INDUSTRYSRI LANKAN TOURISM
Sri Lankan Tourism Missed Opportunity? C Naga Pavan*
This article explores the current status of tourism sector in Sri Lanka and does a SWOT analysis of the same. It also discusses the challenges faced by the management of Sri Lankan tourism to attract more foreign tourists.
T
he tourism industry in Sri Lanka is the fourth largest foreign exchange grosser for the country after the textile, foreign remittances and tea. With a divergent weather and abundant natural resources Sri Lanka is a paradise for nature lovers. The soft beaches, the transparent waters, corals and the hilly plantations all are a mixture to entice any tourist to visit this beautiful land of “Serendib”. With a variety of attractions—for the family tourist, adventure travelers interested in mountaineering and diving and honeymooners—Sri Lanka has potential to be a major tourist attraction of the Asian Continent. Tourism contributed Rs. 36.3 mn in the year 2005 as a foreign exchange earner at 3.6% of the total foreign exchange earnings of Sri Lanka (See Table 1). The Sri Lanka Tourist Board maintains statistical data from nine regions. From 1999 to 2003, there is an above average increase in eight of the nine regions. In 2003 and 2004 five regions have shown an above average increase and two regions have shown a below average increase and two regions have actually shown a decline in the numbers of tourists. The tsunami that affected the Sri Lankan coast was a reason for the spurt in arrivals from major donors like US, which reflected in the changing demographics in tourist data. Tourists from traditionally strong source markets like UK, Germany, France and Japan had shown a decline from 2004 to 2005, as the beautiful beaches and the support infrastructure were terribly damaged. In 2005, region-wise there was a more than average increase in five regions and all other regions registered a decline. The overall market has shrunk by 3.0% since last year. Sri Lanka has, therefore, recognized the importance of attracting tourists from nearby countries and has designed special tourist routine and marketing campaigns for countries like China, India and Pakistan. The increase in the number of tourist arrivals from the South Asia is reflective of the impact of these educational and promotional programs undertaken. From around two-thirds of the total tourist traffic in 1999, the relative importance of Western Europe comprising mainly Austria, Belgium, Denmark, Finland, France, Netherlands, Italy, Norway, Spain, Sweden, Switzerland, UK and Germany has come down to around 40%. Conversely, the relative importance of the South Asia comprising mostly of India, Pakistan and Maldives has doubled during the period 1999–2005. North America, comprising Canada and the US occupies third position as a major source region with 8.4%, an increase of 100% from 1999 to * Faculty (Marketing), The Icfai National College, Hyderabad. The author can be reached at
[email protected] ©27 2007 The Icfai University Press. All Rights Reserved.
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INDUSTRY Table 1: Relative Importance of Tourism as FE Earner Sector
FE Earnings Rs. mn
1. Textiles and Garments
2004 % of Total FE Earnings
2005 FE Earnings % of Total Rs. mn FE Earnings
268,573
29.3
291,090
29.0
158,291
17.3
191,849
19.1
3. Tea
74,897
8.2
81,481
8.1
4. Tourism
42,666
4.7
36,377
3.6
5. Other Agriculture
16,446
1.8
18,439
1.8
6. Precious Stones
10,939
1.2
12,088
1.2
7. Petroleum Products
10,133
1.1
19,170
1.9
8. Coconut
5,936
0.6
11,400
1.1
9. Rubber
5,155
0.6
4,724
0.5
10. Others
322,820
35.2
337,432
33.6
915,856
100.0
1,004,050
100.0
2. Private Foreign Remittances
Total
Source: www.sltbstatistics.org Annual Statistical Report 2005
2005. The Asian Continent, of which Sri Lanka is a part, constitutes over 45% of the total tourist arrivals and is next only to 55% from Europe (See Table 2). Still majority of the visitors to Sri Lanka in country terms are from the Western European countries like UK, Germany, France and the Netherlands. India has taken the top spot as a source market in 2005 with the increase in tourist arrivals (See Table 3) and also job prospects for Indians in many Sri Lankan companies and MNCs operating in Sri Lanka. The Free Trade Agreement between India and Sri Lanka has also increased the profile and visibility of Sri Lanka as a destination of choice for trade, investments and recreation. Sri Lanka is trying to have similar agreements with other SAARC countries to speed up the economic growth in various areas and tourism is a sector where most major hospitality groups like Hilton, Hyatt and Taj (Indian Table 2: Relative Importance of Market Regions Hotels) have already invested. Market Region Percentage Share The decline in absolute numbers from more than half of the 10 countries who contribute three-fourth of the total tourists is a sign of worry (See Table 4). It seems that the attractiveness of Sri Lanka to European tourist is coming down and is slowly replaced by culturally different US, Indian and Australian tourists. The stakeholders in the tourism business have to realign their business strategies to these environmental changes. The percentage of the visitors coming to Sri Lanka on recreation, holiday and for site seeing has seen a slow decline which is reinforcing the conclusions drawn September 2007
1999
2004
2005
America-North
4.2
5.3
8.4
Asia-North East
6.4
6.5
6.7
Asia-South East
5.4
4.9
6.1
Asia-South
14.4
23.6
27.9
Australasia
3.5
4.7
5.4
Europe-West
63.2
50.2
41.3
Europe-East
1.4
2.5
1.7
Middle-East
1.1
1.8
1.9
Other
0.4
0.5
0.6
100
100
100
Source: www.sltbstatistics.org 28
SRI LANKAN TOURISM Table 3: Tourism Trends Purpose of Visit
2005 (Figures in Percent)
2005 (Figures in Percent)
World
India
Holiday, Recreation, Site Seeing, etc.
69.6
52.6
Private and Office Business
16.9
32.0
Meetings and Conventions
2.3
4.7
Visiting Friends and Relations
8.0
7.7
Others
3.2
3.0
Source: www.sltbstatitistics.org
above. Another statistics which amplifies the conclusion is the numbers of arrivals of chartered flights. There is a reduction in the number of arrivals of chartered flights. During 2005 only five European charter airlines operated flights to Sri Lanka, bringing a total of 5,223 tourists to the country, which was a decrease of 76.5%, when compared with the total of 22,231 tourists in the previous year. In terms of market share, the proportion of charter arrivals decreased from 3.9% in the 2004 to 0.9% in 2005. The spurt in cancellation of hotel reservations and airline tickets is a sign of the insecurity being felt by many tourists (See Table 5).
Purpose of Visit The official documentation with the Emigration and Immigration department where filings by every passenger landing in Sri Lanka is necessary, more than two-thirds of the total visitors to the Island are for recreational purposes. In the same year, half of the Indians have visited Sri Lanka for recreational purposes and around 18% have visited for business purposes. As the number of Indian tourist to Sri Lanka has increased for the last few years (it is the top source nation in 2005, see table 6), the change in infrastructure and the facilities in the hospitality industry in Sri Lanka becomes imperative.
SWOT Analysis With the above changes in the demographic profile of tourists to Sri Lanka and the changing nature of the tourism industry in the Island, the strengths and weaknesses affecting the industry have been identified and listed. An attempt is made Table 4: Top-10 Source Markets in 2004 to identify the opportunities and threats for the Market Total Arrivals Percentage industry.
Strengths • Multiple-tourism alternatives—beaches, coral reefs, fishing, diving, mountaineering, skiing, religious tourism, architectural tourism, historical monuments. North of Sri Lanka has attractive Hindu culture, gems and jewellery, health or ayurvedic tourism, plantations, natural reserves, waterfalls, lakes, elephants and safari, natural harbor and travel on Galle Road with a view of the ocean always available.
Share
UK
106,645
18.8
India
105,151
18.6
Germany
58,258
10.3
France
29,996
5.3
Australia
23,247
4.1
Netherlands
21,455
3.8
Japan
19,641
3.5
Italy
18,862
3.3
USA
15,126
2.7
15,013 2.7 • Friendly people, many follow English in and Maldives 413,394 73.1 around Colombo and other already established Total tourist destinations. Source: www.sltbstatistics.org 29
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INDUSTRY Table 5: Tourism Arrivals by Regions (1999, 2003 2004 and 2005) Market Region
1999
2003
2004
2005 03/99
04/03
05/04
America-North
18,477
25,110
29,759
46,457
35.9
18.5
56.1
Asia-North East
27,723
32,677
36,705
36,661
17.9
12.3
-0.1
Asia-South East
23,646
29,954
27,831
33,337
26.7
-7.1
19.8
Asia-South
63,006
114,700
133,532
153,353
82.0
16.4
12.9
Australasia
15,159
22,965
26,540
29,738
51.5
15.6
12.1
Europe-West
275,796
255,169
284,440
227,191
-7.5
11.5
-20.1
Europe-East
6,204
10,663
14,336
9,290
71.4
34.8
-35.2
Middle-East
4,821
6,789
10,463
10,236
40.8
54.1
-2.2
Other
1,608
2,625
2.596
3,045
63.2
-1.1
17.3
436,440
500,642
566,202
549,308
14.7
13.1
-3.0
World
Percentage Change
Source: www.sltbstatitistics.org
• Availability of international brands of hotels like Hilton, Taj, Hyatt and Sheraton. • Cost of living is average. • Old architecture of buildings outside Colombo. • Visa on arrival. • Short distances between various climatic zones and tourist places. More time in sight seeing and enjoying rather than traveling. • Availability of international brands of consumer goods imported from other countries for tourists to use without hassles. • High connectivity to Gulf, Europe and the US.
Opportunities
Sri Lanka has great potential to become a top tourist destination among SAARC nations because of the variety it provides
• Buddhist heritage shared with other countries. The Chinese market to Sri Lanka is booming. Tourist arrivals grew by 25% in 2004 and have apparently recovered from a post-tsunami downturn, registering 134% growth in May 2006 compared to the same month last year. The Tourist Board aims to attract 30,000 Chinese tourists by 2007. • Underwater ocean diving along coral reefs. • Ayurvedic and health tourism have a great opportunity for Sri Lanka. • Back to Nature Theme will be a great advantage to attract tourist from many developed countries, who are stressed out and want to relax. • Can be made in to a hub of business conferences and get together and AGMs if infrastructure related to business is improved. September 2007
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SRI LANKAN TOURISM Challenges • Making Local Tour Operators in target countries aware of the local hotspots, cultural, religious and wild life attraction. • Availability of tourist guides who can speak the language of the tourists, are courteous and can go out of their way to help tourists. • 99.9% of all foreigners entering Sri Lanka use Katunayake International Airport for their travel. No alternative entry points are available to visit Sri Lanka. • Facilities for international tourist—the international tourist expects comfortable hotel accommodation and support services.
Table 6: Top-10 Source Markets in 2005 Market
Total Arrivals
India
Percentage Share
113,323
20.6
UK
92,629
16.9
Germany
46,350
8.4
France
26,653
4.9
Australia
25,986
4.7
USA
25,272
4.6
Maldives
24,576
4.5
Canada
21,185
3.9
Japan
17,148
3.1
Netherlands Total
15,156
2.8
408,278
74.4
Source: www.sltbstatistics.org
Threats • Terrorist threat to foreigners is a reason why many people do not like to visit the Island. • Increased insecurity feeling because of attacks on southern port city of Galle. • Increasing competition from nearby Islands like Maldives.
Conclusion Sri Lanka has great potential to become a top tourist destination among SAARC nations because of the variety it provides. It is also a matter of interest that Sri Lankans are culturally very hospitable people and have always treated foreigners with respect bordering awe. The potential has to be realized, strengths have to be leveraged and opportunities have to be exploited. For this, the Sri Lankan government and companies working in the tourism industry, both client front and hospitality front have to work together and bring out attractions for the discerning tourists. It will be useful for Sri Lanka to be a part of the tourist trips organized by travel agencies to Singapore and Malaysia. It will also be a great help if faster travel arrangements can be made to bigger tourist attractions, which requires an infrastructure commitment from the government of Sri Lanka. The other area that the Sri Lankan government has to concentrate on is creating infrastructure to allow access to Sri Lanka through other airports than Katunayake in Colombo. Sea planes as used in Maldives will also be a good option for flying from one port city to other. Ocean cruises are another potential source of attracting tourists. Casinos are already available but should be more inviting for the average tourist who goes by the image of Las Vegas for a casino. From a macro perspective, the potential is there and the ability to make good on the potential and promise is available. However, micro management of the tourism industry from the government should be avoided and the individual players in this business— tourist operators, hotels, casinos, boat operators and diving schools—have to come together to create an unforgettable experience to the tourist. ♦ Reference # 02M-2007-09-06-01 31
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