Steadying the tourism ship
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This week Sri Lanka, it appears, sent its largest private-public sector delegation for the ITB Berlin tourism fair, one of the biggest in the world. While this is a lot to crow about, the island’s tiny neighbour, the Maldives had in fact sent an equal number or even more representatives, mostly from private companies and resorts.Having more representatives at key trade fairs doesn’t mean anything. Policies, ground realities and dressing up the product to match market needs are what, eventually, matters. Furthermore in today’s context, B2C, that is business-to-consumer relationships, matters more than B2B (business-to-business, meaning trade fairs and road-shows). Reaching directly to consumers and travellers is today’s mantra.
This, however, is not the focus of today’s discussion on tourism and its future and thankfully eternal busybody Kussi Amma Sera (KAS) was busy in the kitchen working her magic and not butting into the conversation.
Like most government agencies with piles of cash, Sri Lanka Tourism (SLT) has been an attractive draw not only for free overseas trips and runaway spending but also to occasionally fund ‘political’ projects.
Senior travel industry officials, who spoke on condition of anonymity, said that while interference in the effective running of the state tourism agency reflects deep-rooted political realities in Sri Lanka over several decades, the ‘politicization’ of the SLT worsened during the previous 2010-January 2015 government.
In one instance, the push in China with a mega campaign including road-shows, trade fairs and advertising was driven by political realities rather than rational and marketing-related decisions. While for some reason it worked, thankfully, it was still a political decision.
The straw that broke the camel’s back was when private sector officials, serving as directors at SLT, were arrested last year, remanded and later released on bail in connection with alleged misuse of funds. While the court case is ongoing, it turns out that while the directors had sanctioned state funds for tourism-related activities, the money was used by the bureau for a ‘political’ project.
Now it appears that private sector officials on the SLT director-boards are reluctant to sign any board paper, fearing repercussions in a change of government. Even high-up officials at the ministry are extremely cautious about signing papers. TV clips and newspaper stories of private sector tourism officials being escorted to court sent shivers down the spine of several officials, many of whom backed out from serving as directors at SLT. It was the first time private sector officials were being hauled before court amidst embarrassing media coverage.
For years, the development of tourism – like in many other countries — has been a public-private partnership. While the government develops the facilities and infrastructure and also engages in tourism promotion, the private sector efficiently runs hotels and travel agents and entices visitors to the country.
Spending for infrastructure development and country promotion largely comes from airport taxes and other levies on tourists. Some years ago, the Government sought the assistance of the private sector in decisions pertaining to the disbursement of funds, particularly for promotion purposes. However, when the Sri Lankan Tourism Act was amended in 2005, all those powers were vested with the government, drawing howls of protests from the industry. Changes were then made in 2008, paving the way for private sector representation on 2-3 government agencies involved in tourism promotion, marketing and development. A proper framework for spending the money, particularly on promotion, was then brought into the law. The private sector is represented on the boards by officials of associations representing hotels and travel agents.
The Chairman and the Managing Director of the SLT, for example, are political appointees and often without tourism-related experience, except in the latest case. However, two to three other private sector directors help to provide rational decision-making that benefits the industry. This, however, doesn’t entirely prevent the minister (through the Chairman or MD) from using funds for a political purpose since some private sector directors are also reluctant to raise objections, fearing victimisation of their businesses or if they need ‘special favours’.
“We have no problem if people are charged with fraud or corruption in the disbursement of these funds. But a new government should not penalise an official or even a former minister on political grounds,” said one private sector official.
The current stand-off between the government and the private sector is over political rather than industry-related decisions taken during the previous regime. In one instance, when the former government decided to target 2.5 million arrivals annually, the number of approvals for rooms was haphazardly decided, while at the same time enforcing minimum room rates in Colombo, an issue that some hoteliers have been opposing. High room rates after 2009 resulted in lower occupancies in city 5-star properties.
While most tourism ministers over the years, none with a tourism industry or private sector background, have used their position to boost political campaigns by authorising liquor licences for tourist restaurants (a cumbersome process) to friends and relatives, and free trips to trade fairs for political catchers, the issues were exacerbated under the last government. When the new government took over in January 2015 with public demands to sue corrupt politicians and public officials across the board, the SLT was one institution where a wide-ranging police probe began.
Recently officials of industry associations met and decided to work out a strategy where their role in tourism agency directorates would be more in an advisory capacity while state officials would be held responsible for approval and proper disbursement of funds. Guidelines on how private sector board members would function are being prepared or already done.
It is well known in the industry that there is a tendency for ministers and officials (over the years) to ‘cross the line’ when it comes to funds being earmarked for tourism. “In most cases and these are small amounts, we turn a blind eye as there are also political realities that cannot be changed overnight. However large sums are vigorously challenged,” a former SLT private sector official said.
These political realities and the need for private sector representation on SLT boards, necessitates the formulation of a clear structure defining roles and responsibilities governed by law or amendments to the present Act. Then, it doesn’t matter who comes in, as structures enshrined by law are in place and cannot be tampered with.
As I put down my pen, sweaty KAS somehow pops into the conversation, saying “Mahattaya … Neva gilunath ban choone”. This time, however, her sarcastic comment is out of sync with the issue and diametrically opposite to the reality that whatever issues and problems, it is strong laws and regulation that would steady the lucrative tourism ship.