AS SRI LANKA PREPARES FOR ITS MILLIONTH TRAVELLER THIS YEAR … Tourism industry urges need to take stock of sector development path

While Sri Lanka prepares to greet its millionth visitor sometime in 2012 (heralding a million tourists in a single year), the local leisure industry is raising some concerns over the quickened pace of development and the need for more private sector input in the process.

Ironically Sri Lanka is slugging it out with its more, upmarket-product neighbour, the Maldives in welcoming the millionth tourist (in a single year) in 2012.

In a cross section of views compiled by the Business Times, senior officials and experts representing hotels, travel agents, destination management companies, small resorts and others connected while complimenting the authorities for ending a bloody, nea-30 year conflict are worried that some efforts could nullify Sri Lanka’s progress towards being a ‘must-visit’ destination in Asia. They are urging a better management of these issues and also emphasizing the need for better trained staff.

Some of these issues are over-pricing of hotels and popular visit sites, over-visitation which could affect some of the hot spots like Sigiriya; and the recent draft Tourist Act which has reduced the role of the private sector and also gives less weightage to MICE (Meetings, Incentives, Conferences and Events) traffic.

Tourism has boomed since the war ended in May 2009 and is by far the fastest developing sector in Sri Lanka next to telecommunication and financial services. Hotels are springing up all over and seen a new set of businesspersons and institutions emerging in this field like the LOLC Group (Ishara Nanayakkara/kapila Jayawardena), Ashok Pathirage (Softlogic), Dilith Jayaweera (Triad/citrus Group), Nimal Perera (independent investor) and K. Wegapitiya (Laugfs) joining up with old hands in the business like John Keells Holdings, Aitken Spence, Jetwing Hotels, Galle Face Group, Hemas Holdings, Mercantile Investments, Lankem Group, etc. Then there are the tea bungalow-concept chains like Tea Trails (Dilmah Group) and now Watawala Plantations among other plantation compa- nies transforming their colonial bungalows for leisure travelers.

In addition, there are a whole range of small investors pumping in money into 1-2 hotels, beach bungalows and houses for home-stays – unfortunately some just following the herd instinct without any proper study or a rate of return.

Here are some of the views of the industry on a range of issues on this rapidly, growing sector in Sri Lanka:

Chandra Mohotti, senior professional hotelier with over 36 years of experience:

Sri Lanka has suffered for 30 years with the war becoming a major impediment to tourism. We got negative publicity for three decades and you could imagine the struggle by us to survive and keep afloat.

This also meant 30 years of an exodus of expertise and limited growth. There was no investment, no training programmes.

Sri Lanka has got a new lease of life and suddenly there’s a boom in tourism traffic.

Challenges:

What makes Sri Lanka special is our hospitality. However that has got affected by war and the people’s natural hospitable nature has changed in all levels of service (shops, restaurants, hotels, airports, etc). There is no smile and warmth of service when you walk into these establishments and this needs change.

Building hotels alone is not enough. We have this God-given asset of being a hospitable nation and we need to revive this. Tourists should be well received. We need to be warm and hospitable.

Training

Training is a serious problem with our current skills level taking into account that the number of tourists has doubled in 3-4 years.

The state-run hotel school doesn’t handle specifics like marketing and promotion. We need a hotel management school too preferably with input from Cornell University in US, a leader in this field. If we don’t have time to send people for 3-yr training programmes, then we should have these courses locally.

Rates

Naturally prices have gone up on demand but do the service standards match this increase?

City hotel rates were $40-60 in 2009 before the conflict and now at $160 for 5-star properties.

Marketing

Most managers in service now are experienced in catering to a buyers’ market (during the conflict) but not a sellers’ market which is where we are today.we don’t have a hotel price range like India for example where in Chennai you can get a room from Indian Rs 100 to US$400. The dire need is not only boutique hotels but a range as the mass market important. Volumes will lead to growth in the upmarket segment

We also need to lure Sri Lankan hotel professionals back from to Asia, Australia and Middle East. That’s not going to be easy. *** Vasantha Leelananda, Executive Vice President and Head of the Destination Management sector at John Keells Holdings:

The challenge with the growth of tourism is to ensure availability of air seats and adequate hotel rooms to facilitate these numbers.

Sri Lankan Airlines is aggressively expanding its network, and with other scheduled airlines increasing frequencies and new hotel projects in the pipeline, these challenges will be overcome to a large extent.

Sri Lanka is still an unexplored destination and the pent up demand is massive.

With air accessibility and infrastructure improving rapidly we have a comparatively new highly diversified product to market.

Pricing

Over the last three years Sri Lanka has gone through a price correction, essentially catching up with what it has lost when others in the region were increasing rates. We have now achieved a decent base rate and need to be cautious not to overprice going forward.

Over-visitation

Our industry has made vast strides over the last three years and will continue to maintain this momentum. This will also lead to over visitation and other adverse social issues which need to be regulated and properly controlled.

The sustainability and protection of our environment and our unique sites are a must for the sake of the future generations.

Nilmin Nanayakkara, President of the Sri Lanka Association of Inbound Operators (SLAIO):

One of our concerns in the new Tourism Act is that there is no independent Sri Lanka Conventions Bureau to handle MICE tourism.

We think this is a serious flaw in the proposed Act and have expressed our concerns. We made representations to have a separate unit but this was turned down. But we were told that there would be a good investment in MICE and hopefully that would solve some of these structural issues.

Pricing:

The minimum price (MP) per room is in contradiction with MICE promotion plans where free rooms and concessionary room rates have to be offered. So with the MP policy how does one promote MICE events?

MP began in 2009 in Colombo city only and saw a price increase in November 2010. It only helps a few hotels

We have had a large clientele in the city on MICE and events from India and Pakistan but now the rates are getting higher.

We could have attracted more MICE tourism from Malaysia, Singapore and Thailand, if not for the rates. Hopefully the Chinese market will compensate. This market is good.

While Sri Lanka has done well with investing in marketing and promotion, we need to sustain the industry and the novelty and curious element of the market won’t last for more than 2-3 years. Our competitors are offering low rates. We need to be competitive.

In 2010 prices rates were up by 2530% for the overall product while in 2011 it was over 20 %. If this continues, we would be in danger of outpricing ourselves. We need to be more cautious on this front.

In a way, it’s okay for hotels that have been refurnished and upgraded to charge high rates but others which have resorted to a ‘coat of paint’ are also charging the same rates.

Unfair

While Sri Lanka needs big investments, we should also be fair by those who struggled and stood by thick and thin during the troubled years and didn’t go away. Unfortunately there are many perks and benefits for new, incoming investors and little or no benefits for those who weathered the 30-year storm.

Anura Lokuhetti, President of the Tourist Hotels Association of Sri Lanka ((THASL)

We are blessed with an abundance of natural resources, lush greenery and rich vegetation. Sri Lanka is the only country where you eat papaya in the evening, throw the seeds and see them growing the next morning.

2011 was the most wonderful year ever in tourism. We estimated 750,000 and ended with 850,000 +, 30 % up.

We also achieved a $100 per night spend per average tourist and did well compared to other destinations like Singapore or Malaysia.

We have the potential to grow in upmarket category. Unlike many regional competitors, Colombo and other cities - due to the conflict – are not filled with concrete. So there is a lot of natural beauty around unlike most capital regions.

Suresh De Mel, President of the Association of Small and Medium Enterprises in Tourism Sri Lanka (ASMET):

The growth in tourism is phenomenal and this is where community participation needs to be encouraged to ensure sustainability in this sector.

Infrastructure is improving at a pace and the new Southern Expressway is brilliant cutting by half the travel time to Galle from Colombo. This is a world-class highway and a huge boost to tourism because of the beautiful landscape on the road. This will get better once the highway is extended to Hambantota.

Challenges

We need to empower the community and develop self-confidence.

We need to make sure locals welcome tourists and treat them well – that’s a sure way of ensuring repeat tourists.

The community must have direct interaction with tourists, make them comfortable. (Feizal)