Tour operator business key to revive Sri Lanka tourism
The recent pandemic has caused serious financial headaches to the tourism industry of Sri Lanka. This is in the aftermath of the Easter Sunday attack in 2019 where the industry was showing signs of moderate recovery. The pandemic could be a nail in the coffin for some stakeholders unless we recover faster and better than other competing destinations. I feel a rapid response from our tour operators who have stood with us for many decades could hold the key in the recovery process of the industry and our economy as a whole. Foreign tour operators love the destination and love the people they are engaged with (DMCs); therefore some incentive at this critical stage will help us position Sri Lanka over and above some of the other competing destinations, which we see as a ‘quick fixer’ and the “need of the hour’.
The Sri Lanka Association of Inbound Tour Operators (SLAITO)-led DMC’s contribute a significant percentage of leisure arrivals to Sri Lanka. Our internal estimates and research state that all SLTDA registered DMCs bring nearly 80-90 per cent of the ‘leisure’ travellers to Sri Lanka, nearly 1.44 million tourists during 2018.
With an average spend of US$181 per day and average stay of 10.8 days DMCs contribute nearly $2.8 billion per year. This is a significant contribution to the overall kitty of the government coffers. This is in addition to generating revenue to state-managed places of interest, PAYE, corporate and airport taxes.
Our estimates suggest nearly 60-65 per cent of the DMC revenue is spent on hotels and accommodation facilities, 10-15 per cent on transport including domestic airlines, nearly 5 per cent on guide related fees, 10 per cent on entrance fees and 1 per cent to the Government by way of TDL (Tourism Development Levy). The 60-65 per cent spent on hotel facilities will have its own value chain supporting the huge infrastructure of the hotels including staff remuneration and facilities, F&B suppliers, water and electricity, loan repayments etc. Therefore, the value chain of tourism and the direct/indirect dependents must never be underestimated.
As almost all competing destinations will be fighting for the wallet of the potential tourist in the coming months and seasons, supporting and motivating the existing tour operator base will be a quick win in my opinion. A total integrated consumer base marketing plan will take time to develop due to our strict procurement procedures; therefore a more B2B approach will be beneficial. We have seen similar positive results in the past and I don’t see why a similar marketing tactic cannot be repeated. (The writer is a former president of SLAITO).