Tourism industry awaits subsidised working capital loans

By Nishel Fernando
Sri Lanka’s crisis-hit tourism industry is anxiously awaiting the interest-subsidised working capital loans announced by the government under the financial relief package for the industry following the Easter Sunday bombings that crippled the once booming industry.

Although the government, earlier this month, announced the availability of interest-subsidised working capital loans for the tourism industry, The Hotels Association of Sri Lanka (THASL) President Sanath Ukwatte told Mirror Business that banking sector is yet to grant such loans to the industry.

“The banks are not implementing it yet. We are trying to find out the reason. We are also talking to the government to expedite the implementation as the government agreed for it in principle,” he said.

The Finance Ministry on May 8 announced plans to grant working capital loans at the concessionary interest rate of 3.4 percent for tourism sector establishments based on annual turnover, under the Enterprise Sri Lanka (ESL) programme with a two-year repayment period.

Issuing a circular on the same day, the Central Bank informed the banking sector to utilise the funds in ESL (Jaya Isuru) and Sawbagya Loan Scheme of the Central Bank to grant working capital facilities to the sector.

Meanwhile, Ukwatte noted that the tourism sector establishments and their permanent employees can now seek the one-year moratorium on existing loans from all licensed banks as the Central Bank had issued an explanatory note to banks clarifying who are qualified for the moratorium.

“It’s now up to hotels to negotiate the moratorium with banks, if there are any issues, the hotels can report to THASL. We will take it up with the Central Bank,” he added.

In addition, the Central Bank also issued another circular on May 21 to request the non-bank financial institutions to grant one-year moratorium on loans taken by the tourism industry.

Speaking on the special discounted promotional packages for tourists, Ukwatte said that the marketing campaign promoting these promotional packages in targeted destinations has to wait until the travel advisories on the country are either softened or lifted.

The tourism stakeholders were planning to carry an initial marketing campaign, targeting Sri Lanka’s largest tourism source market, India.

Ukwatte insisted that the government must take a lead role in the marketing campaign, as the tourism industry contributes one percent of their turnover to Tourism Development Levy.

Although, China last week softened their travel advisory for their citizens on travelling to Sri Lanka, Ukwatte expects that it will take several months for the tourist arrivals from china to bounce back.

“The Chinese airlines pulled out; hence, it will take couple of months to resume their operations,” he said.

Minimum room rate imposed on Colombo hotels removed

In a press release, Sri Lanka Tourism Development Authority (SLTDA) yesterday said the minimum room rate (MRR) imposed on city hotels in Colombo has been removed with immediate effect.

SLTDA said the decision was taken taking into account the severe hit on tourism industry in the aftermath of the Easter Sunday bombings.

SLTDA also said “it’s better for the market forces to decide the room rates” rather than them dictating terms due to prevailing situation.

The bombings which killed over 250 people and injured over 500 people saw the hotel occupancy rates plunging below 10 percent.

The minimum room rates were introduced in 2009 following lobbying by 4-star hoteliers, so that they can compete easily against 5-star rated hotels.

Meanwhile, SLTDA said they were hopeful of getting the travel advisories on Sri Lanka lifted in the next “couple of weeks”, as authorities have been working closely with many diplomatic missions since the incident.

Last week, China softened the travel ban imposed on Sri Lanka to “cautious when travelling.”