Challenges for Sri Lanka’s tourism

Challenges ahead for Sri Lanka’s tourism amidst COVID-19 was the theme of a recent seminar organised by PwC Sri Lanka which included leading experts in the tourism industry- Mikael Svensson, the Sector Head of the Cinnamon City hotels and Executive Vice President of John Keells Holdings PLC; Vickum Nawagamuwage - Founder CEO of Santani Wellness Resort; Thilan Wijesinghe Director Ceylon Tea Trails (Private) Limited, Director Resplendent Ceylon (Private) Limited and Director Serendib Leisure PLC; and  Nalaka Amaratunga  Chief Executive Officer Destination Management Sector, Vice President John Keells Group and Executive Committee Member of the Sri Lanka Association of Inbound Tour Operators. The session was moderated by Thivanka Jayasinghe Partner PwC Sri Lanka and assisted by Kavinda Weerakoon Director Mergers and Acquisitions PwC Sri Lanka, according to a media release by PwC listing key features of the discussion.
 “Don't waste the crisis,” urged Mikael Svensson explaining the step taken by his team after the decision to temporarily suspend operations at all of their properties in Sri Lanka and the Maldives to ensure the safety and health of employees.

This allowed the team to use the downtime to relook and re-assess how things were done operationally as well as how the hotels should be marketed. The team was focused to ensure that decisions taken will not hurt the properties in the long run purely for short term gains.

Vickum Nawagamuwage explained that Santani has benefitted from the extensions of the moratoriums and working capital loans initially offered after the Easter Sunday attacks in 2019. He pointed out that a timeline should not be placed on the moratoriums and that its timing has to be matched with the revival of the industry. He also mentioned that after the Easter Sunday attacks in 2019, there was a widespread acknowledgement of an inherent issue in the industry, which is the lack of any strategic positioning for Sri Lanka tourism.

In response to a question on whether Sri Lanka will be able to market itself strongly as a wellness destination using the positivity gained from how well the authorities have dealt with COVID-19, he was of the view that Sri Lanka has less than 175 proper wellness rooms and possibly 200 quasi wellness rooms, which is not enough to revive the industry. However, the positivity of how well it has managed the situation should be used to promote the overall destination. “Wellness of course will have high demand but with high demand comes higher scrutiny,” he said cautioning against hotels placing a few spa beds and identifying it as a wellness property as it could lead to Sri Lanka being branded as a quasi-wellness destination that is trying to profit from the pandemic. 

He also mentioned that there is an idea about attracting high spending tourists to revive tourism even though the country has less than 300 room nights that can sell over US$400/500 per night. The industry can adopt what he identifies as extreme targeting, covering not only the high-end but also the lower end backpackers, who are more prone to travel during this period. 
               

Thilan Wijesinghe, responding to views on Government support schemes and what policymakers can do to support the industry, explained that in such a situation all the concerned stakeholders should look at the individual sacrifices needed to be made by all stakeholders for the tourism businesses and the industry as a whole, to survive. 

“There should be an element of recycling of capital. Investors with better balance sheets and management should be able to take over weaker businesses”

The Government should also be flexible in terms of the application of labour laws pertaining to retraining and redeploying those who are going to lose jobs. “The Government should not just give people handouts, but to get them enrolled in micro-level projects that can place the industry in a stronger position when tourism revives. The Government should also seek the assistance of agencies like the World Bank. The World Bank for example had proposed a one hundred-million-dollar fund for a sustainable tourism development project, and that can be re-allocated to these micro-level projects”. 

Nalaka Amaratunga explained that COVID-19 is the third hit the inbound operators as an industry has had to face in the recent past. In addition to last year’s Easter Sunday attack, the Inbound Tour Operator industry had to deal with a zero VAT rate issue which was fortunately corrected from the 1st of April 2020. He emphasized the importance of Destination Management Companies (DMC’s) towards the tourism industry by indicating that it is the DMC’s that fill up hotels with tourists wherein certain hotels, DMC’s contribution can be up to 60 per cent of the hotel mix. 

He indicated that DMC’s require a lifeline to hold on to until tourist travel returns to some form of normalcy. He also touched on the importance of Sri Lanka be ready with the health and safety requirements which will be a prerequisite post-COVID-19.