Sri Lanka’s War on Tourism


‘Barmy Army’ to save island’s tourism sector?


England’s upcoming tour of Sri Lanka is set to give a much needed boost to the local tourist sector as the ‘Barmy Army’ are making advance bookings at a healthy rate. Sources in the UK and in Sri Lanka estimate that around 5000 hotel bookings have already been made by the die-hard cricket fans. The matches are due to be played in Colombo, Kandy, Dambulla and Galle with the latter coming into the international picture for the first time since the tsunami wrecked havoc to the stadium.

Since then, it’s been a man-made tragedy for the tourism sector that has the potential to become the island’s number-one foreign currency earner. Visitors to Sri Lanka slumped by 40 per cent in May with Europeans and East Asian at the fore of those choosing to stay away. A total of 26,307 visitors were registered during May 07 as compared with 43,825 in April 07 whist the year-on-year data indicates a 23 per cent drop according to government sources. Whilst the current period is not peak season, the drop should give serious cause for concern about the long-term future of the industry.

Sri Lanka’s War on Tourism

In a recent report compiled by Bartleet Mallory Stockbrokers Research, it notes that ‘the year started off with much promise for the most sensitive industry with 56,553 tourist arrivals for the month of January indicating a jump of 8.54 per cent year-on-year. The sudden jump in arrivals was spurred by the much talked about unrest in the North and East taking a breather, while the tourist board caught up on lost time in implementing many campaigns to revive the industry in the short run. Promotions proved successful with arrivals pouring in, encouraging many tour operators and hoteliers who extensively refurbished properties to meet up market demand.’

In 2006 the industry managed a marginal gain of 1.87 per cent which was attainable with the jump of 11 per cent in arrivals during the first 8 months of the year. Much of this activity could be attributed to the tragic tsunami and the consequent rush of foreign aid workers to the island.

Currently occupancy levels in city hotels are hovering at 46 per cent while beach resorts and cultural hotels are at levels of between 35 per cent and 40 per cent. With plans in place to host the World Tourism Day coupled with low cost special packages and the forthcoming England tour of Sri Lanka, the tourism industry would hope for improved performance during the latter part of 2007. However, as seen in many occasions the industry heavily depends on a peaceful environment to attract large number of arrivals.

Global Tourism and South Asia

With the world population increasing at a rapid pace travel has also taken an express jump over the years which resulted in more countries giving special emphasis on tourism.
Global tourism indeed entered a new phase in 2005 with international arrivals topping 842 million while growth in international travel has seen a significant 20 per cent incline during the last three years.

Although last year global growth amounted to 4.5 per cent below it’s industry norm it was encouraging to notice that Asia and Pacific grew by 7.6 per cent and has recorded one of the highest average growth rates since 1990. The success of Asia’s remarkable growth over the years has been attributed to the tireless efforts of the governments in their respective countries who understand the importance of this fortune industry.

It also has been interesting to note the recent introduction of low cost carriers and direct flights to key destinations have also increased travel to a great extent within the region.
However, the most populated two countries in the world China and neighboring India still dominate Asian travel in both inbound and outbound tourism while also being the driving force behind Asia’s long standing success over the years. Thus both countries are considered substantial tourism markets which hold high growth potential.

Maldives too has been a high income generating market being famous for it’s beach tourism. The countries tourism industry continues to grow at a rapid pace targeting the high end traveler with occupancy levels well above expectations.

Change since the 2002 Cease-Fire

The much awaited news came during the first quarter of 2002 for the two decade war torn industry with hopes of long lasting peace stirring optimism amongst hoteliers and tour operators in the country. The result was overwhelming with arrivals flowing in with ease while a complete make over was clearly evident.

A steady jump was witnessed in 2003 while 2004 posted the highest tourists arrival figure for Sri Lanka. Thereafter arrivals surpassed the 545,000 mark yea-on-year and if not for the tsunami at the end of 2004 arrivals would have easily passed the expected 600,000 mark in 2005.

With numbers flowing in as expected many in the business realized the immense potential in the industry, if the correct market was targeted. Thus Sri Lanka changed it’s marketing strategy from promoting the traditional sun and sand destination targeting low end mass tourists to the high spending free individual traveler (FDI).

The country was promoted as a destination that features all four seasons with the option given to tourists to enjoy all it’s products. Aggressive campaigns were carried out in key destinations such as UK (the highest contributor). Germany and France offering a new array of products such as Sun and Sand, Adventure Tourism, Eco Tourism, MICE Tourism, Pilgrim Tourism & Ayurvedic.

Sri Lanka soon became famed for it’s natural heritage, yet attracting high end tourists proved to be difficult as the country did not have the adequate infrastructure to cater to this segment. Thus the need for upgrading and refurbishing was quiet evident with almost all hotels positioning for extensive revamp while several new hotels were constructed. This also created an excellent opportunity for some of the regional leisure operators (Banyan Tree, Aman Resorts, Hyttes) to embark in to possible ventures in Sri Lanka.

As a result 319 more rooms were added within a year while most of the existing hotels were converted to meet the demand of high spending travelers. Earnings of most hotels depicted a high yea-on-year growth with the increase in room rates, enjoying healthy occupancy levels of 60-70 per cent. Most hoteliers were looking forward to nearly 100 per cent occupancy in December 2004 which was considered to be one of the peak months when disaster struck.

Most hotels especially in the south coast region were badly affected resulting in temporary closure leading to a minimum of three months. When the hotels restarted for business the non-peak season was in progress while the negative media coverage dampened sentiments for the industry as a whole during the peak months. Nevertheless thanks to foreign aid workers and diplomats who traveled regularly during the year kept the industry alive, albeit in a smaller scale.

The year 2006 was yet again a buoyant year for the industry until August. However with the unrest in the North and East leading tourist markets such as UK issued travel warning to the country. Since then a continuous slump has been evident with occupancy levels falling well below expectant levels.

It is interesting to note during the cease fire period the major market UK stepped one slot down while tourists from neighboring India captured the first place, although the demand from both countries vary in nature.

Tourists from India visit the country mainly for business purposes or shopping with a maximum stay of five days mainly within the city of Colombo. Arrivals from European countries namely UK, Germany and France are during the peak season (October to April) where a traveler remains in the country for a period of two months. These leisure seekers travel around the island covering areas such as up country, cultural triangle, the city and mainly the south coast. The demand for new packages such as MICE, adventure, eco and ayurvedic tourism in the recent past has been encouraging although Sri Lanka is mainly known for it’s Sun and Sand.


War and Tourism Will the Trend Ever Change?


As proved time and time again the tourism industry remains highly dependant on political stability while three things viz economy, politics and terrorism influence this segment to a great extent. Thus it has been evident countries with no war risks have developed the industry to it’s benefit while the others have suffered the consequence of war.

Sri Lanka has been one such country affected by decades of war. Although surrounded with all potential resources war alone has subdued the tourism industry not permitting to move more than a certain level.

The question still remains if the industry would survive during turbulences. It is interesting to note tourism has shown some resilience over the last ten years with global travel increasing year-on-year. This to some extent proved that people are changing in every aspect be it psychological or their life style.

Since terrorist attacks have been a growing menace over the years around the globe, it has been accepted by people as a common aspect. Although the trend is changing slowly but surely, how each country markets it self as a destination is of high importance as this plays a big role in a tourists mind.

With Sri Lanka being the hub of tourism in Asia it certainly has all resources to attract many tourists across the globe, although destination marketing will be a vital role in reviving the industry.

Sources: BMS Research, Lanka Business Online, Third i-travel (UK).

Copyrights Reserved (RIU 2007)