 hotels have been registered in Sri Lanka over the past 20-30 years, while there are about 20,000-30,000 unregistered tourist service providers who are not catered to,” the chairperson said.
This meant the SMEs had no “safety net.”
Ms Fernando said the tourism industry did not consist of “one or two” associations with “200-300” members each, but accounted for the lives of about three million people who have not been represented.
While acknowledging the critical role played by the associations that were now on the SLTDA’s Board , she claimed that the industry’s vocal players had failed to develop sustainable tourism.
“Some handed over their hotels to hospitals, demanded aid from the Government for restructuring and others regularly complained about health guidelines,” she said.
The SLTDA Chairperson said Sri Lanka was doing well in managing the COVID-19 pandemic.
“Many tourism countries, like Thailand, Indonesia, Malaysia and Australia, have not even opened up for tourists yet. The Maldives was the only other significant tourist destination that had opened up.”
The new bill would be in line with global best practices including Singapore which has one organization with 19.1 million tourist arrivals in 2019 and Malaysia which had 26.1 million tourist arrivals in 2019.
An independent source of funding would be maintained, with the industry consultative committee that would be the voice of the industry.
For the tourism institutions the main income was the embarkation tax and the Tourism Development Levy. The embarkation tax was paid by all arriving tourists including those who came with bookings through Online Travel Agencies (OTAs).
The Chairperson said she believed the present tourism structure was counter-productive with a wastage of resources, whether financial or human capital.
“Having chaired all four institutions in the past 14 months, I have seen the wastage, lack of coordination amongst the tourism institutions and how inefficient this structure is,” she said.
The Chairperson said the SLTDA intended to support everyone in the industry to meet travelers’ expectations post-COVID. Ms. Fernando said the lack of sustainability within the industry right now impacted its ability to face challenges. “The industry had to face terrorism for 30 years, the tsunami, the Easter Sunday attacks and now COVID-19, so we need to be able to face unprecedented challenges as an industry,”she said.
According to the Chairperson, there are 36 board members with four institutions, that at its height had 2.3 million tourist arrivals. Many of these bookings had come via OTAs such as Airbnb, Booking.com, Expedia and Agoda which were part of the unregistered and unrepresented SME segment. She said the private sector with a majority of Board seats to date had failed to have an integrated global promotion since 2007. She noted the only time a global promotion was successfully executed was when the board seats were reduced.
“The current board is not representative of the industry nor what is needed for the future,” she insisted.
Despite spending about one billion rupees in 2019–which was not shared with all industry stakeholders nor an acceptable return seen–the development of domestic tourism, the use of digital promotion and consumer reach had been pitifully slow since the industry only focused on ongoing travel, the Chairperson said.
The new bill would therefore also focus on including the younger generation of digital-savvy players, building brands and positioning Sri Lanka away from the 1980′s experience. It would include those who were creating unique products and experiences to embrace the new reality.
Stakeholders like the Central Cultural Fund, the Information and Communication Technology Agency (ICTA) and the wildlife department might also be included in terms of the new bill.
The Chairperson said the SLTDA had a working document for the new bill. It would be studied internally first and then shared with the industry for their feedback to ensure that whatever was enacted would be what was best for Sri Lanka’s tourism.
The consolidation of the institutions was part of the 2020 budget proposal and the Cabinet paper was thereafter approved.
In 2006, soon after the 2005 Tourism Act, a detailed report had been created to merge the institutions. Thereafter consecutive governments had attempted to merge the institutions, but failed to do so due to constant changes in the leadership of the authorities–five chairpersons in five years.
The current tourism boards set up under the Act of 2005 were the Sri Lanka Tourism Development Authority, the Sri Lanka Tourism Promotion Bureau, the Sri Lanka Institute of Tourism and Hotel Management and the Sri Lanka Convention Bureau.
The Hotels Association and SLAITO at an illuminating joint briefing opposed the move as unnecessary, especially during a time of uncertainty for the industry. Nevertheless, the Chairperson insists that the merger would be vital to the creation of a people-centric economy that was in line with the global best practices like Tourism Singapore and Tourism Australia.
“A board that has stakeholders from the private sector lends more transparency to the processes of the tourism authority,” countered Hotels Association President Sanath Ukwatte.
He claimed the Act of 2005 was formulated with close discussions between the private and public sectors.
“During the war, the Treasury did not have enough funds to promote the country so the private sector proposed a tourism development levy which we have been paying ever since for the promotion of Sri Lanka,” he said.
All hotels registered under the Tourism Authority paid a levy of one percent of their turnover. About 80 percent of this fund was allocated to tourism promotion while the rest was divided between the other three institutions. Mr. Ukwatte said it was unfair that the decision-making was shrouded in so much secrecy under the circumstances as the only document in the private sector’s hand was a leaked copy of the proposed bill.
“The tourism industry is 95 percent dependent on the private sector so a public-private partnership is the only acceptable method of decision making,” he said, adding that the private sector has been open to changes provided these changes were made in collaboration with the private sector.
He also warned that no bill would be successful in its implementation if transparency was not maintained.
Responding to the claim of an under-represented industry, Mr. Ukwatte said the process of registering with the tourism authority involved submitting proof of ownership of lands, environmental assessments, and the obtaining of liquor licences. He said some hotels did not even have a deed to function on the land they were on. This obviously deterred these hotels from becoming official.
“We are the regulated hotels in an industry with a lot of unregulated activity,” he said. He pointed out that the regulation of the industry was the responsibility of the tourism development board.
The associations were open to the introduction of a more inclusive Board of Directors, but refuted claims they were monopolising the Board authority.
Mr. Ukwatte said the private sector was more than open to the amalgamation of the tourism institutions back offices in the name of efficiency and cost-cutting. But the amalgamation of the institutions as a whole was strongly opposed due to transparency concerns and the fact that each institution served a vastly different purpose.