Driving Sri Lanka’s tourism industry vision

18 December 2013 04:37 am - 0 - {{hitsCtrl.values.hits}}

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By Sugath Rajapakse

Peer-to-peer market needs accommodations, cars/parking, eating and experiences. Sri Lanka is well represented in the accommodations with rooms and houses across the country and rates ranging from US $ 10 to US $ 695 per night.

Also, accommodations feature private gardens and micro campsites. Micro camp facilities are not found for Sri Lanka in these sites. For eating, many restaurants in Colombo and Kandy and even in Anuradhapura are featured. With quality restaurants now in many cities in the country, such places too need to be featured in these sites.

Sri Lanka needs to develop more and more micro campsites and expand the portfolio of accommodation currently available on various websites. Incentives may be provided for such hosts, which will ensure permeation of benefits to a larger mass of people and that will provide them with an income outside the normal sphere of income.

Accommodation could range from those with wattle and daub walls and thatched roofs to upper level residencies. The peer-to-peer market is one that seeks new experiences away from the traditional and here Sri Lanka has the necessary mass of such residencies.

Based on the room nights statistics it can be safely assumed that the peer-to-peer market has moved beyond the innovators and early adopters to that of the early majority. For its healthy growth in terms of Sri Lanka product we need to reinforce all the touch points, be it accommodation, cars/parking, eating or experiences. The peer-to-peer market expansion has a direct impact on the traditional market segments. Indeed even in a place such as Singapore, visitor arrivals though on increase are converting to fewer room nights and even RevPAR has decreased by 2.6 percent for first four months of 2013.

The peer-to-peer market has taken foothold in Singapore evidenced by the accommodation featured in the websites catering to this market.

Also, in the hotels sector, focus needs to be on TrevPAR yardstick as spend capacity of different innovators differ across the spectrum of profit centres, such as restaurants, conference space, meeting rooms, spa, etc. in the property and thus the focus will be beyond the room rate only.
This means that those hotels with a clear understanding of the most profitable market segments are in a position to operate and compete more effectively and have a greater control over long-term profitability.

Hospitality plant and occupancy vs. RevPAR
The sources that generate these travellers/guests can be:

Tour operators
Travel agents
Internet
Agent sites
w Multi-hosted sites
Hotel sites
Walk-in customers

Today, Sri Lanka’s hospitality industry depends on tour operators contracting for the bulk of their customers. Direct bookings are on the increase with many independent websites offering hotel inventory and a choice of hotels. With new emerging segments veering away from hotels, despite increase in arrivals, there is a threat to the occupancy levels in the hotels Due to the marketing lead-time needed in the generating countries, the tour operator/hotel contracts are finalized sometimes up to one year before the period of actual realization. For example, major tour operators in the UK release their main brochure at the beginning of the year for the following year. This means that the bulk of the inventory is under the influence of the tour operator.

Therefore, there is an acute need of forecasting capability for the hotel/s providing guaranteed last room availability to tour operators to optimize inventory usage. Small hoteliers who do not have the financial muscle or the critical mass needed for implementing revenue management (RM), should look at networking to create a sizable critical mass and implement RM for their benefit. Sri Lanka also should look at creation of web portals for accommodation to the peer-to-peer market.

It is important to note that the RM systems do not make marketing decisions. The system will try to achieve the goals based on pre-defined parameters that are set in. Setting marketing goals and defining strategies have to be done by the management.

It must be borne in mind that the size of the hotel is not so much a factor. Successful implementations can be achieved in properties from 40 rooms to 1000 rooms. Greater the complexity of the market place, more the mix of market segments, greater the peaks and valleys in occupancy, greater will be the benefit to the hotelier.

Building capacity for peer-to-peer
The new innovation peer-to-peer segment is not known to use the traditional hotel accommodation and even the traditional tour operator for transportation and guiding. Therefore, to increase the arrival of this segment guests, Sri Lanka needs to build capacity. Capacity building must be done on:

Micro campsites
Guest accommodation
Transport provider
Guiding

Guest accommodation
While focusing on penetrating the existing portals, new initiatives may be needed to increase the critical mass of accommodation for this market segment. Such initiatives could be broadened to cover the extended home market of South India and even places such as Singapore, Malaysia, where the peer-to-peer market is very prominent. Sophisticate sites such as Airbnb, Inspirato and Portico have become polished online house-rental behemoths. Accommodation could be found in these sites with cost ranging from US $ 10 to US $ 695 per room night or for the whole house. The traditional tour operators too need to divert attention to the more affordable and casual lines of tours.

Hoteliers must find ways of using the peer-to-peer market to boost their occupancy. This can be done through networking with the peer-to-peer accommodation providers so that tourists may stay in hotels as well as peer-to-peer accommodation.

Hoteliers should try to mirror the lateral integration done by airlines using third party accommodation, transport and other services. Thus, the Sri Lankan hoteliers need to look at how the peer-to-peer critical mass can be integrated to the hotel critical mass of rooms for mutual benefit. Independent hotel networks as well as standalone hotels should develop their own internal strategies.

The peer-to-peer accommodation can range from wattle and daub to the high-end with necessary amenities. Here we need to build the critical mass to about 10,000 independent accommodations from North to South and East to West. Communities can range from farmers to the upper middle class, who will benefit by way of extra income at minimal cost. Building 10,000 hotel rooms would cost more than billion dollars where as independent accommodation can be created at a very reasonable cost. Also, employment generation will not get isolated to a few places in the island but across the country.

The administration could provide incentives by way of tax benefits, necessary bank loans to increase the critical mass so that more people will seek to enter this stream of revenue. This would mean permeation of the industry benefits to a greater mass of people who could even be the low income earners.

Transport provider
Providing transport can be by established tour operators as well as independent people who would be willing to earn the extra dollar. Normal cabs to bikes are the usual modes of transport and now with the ease of travelling round the island, even the public transport. One can already see these phenomena with increasing bike use and public transport use by tourists.

Micro campsites
No micro campsites are currently featured for Sri Lanka. Campinmygarden.com has a few in Thailand and in India. Sri Lanka now is placed in an ideal situation to promote this segment of tourists.

In Kashmir, in a bid to protect wildlife and promote tourism, a micro campsite was opened last month, where the campsite is made principally of natural material such as wood and grass. Some of the villus in Wilpattu, such as Kali Villu, Marai Villu, could be considered as micro camp sites and could be featured.
In conclusion, it must be stated that the target of 2,500,000 tourists by 2016 can be achieved with these new initiatives and relooking at securing the lost segments such as charter tourists.

(Sugath Rajapakse can be contacted at Sugath_ras@sltnet.lk)

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Driving Sri Lanka’s tourism industry vision

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