Financial Times

Tourism in crisis: Small vs Big

For the second time in three years, Sri Lanka’s tourism industry is confronted with a problem.
An industry, the quickest like the Colombo stock market to take off during peace times, should be steaming ahead and prepare for the ambitious figure of 2.5 million arrivals in 2016 from a current 400,000-plus but recent developments have caused uneasiness in the sector. A World Bank $20 million project to build capacity in the sector is also in jeopardy.

The arrival of a new Tourism Minister, the activities of a new Promotion Minister (visiting kitchens of restaurants which should be the role of the Colombo Municipality), and the changing of the guard at tourism institutions among other issues are turning the clock back for an industry that can pave the way for boom times to return to every sector in the country.

The Tourism Act, which struggled through its implementation in 2007, is again in focus with trade unions at state institutions clamouring for it to be scrapped and to revive the old Sri Lanka Tourism Board days. We are in for a few testing weeks where pressure will mount – just like in 2007 when the industry clashed with the then Tourism Board Chairman Udaya Nanayakkara and had a hard time even meeting Minister (the late) Anura Bandaranaike – and the sector works with uncertainty.

The distribution of the tourism cess funds again has become the bone of contention in addition to a lack of policy, clarity and direction in the state-led tourism bodies. Work has come to a standstill at the promotion and development agencies.

“We are only going ahead with earlier, planned programmes but what we should do in the future, no one knows,” one worried official said. Tourism Minister Nandana Goonatillake is on a cost-cutting exercise and wants to reverse the distribution of funds – 70 % for promotion and 30 % for other activities as laid out in the Act – and go back to the pre-2007 statutes where more money was put in development and infrastructure.

The message by the Minister, a novice to procedure, bureaucracy and with an anti-West, anti-commercialisation, Marxist background, is to spend less and recently, drew amusement when intervening in the ‘Small Miracle’ tagline fiasco. His argument was that with a few rupees, one can change logos and do marketing.

Ironically, his ministry has spent over Rs 800,000 on newspaper advertisements inviting ideas from the public on a new tagline to replace ‘Small’ in the new marketing strategy. Why President Mahinda Rajapaksa appoints a person with such a background, lacks English speaking skills, and thus would be uncomfortable meeting dozens and dozens of foreigners is puzzling. He should have been given another ministry.

Some reports say these appointments (ministerial changes) are temporary and parliamentary polls in early 2010 will see a new and smaller cabinet being sworn in. However we don’t need to stress enough the danger in temporary appointments to key sectors like tourism particularly at a time when it is taking off to greater heights than pre-war levels. With calls for scrapping the Tourism Act which the industry laboured for years to fruition and bringing in unsuitable persons to head industry sectors, tourism is working in reverse gear.

The subject of tourism all over the world has one key, binding factor: It is a public-private partnership with effective facilitation by governments who install capable people to run institutions that need drive and initiative. Promotion is one of the keys in the industry and, for example, if Sri Lanka is not represented at the many trade and industry fairs – assuming it’s for the purposes of costs – that would be a tragedy. Sri Lanka, like the well-known saying goes, is not the only girl on the beach and many countries are waiting to grab Sri Lanka’s minute share of world tourism.

We lost the sector in 1983 to the Maldives which until then had little (on tourism) but came up with an exotic product. Now we compete with the Maldives while Sri Lankan companies have hotels there which during the 1983-2009 period of conflict helped (with profits from Maldivian operations) to sustain their Sri Lankan tourism product. The war also led these companies and others to venture to other countries – the Middle East, India and some parts of Asia – and offer management expertise in addition to running hotels.

In the last 1-2 years, promotion authorities here have been involved in several events-based projects and this year launched a 3-year events plan running to 2011. Are these all going to the wayside?
One of the issues being raised by smaller industry players is that the small and medium-scale sector hasn’t got its share of the tourism budget, a nagging problem in recent times.

Former Minister Milinda Moragoda, aware of these concerns, tactfully appointed members from this tourism industry segment to the various boards involved in promotion and development. But the issue persists and the President, ever alert about the needs of the small man, has also been apprised of this.
Tourism needs a heads-up from the government and reversing all the plans and strategies is not in the interests of the country. What is needed is a rationale approach by the President to balance the interests of all sectors, continue the forward momentumand avoid undoing what has been done so far.

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