Daily News Editorial

A pragmatic step

28 October 2016

More people are travelling today than at any time in human history and the numbers are only going to increase over the next few decades. In fact, tourism now accounts for 10 percent of the world’s GDP and employment. Asia Pacific is the fastest growing region in terms of travel and tourism – Boeing and Airbus estimate the region will need around 13,000 new aircraft over the next 20 years.

All countries are vying to become attractive destinations as tourism dollars are vital to a nation’s economy. Sri Lanka earned US$ 2,900 million (approx) in 2015 from more than 1.8 million tourists. There is every sign that Sri Lanka would be able to surpass 2 million arrivals per year soon. In a few years, it could become the leading foreign exchange earner for the country, beating expat remittances, garments and tea.

Most countries do not levy any taxes on the tourism industry, since it is a vital part of the economy. Besides, tourists already pay certain indirect taxes such as VAT when they visit and stay in a country. (There are some countries that even refund this tax for tourists). Thus a tax-free or low-tax environment is essential for the tourism industry to thrive.

In this context, the Finance Minister has reportedly agreed not to impose any further taxes on the Tourism Industry from the impending Budget. As disclosed by Tourism Minister John Amaratunga at the Hotels Association of Sri Lanka’s AGM, this is a welcome move. Moreover, the government will also explore the possibility of providing duty free concessions for the refurbishment of old hotels. This is commendable, since there are many tourists who prefer to stay at old or heritage hotels. Free of extra tax burdens, hotels and other tourism operators will be free to grow and invest.

As the minister had pointed out at this meeting, Sri Lanka must also aggressively promote religious tourism, agriculture tourism and medical tourism. People in most other Buddhist countries have a very low level of awareness on our Buddhist culture and places of worship. There should be more organised pilgrimages from other Buddhist countries. Health tourism can also be improved as Sri Lanka now has many world class hospitals and health facilities. MICE (Meetings, Incentives, Conferences and Events) tourism too is a growing trend – but Sri Lanka currently lacks a truly international convention facility. This lacuna must be rectified to secure a slice of the MICE pie for Sri Lanka.

For all these to succeed, Sri Lanka needs a solid “destination marketing” programme, but this has been on hold for many years, stunting the growth of tourism. Sri Lanka can stand out from the rest, with its unique mix of culture, nature and adventure as one slogan put it sometime back. Other countries spend millions of dollars for multi-media (inclusive of social media) country promotion campaigns and we cannot afford to lag behind in this intense competition. Any red tape that inhibits the tourism sector must also be removed forthwith and a worldwide marketing campaign initiated.

Sri Lanka will soon be having 45,000 rooms on offer for tourists (including major projects such as Shangri La, Grand Hyatt and ITC) but having rooms alone will not suffice if quality manpower is not available. Thus there is an urgent need for the hotel industry to recruit and train more students who can meet international standards.

If Sri Lanka is keen to receive four million tourists in the short term, there should be an increase in the number of airline seats into Colombo. With airlines such as Thomson (TUI) and KLM returning to Colombo after a long absence, there is every chance that this target could be achieved. More airlines are likely to call at Colombo once the BIA runway repair is competed next year. Sri Lanka should also try to secure a more pivotal place in the cruise industry. Hundreds of cruise liners go past our shores without calling at Colombo or Hambantota. The proposed cruise terminal at Colombo would be a major step forward. This is an untapped market that should be explored.

In keeping with Asia Pacific’s dominance of the travel market, there has been a shift in Sri Lanka’s tourism markets, with India and China overtaking Western Europe in recent years. This trend will be reinforced as the middle class in both these countries grow in numbers and wealth, coupled with the rise of Low Cost Carriers. In fact, it is now possible to travel to another country for as little as US$ 30 in some cases. Sri Lanka, however, should not rest on its laurels – it should strive to find more new markets such as Eastern Europe and Central Asia.

The intense focus on inbound tourism should not be an excuse for neglecting domestic tourism. There should be a cohesive strategy for developing domestic tourism, with the same tax concessions and incentives in place. The objective should be developing both inbound and domestic tourism in tandem to make it the number one industry.