Tourism: Market Outlook

Purchase precose and metformin In the sixties, other than the Rest Houses in Hikkaduwa and Bentota, there were no hotels of any standard in Sri Lanka. The Confifi Beach Hotel was the first Star Resort Hotel in the West Coast in Beruwala, followed in 1972 by the Bentota Beach Hotel in Bentota and the Coral Gardens Hotel in Hikkaduwa. From about 1970, when tourism started, up to 1982, the industry flourished as there was an enormous demand from overseas tour operators to send tourists to Sri Lanka. The war with the LTTE ended in May 2009, and now hopefully a new era for tourism is about to begin.

In the history of Sri Lanka, more appropriately in the history of the world, the names of our President, Hon. Mahinda Rajapaksa, the Defense Secretary and the Heads of the Army, Navy, Air Force and Police, will be carved in golden letters for all time for their unprecedented achievement of completely annihilating the most dangerous terrorist group that has ever existed in recent history. While envy and political jealousy may hinder some people to admit facts, these Sri Lankan sceptics and the international community should not deny our heroes their due. There is no doubt, for Sri Lanka, a new era is about to begin.

Arrivals

The ethnic conflict started in July 1983, and from then on the tourism sector’s fortunes deteriorated according to the level of violence in the country.

The Sri Lanka Tourist Board statistics show that the total tourist arrivals to Sri Lanka in 1982 amounted to 407,230. It remained on the averageA? 500,000 per annum mark for 25 years up to 2008, in which year the figure went down to 438,475.

Given below is a graphic illustration of the tourist arrivals from the inception of the industry in 1966.

The figures clearly show that the drop in arrivals from Western Europe was partly compensated by the increase in East European arrivals. Another significant feature is the sizable traffic from North America, East and South Asia and Australia, where the maority were non tourists, butA? Sri Lankan expatriates returning home.

OnA? 26th July 1983, the Sinhala Tamil riots began in Sri Lanka and from that day on, tourist arrivals have been very erratic depending on the ground situation. In the period 1970 to 1983 tourists arrivals to Sri Lanka increased by about 20% per year, and from the time of the beginning of the northern conflict, the arrival figures per year hardly changed. Whereas competing destinations have gained from the unfortunate situation in Sri Lanka and enriched their tourism prospects by leaps and bounds, Sri Lanka continued to suffer with deteriorating arrival figures. There is no doubt that in the intervening 25 years, the tourist 1rnffic to other competing destinations increased by massive proportions.

Competing Destinations

Sri Lankan offers the multi-faceted features of sandy beaches, ancient cities, wild life parks, highly desirable climatic conditions, both upcountry and low country,A? and a friendly population, a comprehensive tourist product which is hard to match.A? Only a few countries in the world such as Thailand or Cambodia could offer a similar product. As things stand at present, competing destinations enjoy higher tourist arrivals, e.g. Thailand (12 million), Malaysia (10 million), Bali (2 million), Caribbean Countries (5 million). And even the new destinations that started only about a decade ago, such as Vietnam (2 million), Cambodia (over I million) and Laos (1 million) have had tremendous growth. Sri Lanka is still receiving only around 500,000 per annum.

Amongst these foreigners are about 100,000 Sri Lankan expatriates living abroad, returning home for a visit and about 50,000 Indians and business people who are strictly not tourists. Therefore, if the 150,000 non tourists are deducted from the arrivals into Sri Lanka each year,A? genuine tourists are only about 350,000 per year – a paltry figure in comparison to the other competing destinations.

It is estimated that if, in the next 12 months the number of genuine tourists who come to Sri Lanka increases by 100,000, the current supply of registered rooms, both in the cities and in the resorts would be hardly adequate to accommodate the increase. In effect, therefore, there would be a tremendous potential to increase prices and room capacity, which will give the existing hotels an edge in the interim period, as hotel

4Cont.on B3

T

ourism…

4Cont.from B2

construction in Sri Lanka normally takes about 3 years or more from the point of BOI approval.

Room Capacity

The figures in table below clearly reveal that after forty years of tourism in an exotic, unmatchable destination like Sri Lanka, the room capacity has been no more than about 14,700 (estimated) at end 2008.

In the last four to five years hardly any new Hotels of distinction have been built in the South West Coast of Sri Lanka other than the Fortress Hotel in Koggala and the Amanwella Hotel in Tangalla.

Tourism Industry in Sri Lanka has not really taken off in 25 years mainly on account of the war in the North and East of the country. The Tsunami in December 2004 did not help the situation either.

Travel Advisories

Its common knowledge that the overseas media, for one reason or another have overplayed the violence scenes at as a result underplayed the actual ground situation. Whereas the war Was confined to the North and East it hard affected the South where the tourist hotels are located. But the impression created was that the war was all over the island. The city of Colombo was no more unsafe than the city of London in the last decades or so, but med reporting carried its bias. Consequently tourist arrivals were kept artificially low.

In this scenario, in the midst of the media’s appetite for displaying the carnage (with old footage) the western countries indirectly exerted a form of trade sanctions by introducing Travel Advisories which virtually discouraged tourists from travelling to Sri Lanka. That was the scenario before the L.T.T.E. was completely routed on the 19th May 2009. Now that the war which was the excuse for the Travel Advisories is over, the hotel trade is anxious awaiting the Travel Advisories to be lifted, at which point tourist arrivals to Sri Lanka are expected to increase by leaps and bounds.

Prices

It is well known that the price of the Sri Lankan tourism products have been kept very low, as the Tour Operator found it increasingly difficult, during the period of war, to attract tourists to Sri Lanka. Both City hotels in Colombo and the Resort hotels in the coast and in the ancient cities have been keeping their fires burning with unreasonably low prices. The trade reckons that in comparison to competing destination norms, the current Sri Lankan Hotel prices are only about one third of what any comparative foreign product fetches at the present time.

There is no doubt that when the demand for the Sri Lankan products increase in the next six months, the current prices would certainly see significant upward revisions to fall in line with industry norms overseas. In such situation the profitability of te existing hotels which were built at yester year costs are expected to boom.

Outlook

There is no doubt that in the Post Prabakaran period, one of the sectors of business in Sri Lanka that is waiting to take off in a significant way is Tourism. Sri Lanka has something like 1600 Kms of excellent coastline with warm waters (22- 26 “C) and sunshine round the year. It also has luscious greenery, especially in the hill country which is easily reachable within about four hours. It has beautiful beaches, wild life parks, ancient ruins, hill country hotels, golf courses and a friendly nation of people who are capable of adequately communicating in at least one international language – English.

Some of the best tourist development sites such as in Arugam Bay, Passikudah, Trincomalee, Nilaveli, etc., in the Eastern Province have been hardly touched by tourism. Equally new sites such as in Kalpitiya are yet to be developed.

Considering the fact that Sri Lanka is a country with scarce natural resources it will have to increasingly rely on the Service Sector in the future, and in that scenario, Tourism which is number four in the order of importance for economic development is bound to be given heavy emphasis as the potential for quick profitable development is extremely high.

The advantage of Sri Lanka from the point of view of its location in the Indian Ocean to offer itself as a South Asian hub is by itself a tremendous potential from a market outlook.

Now that the Northern war is over, Sri Lanka is indeed a “miracle” waiting to happen – in every sense.

Desamanya M.T.A. Furkhan

Chairman

Confifi Group

Buy carafate medication