Excerpts of the address at World SKAL Day Dinner
From time immemorial, Sri Lanka has been well known for its hospitality, and we have on record many accolades from visitors in the annals of Sri Lankan history including Far Hein, Mark Twain, and Marc
From time immemorial, Sri Lanka has been well known for its hospitality, and we have on record many accolades from visitors in the annals of Sri Lankan history including Far Hein, Mark Twain, and Marco Polo, to name a few. Tourism was recognized as an important industry in the 1960s and was formalized through the Sri Lanka Tourist Board (SLTB) Act No. 10 of 1966 to promote tourism in Sri Lanka, and subsequently augmented by the Tourist Development Act No.14 of 1968.
Today most of the sectors of the economy are rebounding rapidly after the eradication of terrorism, almost 3 years ago. Sri Lanka is in the limelight of the business world, due to its exciting growth potential. Companies are returning very healthy growth figures, and tourism appears to be rebounding back, much more strongly than any of the other sectors of the economy.
There is a rush to develop and grow tourism in Sri Lanka, and a large number of hotels are in the process of being built. It’s in this context that it may be worthwhile to analyze Sri Lanka tourism as the engine of growth for the economy, in an environmentally sustainable manner.
The current status of the tourism industry
Before looking at the future prospects, it is important to be prudent and pause awhile to assess the exact current situation of the tourism industry in Sri Lanka.
Having being buffeted around by both internal and external impacts for over two and a half decades, suddenly Sri Lanka Tourism is enjoying the bright light at the end of a long dark tunnel. Arrivals to the country started increasing immediately after the war, which shows that tourism is really a “front-end” industry. While it is the first to go down in the face of security problems in the destination, it is also the first to rebound once tranquility returns. This confirms that tourism is really an industry of peace.
The year, 2010 showed a spectacular 46 percent increase, with arrivals exceeding 650,000, and 2011 was a further improvement of 31 percent YOY, driving arrivals up to 850,000. The trend appears to be continuing in 2012, and we should hit the magical 1 billion arrival mark if all goes well this year. It is noteworthy that not only the arrivals are growing spectacularly, but earnings from tourism have also kept pace, with 2011 showing US$850 million in revenue, up 40 percent from 2010. Hence there is no doubt that tourism in Sri Lanka is on a fast-track growth mode.
Marketing & promotion
There seems to be a line of thinking today that since the war has ended, we do not need to do anything to promote tourism and that we only need to improve our infrastructure, and tourists will flock to Sri Lanka. Certainly the decisive ending of the long drawn-out conflict is something unprecedented, which we all have to be thankful for. However, one must not forget that during all the time we were having our internal strife, other Asian countries were moving rapidly forward, devoid of any shackles. So in reality what has happened now is that we have regained a clean slate only.
We cannot run away from the fact that in today’s world, marketing plays a vital role in everything. There is stiff competition from the Asian region. Our Asian neighbors, such as Thailand (who had their own series of problems), Malaysia, Singapore, Bali, etc. have strong marketing and brand development campaigns, strengthening their already solid, differentiated brands and positions as prime tourism destinations. Singapore has already “re-branded,” shedding their squeaky clean image, and opening up casinos, resulting in visitor arrivals for a single month averaging at 1 million now. The product offering of these countries is also far superior to what Sri Lanka can offer on a one-to-one comparison.
Tourism as an export industry and value addition
Tourism, although not classified as an export industry, earns substantial foreign exchange with its high value-added component. Unlike some of the other foreign exchange earning sectors, most of the inputs and raw material for the operation of tourist hotels are local, yielding a high-value addition.
In the tourism industry, goods and services are consumed at the point of production, where tourists would come to the resort, possibly in a remote location of the country, resulting in greater benefit and impact to the rural economy.
So in this light, one can perhaps begin to understand the excitement and emphasis that is being placed on tourism as a sector, that can drive quick economic prosperity in the country.
Sri Lanka tourism was suddenly put into somewhat of a spin about a year ago, when HE the President came out with a target of 2.5 million tourists by the year 2016. We certainly do not know how this number was arrived at, and even now no one has really questioned it.
So for Sri Lanka for better or worse, a 2.5 million target of tourists (or something very close to that) by 2016 is now an accepted fact among everyone in the industry.
If Sri Lanka tourism moves forward on a strategically-planned basis in meeting these growth targets, there is a good chance that by 2016 tourism can generate close upon US$2.4 billion as earnings per annum. Per tourist night spent will rise dramatically from the current US$90 to around US$150.
To service this growth, total employment (both direct and indirect), would rise to around 1 million in tourism. Considering 4 persons to the average family, this then translates into close upon 4-5 million people whose lives are linked in some way to tourism, which would be close to 20 percent of the entire population of Sri Lanka.
Therefore, the numbers are very exciting without doubt.
Now let’s pause a while to discuss about sustainable tourism. Sustainable tourism is defined by WTO as “tourism which meets the needs of present tourist and host regions while protecting and enhancing opportunities for the future.” In a more basic manner, this is the balance of the business of tourism against conservation and local involvement. This is more popularly known as the Triple P (PPP) approach – Profit, People, and Planet.
Hence it will be useful to assess where Sri Lanka stands within this framework of sustainability.
There is no doubt that tourism is a very profitable business today as indicated earlier. All hotels are making high profits, with one 5-star hotel in Colombo expecting to generate Rs 1 billion net profit this year. A hotel down south is boasting of a service charge in excess of Rs 45,000 per month. The SLTDA to date has received over 200 applications for new hotel developments.
All these statistics go beyond doubt to show that tourism is a very lucrative business in Sri Lanka today. So the profit angle of the three Ps is well covered.
A little known factor regarding tourism is the impact it has on the livelihoods on common people. Although the industry has only close upon 70,000 directly employed staff, there is large indirect work force engaged in the informal sector. This includes suppliers of vegetable, fish, meat, dry food, chemicals and additives for pools and laundry equipment, stationery, food and beverage and kitchen consumables, etc. Then there are the bands; entertainers; sellers of tourist souvenirs, such as wood crafts, silverware, batiks; beach vendors and beach operators; transport providers including those who hire buses, cars, vans, and three-wheelers, all who also depend on tourism.
It is estimated that this informal sector could be as much as 3 times the formal sector. Thus, it can be safely concluded that some 240,000 people are directly and indirectly involved with the tourism industry. If one were to assume 4 persons to a family, the number of dependents on tourism would then be close upon 1 million persons or some 5 percent of the current population of Sri Lanka.
It is evident, therefore, that tourism in Sri Lanka has a profound effect on the large informal sector of the economy.
At this juncture we are unable to clearly identify the economic benefits that filter down to the “smaller” informal players in the industry. But the trickle down multiplier effect is quite considerable in the tourism sector, especially in the Asian region. In a study done recently and quoted by Air Asia, it was revealed that while tourism earnings of Malaysia and Thailand amounted to some 6-8 percent of their respective GDPs, when the multiplier effect, which is about 12 times, is applied, the impact on GDP shoots up to close to 20 percent.
The last aspect of planet is where, I guess, Sri Lanka tourism scores very highly.
We have a 2,500-year-old history, virgin forests, royal palaces and sacred cities, cliff-top citadels, colonial strongholds, and temple caves. We have 8 World Heritage sites declared by UNESCO, and Sri Lanka is considered as one of Asia’s richest treasure troves of manmade and natural wonders.
Over 14 wildlife national parks and its surrounds in the country harbors about 3,300 plant species; 80 mammal species, out of which 16 are endemic; 480 bird species (33 endemic); 66 amphibians (19 endemic); 180 reptiles (101 endemic); and 240 butterflies (20 endemic). Sri Lanka has the largest density of wild Asian elephants and is home to the world famous “Gathering,” where the largest number of Asian elephants anywhere in the world gather on the open plains of Minneriya National Park each year from April to September. The seas of Kalpitiya, Mirissa, and Trinco have become popular viewing areas for dolphins, sperm whales, and blue whales.
Even though our forests have diminished by some 40 percent over the past century, Sri Lanka still remains relatively a green country. We have about 30 percent of the land area under some form of green covering, while boasting of one of the world’s few virgin forests.
We were ranked no. 36 in the “Living Green” rankings of Readers Digest magazine a few years ago, and no. 22 in the 2009 Happy Planet index published by the New Economics Foundation. Sri Lanka has a very low carbon footprint of less than 0.6 metric tons per person. Compare this with some of the larger more developed countries such as USA where the emission per person is about 20 metric tons per year.
Hence, there is currently no shortage of natural attributes in this compact 65,000 square kilometers of this land of ours.
In reaching for large arrival target numbers, there has to be careful thought given to environmental sustainability issues. If some 15,000-25,000 extra rooms are to be built in the country with over 2 million tourists “unleashed” annually in the country, without proper planning, there is bound to be serious environmental and sustainability issues. Such large-scale and fast-track growth has to be carefully planned and managed within specific tourism zones to prevent environmental and cultural degradation. This is the reason that the private sector has suggested large-scale zonal development of tourism in building these additional of rooms on the fast-track.
This will require large-scale resort developments on a planned basis in at least 4-5 designated zones in Sri Lanka. Individual hotel developments will not suffice. Such well-planned, large-scale tourist resorts can be designed to encompass sound sustainable environmental practices (eg., common, self-contained sewerage disposal facilities with recycling of water, solar lighting for resort public areas, no-build green belts within resorts, etc).
Such organized and well-managed, large-scale developments, contained in several designated zones, will help mitigate most of the possible negative fallout of the socio-cultural and environmental aspects. Building and subsequent maintenance should be under strict environmentally-sustainable guidelines. A large number of small-scale development strewn all over will not be a viable proposition to maintain Sri Lanka’s environmental sustainability nor will it be sufficient to drive the exponential growth required.
According to SLTDA figures, there are over 200 applications for new hotel projects, out of which final approval has been granted for 66 projects amounting to 3,700 new rooms.
It is very important that these new developments all go through a proper environment study to ensure that they conform to the relevant regulations, including coast conservation, environment, or UDA. However, there’s no one single overarching criteria which governs building of tourist hotels. Currently SLTDA is in the process of rationalizing the numerous regulations that are relevant under different government agencies.
At the request of SLTDA, the project that I’m now involved with, the EU-funded SWITCH ASIA PROGRAM – Greening Sri Lanka Hotels Project, spearheaded by the Ceylon Chamber of Commerce, has prepared a concise Good Practice Guidelines for the building of new tourist hotels. Also, we have been formally requested to prepare a New Green Accreditation scheme for Sri Lanka hotels, which now is in process of being drafted by us. The new hotels classification system is due to come in force in the next few months, and will include environment and energy conservation aspects for the first time. The SLTDA is also formulating another 20 Good Practice Guidelines, which will include the use of elephants for tourism (elephant rides), Jeep operators within wildlife parks, camping, whale watching, etc.
So on the face of it, there is considerable good work being done, but the challenge would be not be producing of guidelines and regulations, but the proper application and policing of regulations. As we all know, Sri Lanka has a surfeit of regulations, but implementation is extremely poor with the practice of “going around regulations by fair and foul means” unfortunately a common occurrence.
There is also growing concern by tourists themselves about environment and energy conservation issues today. A recent study done by one of the leading tour operators, Kuoni, revealed that 22 percent of their customers actively seek a sustainable holiday product, while 51 percent take sustainability issues into account when choosing a hotel.
However, this demand by customers for more transparent sustainability practices in hotels is still not strong enough. Until and unless the market demands such practices, these hotels will not actively pursue initiatives on their own. A case in point is the garments industry in Sri Lanka where about a decade ago any “sweat shop” was making big money. Today all leading international buyers insist that manufacturing plants conform to high environment and energy conservation and ethical standards. And the garments industry has completely transformed itself into ethical and environment friendly industry.
While sustainable consumption practices in tourism can be a powerful differentiation marketing tool, it also has a direct impact on costs. Most of such initiatives help reduce operating costs as much as 10-15 percent. Hence, it’s important to note that sustainability is not just about saving the environment but that it just makes good business sense.
At this juncture, a short introduction about the SWITCH ASIA PROGRAM – Greening Sri Lanka Hotels Project may be relevant. It is a totally EU-funded grant program, which is designed to help hotels improve energy, water, and waste management practices. The project provides free advice, energy audits, and training for hotel staff to improve their operations. The project is in its 3rd year of operations and is working with more than 200 hotels.
There is no doubt, that Sri Lanka Tourism today is poised to reap rich benefits after more than 25 years of strife, with definite hope and bright prospects on the horizon. It is the one industry that can bounce back fast after a downturn. We are also seeing that all long-term forecasts indicate that Asia will be the “theatre of action.” Growth in tourism, as we have seen, will have a great positive impact on a large number of peoples’ livelihoods.
Most importantly, tourism is an industry of peace. It brings people together and helps create harmony and understanding of another’s culture and lifestyle.
If properly developed, tourism can, therefore, become the most important and pivotal industry of this country, in this post war, nation-building scenario, having a great socio-economic impact on our people, while at the same time nurturing, protecting, and celebrating the wonders nature has endowed us with.
Let me end by quoting one of the greatest leaders from this part of the world, Mahatma Ghandi:
“The greatness of a nation and its moral progress can be judged by the way its animals and environment is treated.”
So our hope is that visitors to this wonderful land of ours will tread lightly, take only photos, kill only time, and leave only footsteps.