THASL urges rethink of policies to unlock full potential of Sri Lanka’s tourism sector

• Says industry needs government to look at exceptional financial and development models 
• Calls for focus on SME sector as well
• Highlights 7 critical areas of concern, which require immediate attention to sustain tourism sector

By Shabiya Ali Ahlam
 

Sri Lanka’s tourism sector is in need of a robust set of policy, to allow it to unleash its full potential, The Hotels Association of Sri Lanka (THASL) said while asserting that the same old models on books may not work. 
THASL President M. Shanthikumar said the industry needs the government to look at exceptional financial and development models for the revival of tourism, with a focus on the small and medium-sized enterprise (SME) sector as well.
“The SME sector plays a critical role and so does the informal sector, which we estimate has almost the same number of rooms as the formal sector. These require to be regulated, so that they have the proper health and safety guidelines, the SLTDA licence and fall in to the tax net,” Shanthikumar said while addressing the association’s Annual General Meeting this week. 
Noting there is room for improvement, Shanthikumar went on to highlight seven critical areas of concern, identified by the stakeholders, which require immediate attention to sustain the tourism sector.

The first is the sudden increase of the liquor licence fees and taxes by the Excise Department, via a gazette notification issued this year; he called it “grossly unethical and unfair”. Under the new notification, a small hotelier, who paid Rs.454,000 last year, now has to pay approximately Rs.754,000, whereas the pay from larger hotels range from Rs.2.5 million to Rs.5 million.
The second is not awarding the tourism industry the export status, although 90 percent of the sector’s income is in foreign exchange. The status would benefit the industry and its stakeholders tremendously.
The third is local government taxes. The hotel sector contributes one percent of the turnover as the Tourism Development Levy (TDL) to promote and develop tourism but the Treasury does not provide funds for development and promotion. “The local government authorities are demanding the hotels to pay a further one percent tax on turnover, whilst all other industries such as banks, hospitals, supermarkets and apparel only pay Rs.6000 per annum. These industries record much higher earnings than hotels,” said Shanthikumar.
He asserted that the hotels too must pay the same rate as all other industries. 
“This has been a burning issue for the hotel industry for over 10 years and over 200 legal cases are pending. Why is an industry, with such high forex earnings, being penalised and discriminated?” he questioned.
The THASL members continue to spend over Rs.3 billion annually for overseas marketing and promotions. This is in addition to the TDL. 
The fourth is the issue of lack of skilled and unskilled staff at all levels. Shanthikumar stressed the need to develop the necessary human capital in large numbers on a priority basis and to reorganise the Sri Lanka Institute of Tourism and Hotel Management to churn out the much-needed hotel sector staff by training the youth to fit in to the hospitality industry. 
The fifth is the delay of rolling out the global tourism promotional campaign, as the country has not had a global tourism promotion campaign in place for the past 15 years. 
“We have seen in the past that to plan and roll out a new campaign takes a very long time. Time is of essence, if we are to achieve the proposed arrival targets. The competing destinations such as the Maldives, Vietnam, Thailand and Malaysia are carrying out very effective campaigns in key source markets,” he stressed.
The sixth is the formation of a high-powered committee for tourism, as the industry encompasses and needs the corporation of many other sectors such as cultural sites, wildlife parks, aviation, railways, etc. There are over 18 ministries that are related to tourism activities. 
Shanthikumar asserted it is critical that the decision makers involved in these ministries are well aware of the importance of tourism and its benefits to the economy and community at large. 
As ad hoc decision-making by individuals or organisations can jeopardise the growth of tourism, the industry called for the establishment of an inter-ministerial and inter- ministerial secretaries committee, headed by the president.
Lastly, the development of MICE, a key element in achieving the targets planned in tourist arrivals.
Sri Lanka at present only targets small conferences, as Sri Lanka does not have the capacity such as Dubai, Kuala Lumpur or Singapore.  The island nation is an emerging destination and there is an opportunity to strategically work towards attracting this segment by building the required capacity, with a state-of-the-art conference and exhibition centre, which can house approximately 6000 pax  within 30 minutes from the city of Colombo, he said.
“The finest luxury accommodation in the country is available in the city of Colombo, with the highest number of rooms. If there is no strategic thinking to target this segment, the Colombo hotels will never be able to achieve the desired occupancy levels and will continue to sell at the cheapest prices.”
Shanthikumar acknowledged the issues faced are highly complex, which require to be handled in an efficient manner. However, he expressed confidence in the issues being ironed out strategically for the overall benefit of the industry.