The Kalpitiya Integrated Project must be revisited under strict disciplines and must not become an environment closer to some destinations packed with mushroom developments every 10 metres. We must continue to support the southern and the eastern tourism profit modules while carefully segregating clients for different market segments so the southern hotels keep their market [...]

The Sunday Times Sri Lanka

Sustainable development of Kalpitiya as a unique island resort destination


The Kalpitiya Integrated Project must be revisited under strict disciplines and must not become an environment closer to some destinations packed with mushroom developments every 10 metres.

We must continue to support the southern and the eastern tourism profit modules while carefully segregating clients for different market segments so the southern hotels keep their market share.

There should be destinations for diverse budget travellers as well as exclusive destinations which would be the most value for marketing tourism and investments in Sri Lanka.

Hotelier Neil D’Silva with a turtle on the Kalpitiya beach.

Allow me to elaborate on the high-end or affluent segment that remains an immense missed opportunity due to some sensitive reasons that I wish to explain in this article.

Many high-end resort developers and operators (let it be owner managed or operator managed) have established codes of ethics which our target market expects to experience at the destination or the resort. These ethical codes serve an important function by containing the rules that govern the conduct of the high-end tourism industry and members of the industry.

Should the tourism industry be governed by a code of ethics? Should there be higher standards of ethics and codes of conducts for affluent segments? Is it highly important enough and large enough to spend a lot of time and energy developing a code of ethics since tourism is based on service and experience? This seems to be the challenge every high-end destination overseas and every 5-star plus competitor tries to maintain with regular training and implementation of standards and the quality of their services.

Tourism is one of the largest and fastest growing industries in the world, but little attention has been paid to the high-end market of Sri Lanka
High-end tourism is not classified as entertainment, mass tourism or ‘loud’ business venues. Affluent travellers today are those who travel on their private jets, First and Business class with utmost privacy and efficiency. Luxury today is highly personalised based on leisure and comfort without compromise that could not be obtained at any location.

Sustainable development for luxury travellers

Travellers today are willing to spend more for a vacation that is extremely rejuvenating, unique and unspoiled and mindful environment with spirituality in mind. Such environments are those who create an experience we call “Luxury” which is not a brand or a tag that anyone could buy off the shop. Would you like to receive your treatment in the mangrove forest, at the beach or even on your private pier, are some magic words of this high-end industry. At Dutch Bay Resorts, we make this dream come true. It would be an immense value if like-minded developers join me to this untouched Paradise.

The like-minded souls must carry a clear vision of spirituality to protect the rich bio diversity of my Motherland.

We must treat the environment with dignity and respect, and enjoy the best of Kalpitiya or similar rich bio diversities that could be enhanced for the benefit of our target market.

International tourism and hospitality operates today within a paradigm of profit-driven mega-business, with allegedly scant regard for environment, community or culture. Perhaps we ought to start with a definition. What is Sustainable Tourism? I call it CPR. Communication between the tourist and the local community, Preserving our Mother Earth for the next generation and Respecting the environment and the people of that area.

Dutch Bay Island and Kalpitiya Tourism Zone is one of the only 304 sq km of gazetted sanctuaries, of which 43 sq km is a marine sanctuary. I would need reams of newsprint to explain the beautiful history of the Kalpitiya Zone which falls under the Kingdom of Anuradhapura where Queen Kuveni and Prince Vijaya lived.

It was controlled under Rajasinghe the Second under the Kandiyan Kingdom and was not allowed to fall into the hands of the European settlers. Dutch Bay Island was by then fully occupied by the European settlers and the island of Sri Lanka was secretly administrated from Dutch Bay island due to a smuggling route. They hardly spoke of the destination and most marine maps were taken away and some of which can be witnessed at the Hague, which in short is the history of this unique place.

Privacy is the key

The expectation of a high-end traveller can be met if the developer’s criteria of a high-end destination are fulfilled. It is pivotal that the following should be considered and I am sure the current Tourism Minister’s positive attitude of the following due to his own experience:

- Privacy and less noise pollution and niche rather than mass tourism
- Fast accessibility and comfortable infrastructure facilities to include Seaplane and Yacht Club Marinas
- Security in the environment with emergency accessibilities
- Pristine environment with no pollution and clear indication of environment protection strategies so the bio diversity could only be enhanced during the operation of the resort
- High standards and multi-lingual personnel in local authorities to understand foreign developers
- Legal framework to protect developers and prevent land disputes related to the approved development projects
- Fast IT connection and connectivity
- Clear 10-year phase development plan under the clear guidelines of a strategic development
- Real value for lands which become sustainable assets of organizations. Avoid 50-year old values which were devalued due to the ethnic war. Revalue lands and communicate and standardize minimum capping
- Don’t allow subdivision of blocks less than 10 acres of lands in rich bio diversities
- Regular audits on Marine and Safari tour activities and implement international standards to protect the species and their environment
The success of a development is not measured on how much money or profits the developer makes. Instead it is based on how profitable it is to the target market, profitability to the environment and the socio economical factor of the people who live in that area.

Advisory Board

A multi-disciplinary team of experienced environmentalists, real estate experts, architects, structural engineers, scientists, socio advisors and local authority heads must be engaged in every development plan that should follow the guidelines of the Strategic Environmental Approval.
The planning of further developments must include those hoteliers who have been in the area for over 2+ years and their past experience is of value to the Government and the new developers.

A development committee must be headed by those who took risks several years ago.

We must remain flexible to amend laws to fit today’s investment climate. There are over 17 countries with tax havens or flexible taxation procedures to attract the wealthy developers. The Government can further assist the Board of Investment now to implement new benefits and attractions to real estate developers and resort developers in special project zones.

Most issues I have faced in the past nine years of my development planning stage of the Dutch Bay Resorts includes the following key areas of attention that was needed to attract high end developers. I am sure Tourism Minister Navin Dissanayake and Finance Minister Ravi Karunanayake will continue to entertain legitimate requests that are related to various policies needed to be amended to secure a long lost development plan of the Kalpitiya high-end Tourism Zone and beyond.

Various risk Factors must be covered when we expect certain ROI’s. Protection coverages (apart from a few development or destination criteria I have given above) need to be supported due to virgin zones like Dutch Bay Island where basic infrastructure is not available. There again, the developer must have the ability to invest in their own infrastructure facilities particularly in power use through solar and generators rather than expecting the Government to install a marine power cable across islands that would destroy the rich bio diversity and the flora and fauna.

Some of the important insurance coverages that come to my mind are:

- Principal Risk Factors:

Investment in under developed areas will involve certain risks and should only be covered by prospective investors coverage who understand the risks involved and are able and willing to withstand the risk of the loss since it can be covered though a premium agreement with an insurance coverage.

- The economy of Kalpitiya is largely dependent on the fishing industry, where a small close-knit fishing community dominates the lives of the local people.

-Transport and Accessibility:

Vital need for special access point, a public jetty with adequate parking and provision for developers to build our own private access points with piers.

- Politcal Risk :

The possibility that political decisions, events, or conditions in a country, including those that might be defined as social, will affect the business environment.

The developments will be greatly exposed to the risk of unhealthy political conditions in the country. Therefore, favourable economic policies and a stable Government is crucial for the growth in almost all industries. This is one of the major risks.

- Currency Risk:

This risk is due to the fluctuations in foreign currency. Foreign currency is a key variable on which the success of the organization would depend as both the initial investment to be made and the hotel revenue will be generated in terms foreign currency. Therefore it is vital to have a coverage to secure forecasted cash flow to protect and mitigate potential losses.

- Real Estate Risk::

Real estate values are affected by a number of factors, including competition, attractiveness and location of properties, financial condition of project contractors, tourism demand for the area, lack of development, quality of project management, property management maintenance, insurance and management services and adjustments to costs. The risks of development include, but are not limited to, inability to settle land issues, unsatisfactory zoning and planning consent, delays in timely completion of the project, delays in approvals, cost overruns, poor quality workmanship and inability to sell or inability to sell at a price sufficient to generate the targeted profits.

- Transfer of ownership or
leasehold risks:

The risk of the ownership titles of villas not being able to be transferred effectively due to legal impediments or for some other reason beyond the control of the developer.

- Asset Risk:

This is the risk to the organization’s assets from fire, theft and natural disasters. Our project will have substantial assets under its management which is critical for the successful functioning of the hotel. Therefore it is important for the organisation to safeguard their assets.
In this respect the shareholders and investment partners tried securing various controls such as obtaining comprehensive insurance products from international firms at very high premiums, due to the fact that the local insurance firms were unable to face such risk coverages.
The shareholders and strategic investment partners of the Dutch Bay Island tourism and mixed use development zone is in the process of submitting to the Government necessary options to overcome the unforeseen challenges while channeling FDIs to Sri Lanka with the freedom to cover our own risk factors. We hope the new Government will look at an out-of-the-box strategy that will attract billions of USD to special development zones such as Kalpitiya and North and the East.

Attractions and proximity advantages of the Dutch Bay Island and Kalpitiya tourism Zone

Dutch Fort

The fort in Kalpitiya was first developed by the Portuguese in the 16th century which was later improved by the Dutch. At present the remains of the fort could be seen as a four sided affair with two whole and two half bastions. The walls are about 4 metes high and inside are the remnants of the chapel, a commander’s house, barrack rooms, a prison and several godowns (warehouses). This could be considered as an ideal tourist attraction in the region which stands as a true monument of Dutch influence in the coastal region of Kalpitiya.

Wilpattu National Park

This is located 26 km north of Puttalam (approximately 180 km north of Colombo) and it is only a 45 minute boat ride from the Dutch Bay Island to access this reserve.

The park spans from the West coast inland towards the ancient capital of Anuradhapura (50 km to the East of the park). Covering an impressive 425 sq miles, the park is Sri Lanka’s largest, and having reopened in 2003 is now an increasingly popular tourism destination.

Wilpattu is a fairly thick dry zone jungle interspersed with a number of flood plain lakes banked with delicate white sands. It boasts an impressive variety of flora in huge expanses of forest, and varied wildlife, including deer, elephants, wild boar, sloth bears and leopards.

Barrier Reef

The largest coral reef in Sri Lanka (‘Bar reef’) is only 1 hour boat trip from Kalpitiya (the Barrier Reef), this is located North of Kalpitiya which was declared as a Marine Sanctuary in 1992, in accordance with the Flora and Fauna Protection Ordinance. This beautiful reef is home to an incredible variety of tropical fish as well as offering sighting of manta rays, reef sharks and the occasional turtle. This natural underwater habitat provides a perfect diving spot for tourists.

Kalpitiya has many added advantages for an island resort with up-to-the mark international standards.

The concept of a Kalpitiya Tourism Zone can be implemented to much higher standards than what is available in Bali by establishing a direct relationship between the tourists and the destination. This would be initiated by creating an individual brand presence on the tourist destination by emphasising on the location. The influence of concepts implemented in the Maldives, Thailand, Seychelles, Mauritius and Bali was considered in developing the concept of Dutch Bay Resorts and I am glad we have a remarkable Tourism Minister who is able to understand our challenges.
The WTO’s Tourism 2020 Vision forecasts that international arrivals are expected to reach over 1.56 billion intraregional and 0.4 billion long-haul travelers. Total tourist arrivals by region shows that by 2020 the top three receiving regions will be Europe (717 million tourist), East Asia and Pacific (397 million) and the Americans (282 million), followed by Africa, the Middle East and South Asia.

East Asia and the Pacific, South Asia, the Middle East and Africa are forecasted to record growth at rates of over 5 per cent per annum compared to the world average of 4.1 per cent. The more mature regions Europe and Americas are anticipated to show lower than average growth rates. Although there will be a decline from 60 per cent in 1995 to 46 per cent in 2020.

With the huge growth of travel in the world and visitors looking for sustainable destinations, there is tremendous potential for the growth of Kalpitiya as a unique high-end location.

(This article is being published in the context of Government plans to revisit Kalpitiya and call for fresh tenders for 11 islands. The writer, chairman and founder of the Dutch Bay Resorts at Kalpitiya, shares his experience and urges a sustainable development plan for the region focusing on high-end visitors and not mass market tourism. He could be reached at

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