Industry hopes new government can help revive sector
Seven months after the Easter Sunday terror attacks, Sri Lanka, recognized as Lonely Planet’s number 1 travel destination in 2019, continues to suffer due to declining tourists.
Since the April 21 bomb blasts at three five-star hotels and churches in Colombo, tourism numbers have plunged steadily, resulting in hotels facing a severe hit and increasingly finding it difficult to stay afloat. The coordinated suicide bombings carried out by extremists resulted in over 250 people killed, including foreigners, while at least 500 were injured.
Before the terror attacks, tourism authorities estimated Sri Lanka would hit 2.5 million tourist arrivals this year, but the target now seems a distant dream, and the 2019 target is likely to fall way short of even last year’s 2.3 million visitors.
According to the Tourism Development Authority (SLTDA), 1.6 million tourists arrived from January to November, compared to 2 million arrivals during the same period of last year.
Tourist arrivals in October recorded a decline of 22.5%, while the decline was 9.5% for November, a rather refreshing number in comparison to previous months. But despite the gap, industry experts were not too enthusiastic about the rising numbers.
- Discount: to win tourists or suffer low revenue
President of the Cultural Triangle Hoteliers Association Saliya Dayananda said even with massive discounts offered, hotels are still suffering from low occupancy in the cultural triangle region located in the north central area which is popular among tourists as it is home to several UNESCO World Heritage sites, including the ancient capital of Anuradhapura, the ruins of Polonnaruwa and the rock citadel of Sigiriya.
“Even with discounts offered, the occupancy levels in our region are fluctuating between 30% and 40%, and iconic properties such as the Heritance Kandalama Hotel which usually enjoyed around an 80% occupancy during last November, is currently having occupancy of around 50% to 60% this November. So, if you take the overall picture, we are still struggling to survive,” he told Anadolu Agency.
After the attacks, the next three months in a sequence took the heaviest beatings. In May, the tourist arrivals plunged by a staggering 70.8%, followed by 57% in June and by 46.9% in July, compared to 2018.
As a tropical island located in the Indian ocean, Sri Lanka offers a mix of attractions ranging from sun, sand and sea as well as wildlife parks, rain forests, Buddhist cultural sites, lush green tea plantations, ruins dating back centuries as well as multicultural festivals all year round.
The tourism industry is the third largest foreign exchange earner in the South Asian island, and the country depends heavily on the industry, which recorded $4.4 billion in earnings last year.
Meanwhile, with various discounts offered to woo local and foreign tourists in a bid to help the hotel industry sustain, the move has actually resulted in the industry facing a fresh dilemma with difficulty to stay afloat due to low revenue.
“There is a slight increase in the number of occupancy, but the discounts being offered is not hitting the right revenue target. To be frank, with the offering of such discounts, we have basically started digging our own grave, because you can’t run a property by giving discounts at the rate that is being offered right now,” he said.
- New government, new hopes
Soon after the attacks, hotels started to charm tourists, including locals, by offering various online and credit card offers running up to as much as 50%.
However, with the election of Gotabaya Rajapaksa in the recent presidential polls and the subsequent appointment of a new government, some industry experts are optimistic the new administration can help revitalize the tourism and hotel industry.
President of the Colombo City Tourist Hotels Association M. Shanthikumar is hopeful the new president can be the change the industry needs.
“We are expecting a boost in tourists following the new government as they are very positive and focused, so the situation could improve soon,” he told Anadolu Agency.
Shanthikumar too was of the opinion that hotel reservations were low when compared with last year’s numbers. He said even though the private sector gave the necessary input to implement a digital marketing consumer promotion to the tourism promotion bureau along with the necessary funding which was raised by the sector, the bureau failed to implement the suggestions.
“But we believe that the new government will not take too long and soon after they appoint the boards, they will give the necessary kick start,” he said.
The new government’s sweeping tax concessions have also gone down well with the industry.
According to President of the Kandy Hoteliers Association Samantha Ratnayake, the newly announced tax reductions will help the industry.
“With the reduction of the value added tax (VAT) and the nation building tax (NBT), it means that there will be an impact on the supplies and we can demand lower rates from suppliers,” he told Anadolu Agency.
In November, the government announced the slashing of VAT to 8% from 15% and abolishing of the 2% NBT on domestic goods and services.
However, the terror attacks also have created a new issue for the hotel industry, resulting in a severe brain drain of specially experienced professionals leaving either the industry or the country due to declining income.
“The staff have been receiving lesser service charges and tips and they get demoralized and this has resulted in a serious issue for us as most senior and experienced staff have opted to leave the industry or go overseas looking for a better future. This has been happening in several hotels,” he said.
Dayananda warned that when the tourism and hotel industries pick up, the industry will be saddled with a new problem as they will be left with either semi-skilled or unskilled staff.
