Business Times

Tourism: Long way to go

This week we focus on tourism (see Page 8) in our weekly focus on issues of current interest to the business community and while massive development and infrastructure is going on speedily, the sector is still encountering issues that need to be resolved even as the ambitious target of 2.5 million tourists looms ahead.

Speedily progressing ahead is a large number of hotels approved by the authorities as new investments or awaiting the greenlight while infrastructure development is also underway in tourism zones like Kalpitiya, Passekudah and Kuchchaveli where occasional changes in policy over the amount of the leases or the lease period has slightly complicated matters for developers and investors.
As of now, the Government is offering state land on 99 year leases on upfront payment compared to a varied policy of 33 and 55 year leases. The upfront payment has also drawn some criticism from the industry which says the value of state land (upfront payment) is too costly and could hurt development plans.

One of the stories this week relate to a drop in guests for the Kandy Perahera to 10-15% from 25% partly due to adverse publicity in international markets on human rights issues vis-a-vis the negative Channel 4 feature on the Sri Lankan conflict. Another feature in the crop of tourism-related stories is the new star classification being prepared by a special committee, details of which are contained in an article on this page. An interesting aspect of the classification is the theory of 7-star hotels which the writer (Srilal Miththapala) says is available nowhere in the world, while it is randomly used in Sri Lanka without any reservation.

Adverse publicity is something Sri Lanka would have to contend with for some time and such challenges have to be dealt with rationally, without emotion or ‘shooting from the hip’. That is why the need for promotion and marketing Sri Lanka as a country that is open for business and visits gets even more important and should be considered a priority.

Equally important is to understand the markets and trends particularly in the UK and Europe, after the last global financial crisis and its aftermath. Sri Lanka’s neighbour, the Maldives, is doing that quite well focussing attention on some markets while continuing its marketing in other traditional markets.
For example, is the industry or Sri Lankans aware that disposable incomes in the UK have dropped and fewer Britons are expected to travel abroad, at least on long haul destinations (countries beyond Europe)? Statistics show that in most destinations the number of British travellers has dropped and, according to British travel agents, China and Russia are taking over as the main source markets in many countries where British travellers were the number one on the list.

That was clearly the message that Sri Lanka also got (and will get) when hoteliers said that May arrivals would fall based on their bookings but that was not the case. Ultimately May arrivals rose year-on-year, but hotel bookings were still lower than expected. What actually happened was that while arrivals from the UK and Europe fell or growth was marginal, the number of Indians grew and from other non-traditional markets like China, etc. Similarly the drop in expected guests for the Kandy Perahera could have been due to the drop in UK arrivals.

Thus while adverse publicity could affect tourist arrivals, it’s the economic crisis in Europe that could also impact Sri Lankan tourism. Sri Lanka could take a cue from the Maldives where active promotion in going on to promote the destination, additionally now as a mid-market destination, from a high-end location. Resorts in the Maldives charges rates from US$200-300 upwards to over $1000 per night and the authorities is now looking at attracting the mid-market clientele which is also Sri Lanka’s market – though the two markets has different attractions.

Those islands are attracting thousands of Chinese which have resulted in China becoming the biggest source market for the Maldives in the past two years. According to one travel agent in the Maldives, “every agent is scrambling to get a slice of the Chinese market.” The Chinese are seen as the biggest tourism source market of the world while India is also becoming a huge travel market.

The Maldivian tourism industry is fully focussed on the Chinese market with agents and others taking part in all trade fairs in China. Furthermore resorts in the Maldives are gearing for the Chinese, staffing it with Chinese-language speakers and other specially-focussed facilities. The authorities there are also looking at development resorts that would be compliant with the needs of Chinese travellers, and also ramping up shopping malls to meet their needs.

In Sri Lanka’s case, India is the country’s biggest source market but is the country ready for increasing numbers of Indian travellers? Do hotels have Hindi, Tamil or Bengali-competent speakers? Are food needs and preferences adequately taken care of? Sri Lankan hotels are still western-oriented with a few frills to meet the needs of other travellers.

Thus apart from the need for more marketing and focus on non-traditional markets, the industry should also be conscious of the need to tailor hotels to the needs of the new markets, India and emerging ones like China, Russia and the Middle East.

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