Luring 2.5mn tourists by 2016 unlikely: report

By Chandeepa Wettasinghe 
Sri Lanka will not be able to entertain 2.5 million tourists by 2016 as claimed by the previous government, according to an industry report, which also called for a harmonized grading system for accommodation.

“Achieving 2.5 million tourists by 2016 is not a pragmatic goal. For the country to reach 2.5 million visitors by 2016 the annual arrivals should increase by approximately 28 percent per annum,” the research arm of Bartleet Religare Securities (BRS) said.

The country attracted 1.53 million tourists in 2014. While the compound annual growth rate of tourists from 2009 to 2014 was 27.8 percent, tourist numbers grew by 19.8 percent year-on-year (YoY) in 2014 and has grown by just 14.1 percent YoY for the six months ending in June so far this year.

Experts have attributed the slowdown of the numbers to the dying off of the post-war euphoria and the lack of proper integrated marketing campaigns.

“The country over the past considerably lagged in promotional campaigns in the correct source markets. However, the authorities are now taking steps and working towards fostering and attracting more awareness to the island nation thereby contributing to the arrivals growth,” BRS added.

However, it said that to accommodate 2.5 million tourists, the country must have a greater supply of hotel rooms.

“We believe the industry needs around 25,000 more graded rooms to accommodate this target,” BRS said.

According to the report, there were 18,078 graded rooms available in 2014, which is set to increase by around 5,100 by 2019.  However, 7,959-room strong non-graded accommodation sector, for which free independent travellers are more attracted to, is growing at a faster pace than graded accommodation despite the questionable service standards.

“Lack of a harmonized grading system affects the overall service standards of the industry. The industry needs a standardized grading system that spells out the minimum requirement of service standards to ensure the safety and comfort of the establishments’ guests,” the report said.

The current star classification system was established in a 1966 Gazette notification. While it was somewhat updated in the Tourism Act of 2005, most requirements remain outdated and take into consideration only technical aspects, such as 150 centimetres of the wall in the staff dining areas being covered in impervious material to facilitate cleaning.

Further, most travellers now rely on online booking portals where they rely on peer feedback.

“Adverse service reviews will hamper future occupancies. This illustrates the need for a harmonized grading system and minimum service requirements that should be strictly enforced on individual properties,” BRS said.

The report also stressed the importance of Chinese travellers who are globally considered as the highest spending tourists. While this is evident from Chinese patronage of the Maldives, it is not reflected in Sri Lanka, with the average daily spending per tourist remaining around the US $ 150 mark.

Local hoteliers have complained that the Chinese, who mainly travel in groups, attract the lowest rates. The new regime in reflection said that European tourists will be the mainstay, with Chinese tourists being a welcome bonus. However, promotions are now being conducted in affluent Chinese provinces such as Guangdong, which boast gross domestic products (GDPs) far larger than the advanced economies in the world.

BRS said that affluent Chinese and Indians will only visit Sri Lanka if extensive entertainment and shopping experiences are created, since the new regime has put a stop to casino development.

It added that gaming and MICE (Meetings, Incentives, Conferencing, Exhibitions) tourism could have bridged the gap to achieve 2.5 million tourists. The new government is attempting to promote Sri Lanka as a MICE destination, despite its infancy compared to destinations such as Hong Kong and Singapore, which attract around 2.5 million and 4.5 million MICE tourists annually, respectively.