HOW ‘CRISIS TOURISM’ AFFECTS SRI LANKA
Tourism as a whole is rather resilient to crisis
It has been reported in the print media, that tourist arrivals to Sri Lanka would face a downward trend in the near future. The findings have been made by Fitch Ratings and its exclusive report has come out from a deep and penetrating study. Following are the main findings of the report.
(a) Sri Lanka’s hotel industry is likely to face several impediments in the next four years as tourists arrivals to the island slows down. (b) Sri Lanka will lag behind most developed tourism destinations. (c) Sri Lanka will fall short of its 2020 target of four million arrivals by nearly 400,000 visitors, as the expected compound growth rate bring in only 03.6 million travellers. (d) Earnings from tourism is to be limited and curtailed due to slower growth in tourist spending over the medium term. This is mainly due to the inflow of low spending Asian tourists from the Indian and Chinese resource markets. (e) MiceTourism remains significantly underexploited, accounting for less than 01% of tourist arrivals in 2016. (f) However, during the first three quarters of this year, tourist arrivals to the island reached 1.55 million, up by 2.9% from 1.5 million in 2016. Tourism earnings during this period has also recorded an increase.
Highlighting ,this situation in world-wide tourism trends, a research study undertaken by the International Association of Scientific Experts in Tourism based in Germany has unearthed the fact, through its well researched publication-’tourism Development After the Crisis’, that the tourism industry has taken a particularly hard beating from the economic downturn in the capitalist world, explosively spreading unemployment, widespread income loss and a sudden uncertainty as to the present and future value of assets and the safety of savings. It will also affect old age pensions and life insurances and will instil dire consequences for investment and consumption. This research which covered present trends in several leading resource markets has found that large number of tourists retrenched on their holiday travel and/or spent less on their trips (cheaper rooms, fewer restaurant visits, cheap meals and drinks self supply, low budget shopping etc.).
Further, business travel, directly related to foreign trade, commerce and investments, has suffered immensely even surpassing the decline of holiday trips, excursions and adventure tours.
The adverse economic conditions, recessions and skyrocketing cost of living will force travellers, all over the world to tighten their belts. The tight consumer budgets will be obviously be spent on the necessary consumer goods, while expenditure for holidays and/or luxuries will be reduced, postponed or cancelled. The loss in wealth during the crisis will also increase saving rates and limit the growth of private consumption and tourism activities. The inevitable consolidation of public finances will require higher taxes and/ or cuts in public spending, which will in turn limit purchasing power. Such dampening factors will be further aggravated by the fact that households, companies and business organizations will have to search for ways and means to readjust their balance sheets. This is certainly a time consuming job which will have detrimental effects on the recovery process.
Another critical point determining future trends is the demand and supplyside-driven price development. This recession has made tourists highly price sensitive and it looks like this will not change for a considerable period of time, partly because of uncertainties about their future employment situation, partly in the hope of getting some last minute bargain and/or the ultimate cheapest deal, tourists have taken to last minute bookings so that prices have come under massive downward pressure, as there is an inelastic demand for the supply.
Taking into consideration the present situation, the sluggish recovery process, unpredictable uncertainties and tight travels budgets, it will be difficult for the industry to easily and rapidly return to pre-crisis levels.
In this prevailing situation, tourists prefer to travel to nearby places that are easy accessible. They will travel to close by destinations by using their own car or get into a train to reach the selected point, Choosing a holiday spot closer to home minimizes the risk of surprisingly high product prices and disappointing quality, as it is assumed that people have a significantly greater product knowledge about near educe destinations than about long distance destinations. Another factor driving consolidation in long distance destinations is that airlines, adjusting their capacities to lower demand, reduce or eliminate their flights to these destinations which then suffer from an even greater lack of demand.
Various stakeholders of tourism, foreign and domestic tourists alike and providers of services as well, are used to these booms and slums and it has been found through its own experience that they develop specific behaviours to face crises of this nature. The ongoing financial crises in the world and the recession that followed and its impact affect the different tourism categories in different ways and with shorter and longer time lags.
Wide ranging government interventions have supported demand and lowered uncertainty and systemic risks in the financial markets. However, the recovery will be slow, as financials systems remain impaired, public support schemes will gradually have to be withdrawn to reduce the huge public debt and households that suffered from a loss in wealth as a consequence of the financial crises will start to rebuild their savings stocks.
The findings of the World Tourism Organization have proved that emerging countries in the world were able to handle the crises situation better than the developed countries. Their dynamic markets and the strong increase of their domestic tourism potential softened adverse effects of the crisis.
However, 57% of international tourism arrivals still take place in the developed countries.
It is a fact that good governance is essential for successful tourism development which satisfies the desires of the visitors and the needs of the concerned local population. UNWTO has developed principles of good governance which are embodied in its “Global Code of Ethics for Tourism”.
Dengue menace and health warnings issued by respective governments, high hotel rates compared to other markets in the region, political unrest are also contributory factors to the emerging situation in Sri Lanka.