By C. Samaranayake
For the last few years Sri Lanka has achieved a remarkable tourist influx mainly due to the prevailing peaceful situation of the country, policy decisions of tourism authorities and aggressive promotion.
From around 450,000 tourist arrivals in 2008/9 season, Sri Lanka has reached a landmark arrival rate of 1.5 million tourists per annum. The future looks promising and Sri Lanka is on the way to create a leisure industry of around US$ 4 billion annually at realistic levels. This will make the industry the third highest forex earner next to foreign employment and the apparel sector.
Sri Lanka possesses many breakthrough tourist attractions such as sandy beaches, plantations, adventure exploratory excursions ,precious gems/jewelry, a variety of fruits, sea food and health drinks, bird parks, wildlife sanctuaries, religious and historical places, quality apparel industry, value added shopping malls etc. above all the literate and friendly people would enhance the standards of all leisure activities. Even Singapore, Dubai or Hong Kong do not boast of so many natural tourist attractions. The great film magnate Stephen Spielberg described Sri Lanka as a hidden treasure and a paradise.
Weathering the storm
The leisure sector in Sri Lanka is greatly hampered by the brain drain of qualified and experienced staff. The sector has so far weathered the storm and have managed to retain the top executives and even attracted expatriate executive staff to improve the quality standards.The rupee depreciation would pave the way for higher profits in the short and medium term.
The priority points for the sector are enumerated for the benefit and guidance of the sector.
All hotels should engage in a SWOT analysis, i.e. strengths, weaknesses, opportunities and threats for their individual hotels and devise strategies for achieving the desired profitability levels for 2016.Off season strategies are extremely vital to ensure profitability or at least the break even status. The hoteliers, travel agents and the tourism authorities should engage in a structured exercise to monitor the ever changing scenarios in Sri Lanka and abroad and devise rapid strategies to attract high net worth tourists who are hunting for exclusive locations to spend their vacations. The tourism themes, products and markets undergo constant changes which may be caused by even an isolated incident. According to media reports Sri Lanka is likely to enjoy a bumper season. As a result, the other standard hotels in the vicinity of major hotels are likely to benefit from the spillover effects.
We must address one important problem on a priority basis. A recent international survey has revealed many shortcomings at the Colombo international airport such as harassment by the porters to carry luggage, unclean toilets, inadequacies at waiting areas etc. These shortcomings were highlighted in print media recently. The problems faced by the visitors at the airport should be immediately rectified by a panel from the airport and tourism authorities with the assistance and directions of hotel associations.
The visitors to the country get their first impression of the country at the airport, the point of entry to the country. Initially, a daily monitoring system should be introduced on a 24-hour basis, especially during the peak hours. Responsibility centres need be created on shift basis. After the successful completion of the deficiency rectification programme the authorities need to invite the same rating authority to evaluate the progress made and to report same in their web sites and other print and electronic media. We must endeavor to achieve the standards of changi airport in Singapore.
Getting back to the hotel services, the reception, room service food and beverage orders, house keeping and the business center play a pivotal part in guest satisfaction. Repeat guests will accrue to hotels mainly by way of satisfaction from the services provided. A very informative travel center located closer to the reception will definitely ensure substantial additional income to hotels. Theme tours such as Colombo by night, city tours, shopping and day excursion tours are some of the examples. The guests are sure to get a value for money spent vacation also.
In certain overseas hotels budgets are prepared on a one-to-one return basis for extra income in comparison with the room income. Hotel functions like weddings, parties, conferences, etc. should be planned meticulously to avoid all inconveniences to the resident guests. Separate entrances and exit points are provided by some hotels for external functions and even night clubs. Specialty restaurants are also needed for the reserved type of guests who prefer privacy and exclusivity and also to spend time in an exclusive environment with very personalized service rather than going out of the hotel and returning late.
Staff training
Staff training prior to the commencement of the season is of paramount importance. The available staff cadres be specifically trained to handle crisis situations such as guest complaints, unruly behavior by guests,injuries to guests inside hotel premises,etc. The span of control for staff should be at manageable levels. Environmental pollution and local by laws also should be included in the training programmes to avoid payment of compensation and damages. Hotel security services are inter connected to the maintenance of above standards.
The three most important aspects of achieving desired profitability are the avoidance of profit leaking, credit control and working capital management and the tax planning aspect. Profit leaking arises from many sources mainly from loose controls in food and beverage departments, non employment of power saving methods, forced negotiation of room tariff rates, lack of outlet controls, etc. All discretionary costs should be avoided other than the pre planned and budgeted CSR project costs to fulfill social obligations. To raise staff morale and productivity, measures such as quality meals, uniforms, attendance bonus, profit bonus, accredited training programmes would play a major role. However, at the bottom end, a steady stream of dividends need be guaranteed to the shareholders by the directors and the management. In addition, adequate funds be transferred into reserves for maintenance, capacity enhancement and periodic refurbishment.
Fund management
In the case of quoted companies, the additional funds could be raised by rights issues and debentures. Others will have to negotiate long term finance if internal funds are not available. Tax planning exercises should be carried out regularly to avoid huge liabilities at year end with penalties. Credit control is an integral part of working capital management. The credit control policy will directly affect the liquidity of any hotel. Sound working capital management will ensure avoidance of external temporary finance such as bank overdrafts which carry high interest.In conclusion the employment of good governance measures will ensure the long term survival of any hotel.
(The writer has extensive experience in the sector for over 35 years as a consultant in hotel management and restructuring in Sri Lanka and abroad to achieve higher profitability and is also a qualified financial specialist and a corporate trainer in value added hotel management. He can be contacted via: [email protected])
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