Hard Times for Hotels, also at ArugamBay

SRI LANKA: Livelihoods at risk as tourism sector slides

COLOMBO, 9 October 2008 (IRIN) – Sri Lanka’s struggling tourism industry – hard hit by the conflict between the Liberation Tigers of Tamil Eelam (LTTE) and government forces, and with security concerns increasing in Colombo, the capital – is banking on the island’s traditional attractions to lure tourists back again.

Government and industry officials have renewed promotional campaigns marketing a varied assortment of attractions, including safaris tracking wild elephants, eco-tourism, nature tours and visits to archeological sites.

The promotional campaign comes at a time when the industry has been hard hit by the tense security situation. Tourist arrivals have recorded alarming slides, according to industry officials. In August 2008, monthly tourist arrival figures fell by 31.4 percent compared to last year, according to Tourist Board statistics.

In July the drop was 25 percent and in the first eight months of 2008, arrivals indicated an increase only in January, March and May, while during that eight-month period overall arrivals fell by 8.2 percent to 288,000 from 313,000 in 2007.

Tourism contributed about US$1.03 billion, or about 3 percent of gross domestic product, in the last year, according to the Sri Lankan Tourist Board.

“Arrivals have dropped because of what has been happening [on the security front] and things have been difficult for the industry,” George Michael, secretary to the Ministry of Tourism, told IRIN. The slide in the industry has been continuing since 2007. The Department of Census and Statistics said in its economic performance report for 2007 that arrivals had fallen by 11.7 percent in 2007 to 494,000 (from 559,000 in 2006). The conflict escalated in late 2006.

Village economies affected

Hotel operators warn that the downturn in the industry will not be limited to the number of falling arrivals or occupation rates.

“Entire village economies can depend on a single hotel,” Dayal Fernando, the general manager at Amaya Reef Hotel, a beach front hotel at Hikkaduwa on the scenic southern coast, 100km south of Colombo, told IRIN.

“When the hotels lose business, the suppliers in turn feel the pinch and it will impact their employees and those in the transport sector or on the farms that provide food for the tourist trade,” Fernando said. “Most of the hotels also employ a lot of people from the area and if retrenchments start, the local economies will be the first to feel the heat.”

The Census and Statistics Department’s Labour Force Survey for 2007 found that over 100,000 people were employed in the restaurant and hotel sector and of that 56 percent were employed as informal employees.

A recent World Bank report said the Sri Lankan tourism industry had lagged behind regional growth levels for over two decades.

“Tourist arrivals have not increased significantly compared to 1982 despite a six-fold increase in tourist arrivals in East Asia and the Pacific during the same period,” the Bank stated in its World Bank Country Assistance Strategy for Sri Lanka released on 6 October. The report also said that tourism was one of the areas identified for future assistance.

Tourist Ministry Secretary Michael feels that there are already small signs of a recovery. “There is a slight increase in forward bookings in the winter season (from November 2008 onwards). Our hope is that the trend will continue.”

However, hotel manager Fernando feels that a permanent turnaround for the fickle industry can only be expected once the violence ends.

“We really don’t need marketing gimmicks,” he said “It is a beautiful island and if there is no war, tourists will flock to it.”

Hotel operators said they had not yet assessed the impact of the global credit crunch but expected it to put further strains on the industry.

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