The tourism industry is made up of 80 per cent of SMEs that have kept the home fires burning these past 10 years but now these tour operators, reeling from the disaster that struck Sri Lanka on 4/21, are likely to close shop or resize in six months. With no relief package to soften their [...]

Business Times

Tourism’s SMEs dismayed by state inefficiency

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The tourism industry is made up of 80 per cent of SMEs that have kept the home fires burning these past 10 years but now these tour operators, reeling from the disaster that struck Sri Lanka on 4/21, are likely to close shop or resize in six months.

With no relief package to soften their woes, the soft loan offered by the government is hard to come as banks are not willing to take on the risk of financing SME tour operators or hoteliers. In this respect, Sri Lanka Association of Inbound Tour Operators (SLAITO) members will be pushing the government to intervene and underwrite the risk, Island Leisure Lanka Managing Director Chandana Amaradasa told the Business Times on Wednesday.

Incidentally these were the same banks running behind these SMEs during the good times offering loans that are now closing their shutters on the same sector that is struggling to rise up. Most SMEs were not willing to take on loans at the time now to their advantage, it was noted.

He noted that moreover, none of the SME members are ready to pay in two years since they are traditionally not asset based companies and whatever collaterals they may have are already exhausted. In this respect, they want a 5-year repayment period as opposed to the two years offered via the relief package.

Local tour operators generate nearly 75 per cent of the tourism business to the country; it was pointed out adding that of the total business over US$4.2 billion in revenue was brought in by them. SLAITO’s membership comprises around 240 that include a majority of SMEs while the Association of Small and Medium Enterprises in Tourism (ASMET) have a membership of about 100.

Since most tour operators spend their own money for promotions right now they were unable to do so as they need to sustain their businesses and the employees and in this respect have begun to cut down on their marketing spend as well.

In view of this situation the SMEs want the authorities to ensure that the promised recovery plan and the JWT promotional campaign that was scheduled, be carried out as planned and expedited.

In addition, they have requested a 5-year repayment period on the loan package since they would take at least 12-18 months to recover, Luxe Asia Managing Director Chaminda Dias said.

All they request for is a one year deferment on the capital repayment without collateral and a 5-year repayment period, he said.

Moreover, Mr. Dias pointed out that they would be suggesting to SLAITO to take in their concerns and ensure that the road shows that the Sri Lanka Tourism Promotion Bureau (SLTPB) board had decided to cancel be resumed for their sake.

In addition, the SMEs will be asking for an increased participation of their members in the industry advisory bodies and a sub committee comprising of SMEs on the SLAITO body and an additional Vice President level representative from the SMEs, Mr. Dias explained.

They pointed out that having paid the government billions in taxes today they are struggling to run their businesses since the government has not yet addressed their concerns either by way of promotions or even financial relief and this is their pain, the industry’s majority stakeholders lamented.

Tourist Hotels Association of Sri Lanka (THASL) President Sanath Ukwatte also noted that they would continue to pressure the government to assist the SMEs within the hotels sector to obtain the soft loan offered in the relief package to the industry.

“We urge the government to expedite the loans to our members who are not in a position to meet the requirements by the banks as they are mainly from the SME sector,” he said, adding: “We urge the government to underwrite these loans so that they can utilise the soft loans to maintain their businesses and livelihoods.”

THASL has a membership of 235 out of which a majority are SMEs.

SMEs want relief on different terms like:

1) One year deferment on the capital repayment, 2) 5-year repayment period, 3) Expedite promotions and recovery plan, 4) Resume roadshows and, 5) Increase SME representation at higher level on SLAITO.

(SD)

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