By Srilal Miththapala
The past year was certainly a ‘mixed bag’ for Sri Lanka tourism with possibly the ‘highs’ slightly outweighing the ‘lows’.
A quick overview of the past year, albeit weighted towards the hotels sector, is as follows.
Arrivals and growth
The Sri Lanka Tourism Development Authority (SLTDA) had set an overall target of 1.2 million tourists for 2013 and by the end of November, this target seemed to be unreachable with total arrivals for the 11 month ending November 2013 recording only 1,016,228 arrivals, a 15 percent increase YOY. In fact the Director General of Sri Lanka Tourism Dr. D. S. Jayaweera is on record saying that the target for 2013 has to be revised down to 1.1 million arrivals (Daily FT: July 29th, 2013). This view was also echoed by the Emeritus President and CEO of PATA Lakshman Ratnapala in October 2013 -“Sri Lanka tourism tumbling off target”
However, the year ended with controversy where the SLTDA suddenly ‘re-validated’ the year-end figures at the eleventh hour, arriving at a total arrival figure of 1,274,593, with an YOY increase of 26.7 percent, contradictory to all the expert predictions. Errors in reconciling the on line figures and manual figures are said to be the reason.
While we can split hairs about the accuracy of the numbers, what is important to note is that the overall YOY growth had steadily declined from 46 percent in 2010, 30 percent in 2011, to 17 percent in 2012. So, in the absence of some major promotional initiative in 2013, (which was not prevalent ), it is quite surprising how growth suddenly shot up to 27 percent in 2013 completing reversing this trend.
It is also pertinent to compare the 2013 growth rate in the region as released by UNWTO.
It is therefore intriguing as to how Sri Lanka is showing such a large YOY growth for 2013, completely going against the world and Asian trends.
In the meantime, the Maldives ‘pipped’ Sri Lanka to reach the magical 1 million arrival figure on the 25th of November 2013 and Sri Lanka followed closely behind a few days after.
Hence while certainly there will be continued organic growth of the sector, it is difficult to imagine how there will be quantum advancement, in the absence of any focused destination marketing and branding plan in place. (See below)
The lack of a cohesive strategic master plan to promote and market the destination has been talked about a great deal. The slowing down of growth, after the immediate post war pent up demand is widely attributed to the lack of a cohesive marketing plan. Many tourism professionals agree with this, and a senior hotelier and former Vice Principal of Hotel School Anil Perera was very forthright in stating that “lack of a proper marketing strategy by SLTPB, and the campaigns being handled by inexperienced, inefficient persons had resulted in Sri Lanka not been marketed properly” (Ref. The Island – 24th December 2014).
There were several adhoc ‘Mega Promotional campaigns’ by Sri Lanka Tourism in China, India, Russia and other Eastern Bloc countries. Certainly these would have had some positive impact, but on an overall cohesive basis, there was no planned approach to study generating markets, assess newly developing tourism consumer trends and design campaigns accordingly.
Media familiarization tours coordinated by the SLTPB took place for journalists from foreign countries with the hotels and inbound tour operators’ support and sponsorships, which have proved to be quite successful in promoting the country.
In the meantime, the private sector continued participating in most of the international tourism fairs with World Travel Mart (WTM) in November 2013 drawing one of the largest Sri Lankan contingents ever with over 60 companies represented by over 120 participants. The overall design of the WTM stall was completely revamped this year to give a much more appealing and eye catching look, giving a very ‘Sri Lankan’ flavour depicting the entrance of Yapahuwa Palace, ‘kudos’ to the SLTPB.
Private sector-led promotions
One of the most successful private sector led promotions was John Keells Cinnamon Group of Hotels partnering with Miss France Pageant 2014, where 33 finalists of the Miss France 2014 contest were hosted by the Cinnamon Hotels and Resorts for one week in the country, in association with Sri Lankan Airlines.
Subsequently, Sri Lanka was featured in the main pageant, giving tremendous exposure to the country. Such individual efforts from the private sector, most often supported by Sri Lankan Airlines, was the only form of cohesive promotional activity that took place, which has a wide reach and impact on consumers in a foreign country.
This initiative in one of Sri Lanka’s strong western markets, France, would have had a huge impact, much more than any paid advisements or individual trade fair promotions could have achieved.
Apart from this, many of the large hotel companies sponsored and brought down several wildlife documentary film crews to showcase Sri Lanka’s spectacular wildlife, which included the Discovery Channel, BBC and Animal Planet. This initiative has also helped to promote the natural beauty of Sri Lanka to a wide range of the world public.
Several new hotels opened their doors for business in 2013. It is estimated that some 9000 new hotel rooms have been approved and are in the process of being build. Newspapers report that 43 new hotels have commenced operation during 2013 (it has been virtually impossible to obtain any information from SLTDA, regarding the details of these new hotel developments. The writer tried valiantly to obtain this information without any success). However, it is estimated that about 3000 of these rooms (1/3) is said to be being built in and around Colombo, which will, (experts believe), result in an oversupply of tourist rooms in the City.
In the desire to drive construction of hotel rooms to meet the ambitious target of 2.5 million tourists by 2016, there seems to be a ‘carte-blanche’ approval scheme in place by the SLTDA, without any consideration for the type of hotel, or the carrying capacity of a particular tourism area being given when approving a project.
A case in point is the Yala area, where already there are serious issues with over visitation of the Yala National Park, the most popular National Park of Sri Lanka. On November 29th 2013, Yala had the highest number of visitors ever in one single day of 3,300 bringing in record revenue of Rs.3.3 million. However, more than 500 jeeps were inside the park this day. One can imagine the disruption caused to the animals with such unregulated visitation. It is the proverbial ‘killing the goose that lays golden egg’. Currently, there are 22 hotels and guest houses in the Yala vicinity, amounting to 505 rooms. There are apparently 9 more hotels approved, which will bring in another additional 195 rooms into operations, which will only add to the serious over visitation problem.
Hence, there should be some moratorium to limit the growth in certain areas, which have reached saturation level, and also to stimulate growth in certain other areas, where development is needed, possibly by offering some incentives to investors.
Sri Lanka tourism has lacked big branded hotel names and it is reported that several international brand names have commenced some form of construction activity in Sri Lanka. This augurs well for the destination without any doubt.
The Katunayake express way has given Sri Lanka tourism a big boost and the Outer Circular express way and the extension of the Southern highway to Matara will certainly create greater tourist movements. The commencement of the Kandy highway is indeed an important step for the development of tourism and all tourism stakeholders look forward to the speedy completion and commissioning on this expressway.
There is much controversy and debate about the setting up of casinos in Sri Lanka. Tourism experts see this as somewhat of a ‘necessary evil’ in the tourism trade. If casinos are carefully developed, and managed, it can be a game changer for the industry. Singapore tourism was reaching a plateau with growth rate petering out, when the government of Singapore took a strategic decision to introduce to carefully managed casinos, which has given Singapore tourism a complete new lease of life, with monthly arrivals now exceeding 1.2 million on the average.
In Sri Lanka too perhaps this model could have been followed by developing casinos in one central area away from the city (possibly in Kalpitiya), instead of having them in the city (this was suggested in the ‘Way Forward’ for Sri Lanka Tourism report, prepared by the Private Sector for the Secretary, Ministry of Finance in April 2010) . Not with standing this, there are now 3 mega ‘integrated development projects’ that been approved in the city, which no doubt that will make a significant impact on Sri Lanka tourism portfolio, although there may be some socio-cultural fallout.
Emerging tourism trends
There appears to be an emerging tourism trend, where there is a large influx of tourists, seeking a more authentic experience, rather than the conventional tourism offering. Consequently, these tourists seem to be seeking out cheaper accommodation units and home stays, where they have a richer, more down to earth exposure of what Sri Lanka can offer. These tourists appear to be more of the younger age group and are much more knowledgeable, utilizing internet applications to find their way about, seeking adventure and authenticity, and are more conscious and concerned about the environment.
However, most of the accommodation units used by these ‘new’ tourists are from the informal, unregulated sector of tourism in Sri Lanka. Due to the fact that these units are not officially recognized, no data is available with the SLTDA regarding this sector, through the formal reporting channels. Hence, we may be missing out an important and newly emerging trend that is, developing in Sri Lanka tourism sector.
The writer has conducted two surveys in the Ella and Sigiriya regions and found that there is a considerably large informal and unregulated tourism sector in these two areas, with over 40 unregistered units operating in each area.
However, it will be a simple task to assess this ‘leakage’ factor and analyze whether it is increasing YOY, showing a growing trend, if the proper data is available.
All these tourists’ arrivals get captured at the point of entry. However, the problem is that details of their stay are not recorded, since the unregistered accommodation units do not report on this. However, all the registered hotels in the country do report the foreign guest nights reasonably accurately to the SLTDA on a monthly basis as is required by law. Hence, it will be a simple analysis to compare the arrival figures, against the formal foreign guest nights, the difference of which will indicate this leakage figure.
Unfortunately, the SLTDA statistics for both 2012 and 2013 are still unavailable to analyze and study this important trend in Sri Lanka tourism (see Strategic Direction below).
Certainly the new airport at Mattala can give Sri Lanka tourism a big boost, provided a proper strategy to market the entire product offering is in place. The airport is very strategically positioned in the Deep South, which can be a good launching pad to promote Sri Lanka tourism in the South and East coast of the country. However, there has to be strategic thinking to attractively price tours to these regions, partnering with tour operators, using chartered flights to land at Mattala airport in Hambantota. Unless such aggressive efforts are made to promote the whole area, the airport will not be fully utilized to bring out its full potential.
No doubt the expected high point for Sri Lanka tourism during the year was to be the CHOGM, which unfortunately seems to have ended as a damp squib as regard to the occupancy in hotel rooms. The City Hotels Association President, Shanthikumar said “ at the peak from November 15th to 16th, the normal average occupancy in the city hotels was 55%. However, from 10th to 13th November, the occupancy was 30 percent and from 13th to 14th, it was only about 40%. This was far below our expectations, where a minimum of 4000 city hotel rooms were expected to be occupied, but only 2,000 – 2,010 rooms were eventually occupied” – Daily Mirror 18th November 2013. This was reflected when the November tourist arrivals were released, showing only a 3 percent YOY increase, the slowest YOY growth for Sri Lanka tourism for many years. City hotels, which expected a very high occupancy rates ended up having large number of rooms unoccupied.
However, on an overall basis, certainly the event gave Sri Lanka tourism considerable exposure, in spite of the fall outs due to other political controversies.
SLAITO and THASL
The two main tourism associations SLAITO and THASL continued to carry the flag for Sri Lanka tourism. There was no change in the upper hierarchy of the governing Executive Committee of either body. The AGM of SLAITO was held on 24th August 2013 re-electing Mahen Kariyawasam as the President. In the meantime, THASL held their AGM at the newly opened hotel Kingsbury on 28th October 2013, re-electing Jayantissa Kehelpannala as the President (albeit under some very hot conditions!).
Impending HR crises in industry
The shortage of well-trained tourism personnel continued to be a major issue for the industry with the situation worsening with many new hotels coming up in the country and absorbing the existing experienced personnel. This matter has been talked about at great length, and many tourism professionals, including this writer, has brought this up at many forums. “While everyone is scurrying around trying to build and develop infrastructure and hotel rooms, the critical HR factor is a hidden issue, which will soon mushroom into a great crises in the near future, if not addressed in a strategic and holistic manner immediately” – Srilal Miththapala, Impending HR Crisis in the Hotel Industry, Daily FT.
There are moves by the Sri Lanka Institute of Tourism and Hotel Management (SLITHM) to forge partnerships with a foreign tourism educational body, to revamp their operations. This is indeed a very good initiative, but there are still remains the fact that SLITHM alone cannot produce Sri Lanka tourism industry’s entire people requirement. It is up to the private sector tourism bodies (Ceylon Hotel School Graduates Association, THASL) to take the initiative to draw up a strategic master plan on how this problem should be addressed, and initiate a private sector / public sector partnership urgently.
There was a marked drop in overall tourism accolades and ratings by various world agencies for Sri Lanka. Last year saw Sri Lanka being assessed as the best emerging destination in the world for travel for 2013 by the prestigious Lonely Planet publication. However, Sri Lanka does not feature anywhere in the rankings for 2014.
The absence of any such new form of recognition perhaps indicates that the interest for Sri Lanka could be waning, with the destination losing its ‘luster’.
Much has been debated about Sri Lankan hotel rates, which many consider too expensive, and un- competitive among our Asian neighbors.
There could be some truth in this, where post war resort pricing has increased some 40-50 percent. The initial price correction was certainly badly needed for the hotels to recover from the decades of stagnancy, but there could have been an ‘over-correction’ which saw some occupancy dip in 2013. However, with the perception that the destination has become too expensive, there is some price correction that seems to have taken place, especially in the resorts, where most hotels have either held their prices for 2013/14 or in some cases discounted down. This is a common phenomenon and provided that the market forces are not interfered with, the supply and demand will provide correction.
However, this is not so in the city, where there is a minimum price stipulated by the government, which has to be adhered to. Debates still continue to rage regarding this between the hoteliers and travel agents, but fact of the matter is that with the destination now maturing, free market forces should be allowed to prevail.
Sustainability and tourism
The year showed more and more focus by tour operators and tourists on sustainability and environmental issues. Sri Lanka being identified as one of the 34 bio diversity hot spots in the world; it is quite easy for the destination to create competitive advantage of this aspect.
Unfortunately, the main private sector hotel sustainability focused project, initiated by the Ceylon Chamber of Commerce, the EU-funded Greening Sri Lanka Hotels Project (GSLH) came to an end in November 2013, after 4 years of successful operations. The project had more than 350 hotels registered and working on sustainable consumption practices. Many workshops, training programmes and awareness programmes were conducted all over the island and the GSLH project created Sri Lanka’s first dedicated Green Award for the hotel industry, which became a much sort after award by Sri Lankan hotels.
The project produced from its research, Sri Lanka’s first ever Water and Energy Benchmarks for the hotel industry.
Without a dedicated agency or organization continuously championing this cause, there is concern that the positioning of Sri Lanka as a sustainable destination may fall by the way side.
As indicated earlier, there is no strategic direction as to how the Sri Lanka tourism sector needs to develop. The original positioning statement developed by the industry professionals some 6-7 years ago during the now defunct ‘Small Miracle’ Branding Campaign – Asia’s most Authentic, Diverse and Compact Island is still very valid and should form the core foundation of Sri Lanka’s future tourism development.
Also analysis of statistical data and trends, supported by good research is vital for planning as against ‘knee jerk’ responses. It was Lord Kelvin, the British mathematical physicist and engineer, who said “ if you can’t measure it, you can’t improve it”.
Without reliable information and data, backed by good research and strategic thinking, Sri Lanka Tourism will continue to meander along in the ‘Backwoods of Asia’ , content to be another ‘also ran’.