Tourism realities and the cess

Finally the Tourist Act is back on track, as we reported last week, which the industry has been clamouring for the past two years.

The new Tourism Minister Milinda Moragoda is in a listening mode and these days spends time speaking to and discussing with the various stakeholders ways to move forward rather than revisit the disputed issues.

With this in mind, The Sunday Times FT would also like to offer some tips on tourism and ways of moving forward.

Tourism has been embroiled in disputes between the former Tourist Board chairman Udaya Nanayakkara and the industry and to some extent former Minister Anura Bandaranaike’s reluctance to meet the industry to discuss the enforcement of the Tourism Act.

The hotly disputed issue is the tourism cess and its disbursement. The industry says not enough is coming to the industry, which is their due, while Nanayakkara had other views. The to-and-fro coupled with Nanayakkara’s battle with Dr P. Ramanujam, Tourism Ministry Secretary who has moved to another ministry, didn’t help. That led to the Treasury Secretary Dr P.B. Jayasundera intervening and the cess being directly managed by the Finance Ministry.

Tourism promotion efforts suffered during this period while accusations were hurled by both sides. The drama also led to the Tourism Act being reviewed by another committee appointed by Bandaranaike which came up with a series of changes to the Act.

The industry says the cess, made up from the airport tax, should be used solely for the benefit of private sector-led tourism. But the tourism sector can’t have exclusive rights to the airport tax levy (or share it only with airport development) since another sector -- the migrant worker industry should also be entitled to a share of the proceeds. Migrant workers are a marginalized lot and often used by the government as a tool as “the country’s biggest foreign exchange earners”. There are some 230,000 Sri Lankans who travel overseas for employment every year, more than half the number of tourists who comes to Sri Lanka. Since tourism figures are in dispute with many like Indians in transit or NGOs workers classified as tourists, migrant workers may even total more in number than ‘real’ tourists. Migrant workers and that industry get little or nothing from the government whereas tourism, garments and plantations – considered the lead sectors -- get various benefits in the form of tax holidays or duty free cars and concessions.

The government should also rethink its strategy of going after numbers (one or two million tourists in 10 years, etc) and consider a balance of up-market, high spending visitors and mass market.

Sri Lanka is quietly attracting high spenders some of whom are musician Paul Simon, former German Chancellor Helmut Koel, singer Sting and Paul McCartney of the now-defunct Beatles pop group. All of them came quietly, relaxed at high-class boutique hotels or tea estate bungalows and spent lavishly. There are other examples to go by. Ulpotha, a jungle hideout and meditation centre, draws high spenders for a minimum stay of three months! A few Helmut Koels’, Paul Simons’ and Paul McCartneys’ put together is equivalent to hundreds of mass market tourists in terms of spending power. At the end of the day a string of high spenders and tourist arrivals of around 200-300,000 would be equivalent to a million mass market tourists, in value terms.

Thus there is a need to re-visit some of these targets and come up with a more practical and rationale strategy where the profile of high spenders should be raised. It is for this reason too that in the disbursement of funds, tourism authorities must be mindful of the contribution of the small players in the industry like boutique hotels and eco lodges and ensure equitable distribution of financial resources via the cess.

The mass market is important and their role in the development of the industry cannot be ignored. At the same time however, due recognition must be given to small players whose contribution can be enhanced.