The tourism industry can achieve seven million arrivals in five years provided the Government adequately supports the overall industry in marketing and assures national security, said NKAR Travels and Tours (Pvt) Limited Managing Director and past Vice President of the Travel Agents Association of Sri Lanka, Nilmin Nanayakkara, in an interview with Sunday Observer Business.
Excerpts from the interview:
Q. The tourism industry took a nose dive after the 2019 Easter Sunday attack. How far have we recovered from the impact of that?
A. That was the most unfortunate incident the country had to face since the end of the war against terrorism. Not only the precious lives were lost but also the whole country suffered, including tourism, by way of economic restraints. I think the tourism industry was the most affected.
The irony is that when looking back, I feel this could have been averted if the authorities were a bit more vigilant. Due to the negligence of a few, tourism industry went through the most turbulent period from April last year.
It was regrettable that there was no properly planned or well designed recovery process by those responsible in the then Government. There was only public addressing with idle promises. It is very evident that the trade has recovered by itself without much assistance from the Government.
It most certainly was not due to the championship of the then tourism authorities.
The biggest blow was the travel advisories by various countries. Travel trade organisations, mainly, Sri Lanka Association of Inbound Tour Operators (SLAITO) and The Hotels Association of Sri Lanka (THASL) contributed immensely to the recovery by way of negotiating and talking to the diplomatic missions.
Q. You said that the Government did not adequately provide assistance in the aftermath of the incident. Can you elaborate?
A. Even for business entities, which were struggling to obtain soft loans under the scheme were in dire straits due to slow decision making. Most institutions got their soft loans after about five months of struggle. This was due to lack of responsibility and leadership by the then Finance Ministry.
Unfortunately, lots of small timers did not get any support under this scheme.
It showed a progressive demand since last November in the arrivals of bottom end. Young and risk-taking tourists made the first move taking the advantage of low pricing.
Thanks to Google and as the social media was very active, it was immensely helpful for the recovery. They were the sole promoters for the industry and not the then Sri Lankan tourism authorities, too true but sad to say.
Q. Now we are facing a different type of an obstacle in coronavirus. What is the impact of that?
A. The industry is heading for the second disaster within one financial year. As the tourism industry professionals, we are appreciative of the fact that China, on their own, prevented holiday makers and group travellers visiting other countries. However, the fact remains that China is the second largest tourist market for Sri Lanka. When that was unplugged, the industry got into troubled times in business of course. There are also hotels which are solely dependent on Chinese guests.
I honestly think that on President Rajapaksa’s directive, the Health Ministry, Tourism and Aviation Ministry, Foreign Ministry, Sri Lanka Tourism, Sri Lankan Airlines managed this crisis situation effectively. Bringing down the students stranded in Wuhan was the pinnacle. That offered maximum confidence to the world about effective crisis management abilities of Sri Lanka.
Chinese nationals domiciled in Sri Lanka, operating tour business without licence have gone quiet. They were undermining the licensed operators.
They are not concerned or bothered of the future of the industry. They are there when the times are good, when the times are bad, like now, they vanish.
It’s only the traditional licensed DMCs who are now chasing other markets that will help themselves and the economy. The Tourism Authority must realise this and not allow unscrupulous foreign operators to undermine the tourism business in Sri Lanka, including accommodation, restaurants and other services.
Q.Tourism must recover from the current turmoil as early as possible. As an industry veteran what are the immediate strategies you recommend?
A. We, as a Destination Management Company, are extremely pleased about President Rajapaksa’s approach to this all-important business which brings a large amount of much needed foreign currency. Chapter four of the manifesto of President Rajapaksa states his vision about the tourism industry.
Having seen his unyielding perseverance, the whole industry believes that the future of this business will achieve maximum growth. The soft loan scheme must be extended further to help the industry with easier payback conditions. Whilst appreciating the VAT reduction given to the Hotels, I must state that the tour operators were neglected there again placing full burden on them with no input credit on VAT.
It is regrettable that successive Governments have overlooked the contribution of tour operators who bring in 60% to 70% tourists to the country. It also is a hard fact that these tour operators collectively spend over Rs. 1.5 billion annually from their marketing budget for tourism promotion.
We strongly believe that the President and the Government must seriously consider these facts to recognise the tour operators (DMCs) role.
When Tour Operators (DMC’s) invest in promotions, we promote the country.
Q. What should be done to maximise the Return on Investment (ROI) of the tourism industry on the whole?
A. We need to create opportunities for tourists to spend on extra activities, on F&B, entertainment and perhaps on shopping as well. It is extremely urgent to introduce a Capacity Management Plan before we run into a huge surplus situation of rooms which will lead to a price war and dumping.
If you have a proper Capacity Management Plan one does not need to run around requesting the introduction of minimum rate structures that would not sustain in a competitive market.
In case the capacity of rooms are more of different categories as against the projected and planned number of arrivals certainly there is an issue and return on investment (ROI) would get lean due to competition. We must plan to prevent this situation in advance so that dead investment on accommodation could be prevented and this will be a huge stress reliever to the economy.
Q. Finally, how important economically is tourism and promotion of tourism to the country at large?
A. The President has already answered this many times. He has set a goal of seven million arrivals in five years with a monetary target of US$ 10 billion.
I can confidently say that this can be achieved provided the Government adequately supports the overall industry in marketing and assure of national security.
While the Government has to look after these two areas, we DMCs (the tour operators) will bring 60% to 70% of the set target.