Lack of financial discipline and insight buckles tourism

At a time the tourist industry in the country is lagging far behind the set goals this is an overview of judging the effectiveness of the measures taken by the authorities to attract the tourists and help promote the tourist industry.   

At present there are over 5,000 tourist hotels registered with the Sri Lanka Tourism Development Authority (SLTDA). The presence of these hotels ensures there are 30,000 rooms to facilitate local and foreign tourists. Among these hotels 218 are permanent members of the Hotels Association of Sri Lanka.   

A special fund ‘Tourism Development Levy’ (TDL) was set up 12 years ago with the aim of promoting tourism. Sixty percent of the fund is allocated for promoting tourism and enhancing the training opportunities for the youth who have enrolled at Sri Lanka Hotel School.   

This fund is made of one percent of the tax collected from the total turnover of all the tourist hotels and part of the 15 dollars charged from tourists on their arrival at the airport and credited to an account of the Tourist Promotion Bureau. This account is operated under the Finance Ministry and the General Treasury. 

 
However a study of statistics in relation to tourist arrivals during the past years does not reveal any significant improvement in tourism in the country. This indicates the inefficiency of the Tourist Board in investing the financial resources available to achieve the expected goals. It’s also learned that there are instances of the money lying to the credit of the fund being utilistd by the treasury, for some other purposes beyond the scope of the fund.   

Until the end of war in 2009 the money under this fund was not used in the name of tourist promotion activities during the period because many felt doing so would be meaningless. Although SLTDA had conducted promotion activities after the end of the war, in some countries, deploying special officials, affiliated to the Sri Lanka embassies, a comparative increase in tourist arrivals has not been recorded.   

SLTDA has set a target of seeing the arrival of five million tourists. However during the past three years (since 2014) there was an increase of about 700,000 tourists. There is only 20 more months to 2020 and is it possible for the SLTDA to increase the number of tourists from 2,116,407 to 5 million (an increase of 2.4 million) during this period? Recording this achievement looks bleak given the existing slow progress in promotional activities.   

Utilising the fund   

When we inquired from Tourist Development Fund, the Minister of Tourism John Amarathunga said that some officials of the SLTB had spent the fund money without a proper plan during the past regime. But under the present Government this fund is utilized for the maintenance of four institutions functioning under the ministry of tourism.   

He also said that there are instances of this fund being improperly deployed by the treasury and he said that he hopes to inquire into these expenses incurred in deviation of the defined purpose.   

According to the minister plans are afoot to employ digital technology to tourism promotion programmes internationally; beginning from China and in Asian and European counties.   

From the revelation of the matters relating to tourism it is indicative that any significant action hasn’t been taken for the promotion of tourism in Sri Lanka during the past three and half years.   

These circumstances and the presence of instances of torments being exerted on tourists would not be conducive for the tourist industry in the country. All these negative factors would also adversely affect the SLTDA’s ambition of to achieve 5 million tourist arrivals by 2020.   

Cheap hotels affects target   

In response to our inquiries Hotel Association of Sri Lanka Chairman Sanath Ukwatte said the purpose in creating the tourism promotion fund has not been achieved and the attention of the authorities should be focused on its proper management.   

In addition to the one percent TDL levy for the fund, hotels are paying 30% tax to the Government. 

With this heavy tax component it has become very difficult for the hotels in the island to attract more tourists and offer them facilities at affordable prices. The tax collected from tourist industry in Asian countries like Vietnam, Cambodia andMalaysia is only ten percent and as a result a rapid development in tourism has been achieved.  

Ukwatte also said that although the Government expects to achieve a target of 5 million tourist arrivals most of the tourists – about fifty percent coming to Sri Lanka- seeks accommodation in cheap hotels with less facilities. Some of these hotels are even not registered with SLTDA. This situation would adversely affect the expected revenue from the tourist industry.   

Ukwatta said that Minister Amarathunga had promised to launch a wide international promotion programme to overcome these difficulties.   

The former Chairman of SLHA Anura Lokuhetti, expressing his views about the present state of tourism in Sri Lanka, said that the purpose of introducing the TDL to promote tourism hasn’t been achieved although a high tax rate continues to exist.   

He also stressed the need of utillsing the TDL fund prudently to promote the tourist industry as it is the third largest foreign exchange earner of the country. He also highlighted the need for the revision in the tax policy on tourism and the grant of other reliefs.   

He also said that various officers had been appointed to the Tourist Promotion Bureau with high perks. He also maintained that the Tourist Board and Hotel School weren’t able to carry out a satisfactory level of promotions to ensure the desired number of tourist arrivals, despite there being a regime change. 

Lokuhetti also stressed that those involved in the tourist industry should be vigilant of the movements of the TDL funds worth $40 million (Rs. 6,000) million as this money may be utilized for promotion activities outside the tourist industry.