Looking to regain a lost paradise

To a Sri Lankan tour operator or hotelier, 'boom' is a dirty word. For, the LTTE's suicide bombers over the past 17 years, have eroded the emerald island's lustre as a prime South Asian destination, and other well-endowed tropical destinations have lured the tourists away.

Just when the tide seemed to have turned in -1999 with a 16-year high in tourist arrivals, the Tamil Tigers struck again…and again. Serial explosions rocked Colombo during the presidential poll campaign and the blasts continued well into 2000. No tourist was harmed but the industry bled. The tourist season, which is supposed to peak between November through March, hobbled to a weak finish.

There was another reason for the relatively poor showing, according to some, and that was the expectations for the millennium winter arrivals from Europe having been notched too high. Prices climbed wildly in anticipation of a flood of bookings; but hotels and travel agents had reckoned without the Y2K scare, which had beach-lovers going to Brighton instead of Bentota. Colombo's five-star hotels were forced to slash prices by more than half during theChristmas-New Year season. Still, overall arrivals were up 15 per cent in 1999, recording a total of 436,440 and earning the industry SLR 18,518 million

The relatively cheaper rates have always been a lure for the mostly low-spending tourists who come to the island; but this too threatens to become a thing of the past. A 12.5 percent Goods and Services Tax (GST) comes into effect this April. Trade association heads had appealed for a rethink, with petitions going all but the way up to the President Chandrika Kumaratunga, but in vain. The GST will straight away raise prices, and so the Sri Lankan tourism product must sell higher for companies to stay afloat.

Having already pared their rates down to the minimum, hotels will now struggle to make even marginal profits. "The GST will have a serious impact on this year's arrivals. It will be impossible to pass this on to clients," Michael Elias of Walkers Tours says. Another travel agent: "We are in a price-competitive market. Tour operators abroad will refuse to sell Srilanka, opting for cheaper destinations in the region. In general, it is the low-spending tourist who comes here, although you do have pockets of high-spenders."

Most package tour visitors who have paid up-front for food and board are chary of loosening their purse strings on what is essentially a cut-price holiday with very good facilities. "The problem is, we have two-star tourists staying in five-star hotels," said a Colombo five star hotelier. The Sri Lankan Tourist Board says foreign holiday-makers spend an average of USD 55 a day.

The travel and tourism sector sees one chance of escaping the GST — its recognition as an export industry that would qualify it for tax and duty concessions. The industry has long been lobbying for this, its argument being that though tourism does not export a physical product, it ranks among the country's top five foreign exchange earners. But the cash strapped government, which needs all the income it can try and squeeze, has not bought the argument.

Meanwhile, even as the industry whines and complains, the government and the Tourist Board have their chins up. The government has set a goal of 535,000 tourist arrivals this year. According to Charmari Maelge, the Board's director of marketing, its budget has been increased four-fold over the last year, up to SLR 350 million from SLR 88 million.

The bulk of the money will go on promotion and in March the Board announced a USD 10 million (SLR 730 million) campaign to boost the country's image in key foreign markets. The Board is to provide half of the tab, and the industry must put in the rest. The industry, made up of travel agents, tour operators and hotels, says that it is more than willing to pitch in, but on the condition that the promotional campaign must be carried out professionally, so as to beat the competition, especially the Maldives,Thailand and Indonesia.

The truth is that over the years, the trade become more and more sceptical of the Board's ability to sell the island to tourists, and Parliament is looking at a new Act to change the nature of the Board and set up a Tourism Promotional Authority with private-sector involvement. But despite everything, hope runs high in the private sector, which claims it kept the trade afloat through the stormy years with little help from the government.

Bullish bent

Every month, private sector proposals for new hotels and tourist recreation facilities flood the Board office in Colombo. Investor interest is evident in the number of upmarket hotels that are coming up. Earl's Regency, the new five-star riverside resort in Kandy, 117 km from Colombo, is a USD 11-million investment by a Japanese businessman and a local jewellery magnate. In Wadduwa, 50 km from Colombo, an exclusive four-star beachside resort built with Swedish funds is ready for visitors. John Keells Hotels, a large chain of resort hotels in Sri Lanka and the Maldives, has two projects on the drawing board, one for a picturesque new golf links in Kandy and the other for a safari-type wildlife resort close to Yala, the country's largest national park. Uma Sharma, an Indian businessman, has just bought 98 percent of Colombo's Intercontinental Hotel and is spending USD 10 million to do it up.

Today, the industry pats itself on the back for surviving the tough times and continuing to persuade tourists to visit the island in the teeth of negative publicity of the civil war beamed around the world. The war stories and pictures have taken their toll, though. Countries that lagged far behind Sri Lanka in 1980 have grabbed large chunks of the tourism market segment where Colombo should have been leading. The Maldives, for instance, is today an upmarket beach resort. Seychelles and Mauritius too have geared themselves to a high-end clientele. Sri Lanka, on the other hand, has slashed and slashed its room rates, and today sells rooms at the same dollar rate as it did in 1982.

The country has not been able to polish up its image, and still attracts mostly low-spending package tourists. Many resorts adopt the all-inclusive concept imported from the Caribbean, where unlimited food, drinks, certain alcoholic beverages and entertainment are all thrown in at a set price. Officially, resort hotel rates vary between USD 25 and 50 a night, and Colombo room rates are USD 70. However, the actual selling prices are much lower.

There is a growing consensus within the industry that Sri Lanka should aim higher. Three years ago, the government declared a duty concession to help hotels and resorts to spruce up, and many did upgrade. The newer hotels have been wooing a higher class of tourist, offering luxury interiors, high-tech rooms and quaint ethnic touches. One such is "Ayurveda tourism", in which Europeans aretreated for high blood pressure, stress, diabetes and arthritis through assorted herbal methods. Some entrepreneurs have gone the whole hog, setting up exclusive Ayurveda resorts where rooms cost USD 250 a night.

Fresh focus

Together with upgrading and going upscale, there is also agreement among the travel folk that it is time Sri Lanka stopped selling itself as a beach destination. "We cannot compete with the beach resorts in Thailand, the Maldives and Bali, so we must develop a different unique selling point," said a hotelier from Kandy, which lies inland.

This shift in focus is evident in the recent promotional materials of the Tourist Board and the resurgent national carrier, Sri Lankan Airlines (formerly Air Lanka). The adverts and commercials now tout Sri Lanka's culture and history, its nature and wildlife, and the hill stations. The beach is present almost as an afterthought:

Sigriyaa fortress capital built on a 600- foot rock massif in central Sri Lanka, is to be the hub of future promotions. The authorities have been plugging this fifth-century architectural marvel as "the eighth wonder of the world", and there are plans for a sound-and light show and a large museum.

Inland-based adventure sports is also regarded as an arena for diversification, but it is still a fledgling; with just three professional companies providing packages for white-water rafting, rock climbing, canoeing, mountain-biking and paragliding. But most travel agents do offer safaris, bird watching, 'elephant trails' and tea garden visits.

There is also a renewed accent on conferencing and 'incentives tourism'. The Tourist Board has a unit to handle MICE (Meetings, Incentives, Conferences and Exhibitions) travel. This market, though, is overly sensitive to the security situation, particularly in Colombo, and will probably have to wait for a definitive advent of peace before it will fulfill its potential.

 So near, so distant

About five years ago, the tourism entrepreneurs of Sri Lanka began looking north to India for their clientele. More and more middle class Indians are travelling abroad on holiday, so why not lure them into Sri Lanka? But though large sums have been pumped into promotions in Indian metros, and theTourist Board now has an office in New Delhi the Indians are just not coming.

Several problems have been identified: Indian tourists like to shop, to gamble and maybe (just a few) to visit the resorts. Sri Lanka has failed to adequately meet these demands. Only the Taj Group's luxury beach hotel in Bentota,70 km south of Colombo, gets a fair number of Indians. Another problem is that, unlike Nepal which attracts a fairly large number of tourists (it also has casinos), the Indian rupee is not exchangeable in Sri Lanka. Indians must bring dollars and pay dollar rates. That apart, the high-end Indian guest does not see Sri Lanka as a prestigious destination, and the Hindi film industry has done its bit to divert the spending Indian noveau riche to the Maldives and Mauritius. Additionally, there is a severe shortage of airline seats to and from India. Sri Lanka has been talking with Indian authorities to increase airline capacity, but without much success.

Meanwhile, Sri Lanka Airlines, now managed by the Dubai-owned Emirates, has adopted an aggressive tourism policy. It began flying to Stockholm last November, trying to rekindle what was once Sri Lanka's best market in Scandinavia. The trade has also welcomed the airlines' new, direct thrice weekly flight to Australia. The carrier now flies daily to London and has increased flights to Germany (Munich and Frankfurt) and Japan. It also runs tourism campaigns, each targeting a specific country. Whether all this will give "boom" a nice name, only time and the LTTE can tell.

After the terror, the tax

TOURISM IS the most volatile of industries, and it is bad policy to have a civil war on if you want to cash in on euro-dollars. For decades now, Sri Lankan tourism's marketers have been fighting the civil war—the negative media reports it generates, and the 'travel advisories' it sparks off in the major markets from New York to Nagasaki.

The latest advisory, this one from the US State Department, issued in December 1999, says: "Although US citizens have not been specifically targeted, LTTE operations have been planned and executed with the knowledge that Americans and other foreigners may be killed or injured."

Says the Sri Lankan Tourist Board's director of marketing, Charmari Maelge, "We sometimes find these travel advisories exaggerating the situation. Then we bring it to the notice of the relevant authorities. "The Board's website (www.lanka.net/ctb) has this to add: "While only the bad news makes it to the television screens, for the most part life in the majority of the island continues undisturbed and in a peaceful manner."

It is hard to hide the fact that the separatist war that has claimed more than 55,000 Sinhala and Tamil lives does often spill over to other parts of the country, especially Colombo. An LTTE attempt on President Chandrika Kumaratunga's life at her 18 December election rally, which killed 26 people and blinded her in one eye, turned back what was amounting to be a tide in tourist arrivals. In March, eight suicide bombers made a daring rush-hour attack on a major highway leading to Parliament in Rajagiriya with an as-yet-unnamed politician as the likely target.

It's not easy painting the image of a tropical paradise over the grim images on television. There was little the Board could do when the luxury passenger liner Queen Elizabeth II decided against making a scheduled 12-hour stopover in Colombo, seven days after an LTTE attack in the capital. The liner made its way to India instead. Similarly, the MB Victoria and the MB Oriana which dropped anchor in Colombo the day after the incident, refused to let their passengers disembark for the city tours. The tour agent, Mackinnon, lost USD 40,000 on the cancellations. The passengers, who were on leisurely round the-world cruises, belonged to just that class of wealthy, dollar-laden visitor that Sri Lanka can least afford to lose.