CONTENTS

 Heading
 Tourism in Sri Lanka
 The New Trend of Tourism in Sri Lanka
 Statistical Data of Tourism Trend
 Conclusion
 Reference

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 The
New
Trend

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Tourism in Sri Lanka
Tourism is one of the main industries in Sri Lanka. More than two years after the defeat of terrorism, Sri
Lanka’s tourism industry can look forward to the future with confidence. Tourism has been identified as
one of the key industries to propel the country’s economic growth. The end of the 26-year armed
conflict saw a surge in tourist arrivals, with a record 46 per cent growth in 2010. Sri Lanka has been
globally acclaimed as one of the finest destinations for travellers seeking multifaceted attractions. The
country is also a relatively cheap destination in Asia, especially for Asians travelling within the region.

Major tourist attractions are focused around the island's famous beaches located in the southern and
eastern parts of the country, ancient heritage sites located in the interior of the country and lush green
resorts located in the mountainous regions of the country. A large majority of tourists come from the
United States, the United Kingdom, Canada, Australia, Germany, France, Maldives, Japan, the People's
Republic of China, and India.

Sri Lanka’s tourist attractions can be categorized as the south coast, for its beaches; the central hill
region, for its scenery and cool climate; the north-central area, for historical and cultural heritage; and
the western region, for more urban landscapes. Sri Lanka is home to eight world heritage sites: Galle,
Kandy, Sigiriya, Anuradhapura, Polonnaruva, Dambulla cave temple, the Central Highlands, and Lion-
King Sinharaja tropical rainforest.

Natural attractions such as wildlife parks and forest systems too offer a rich diversity across the island.
Few places in the world can offer the visitor such a remarkable combination of stunning landscapes,
pristine beaches, a captivating cultural heritage and other unique experiences within such a compact
location. Our country’s culture and biodiversity are still largely intact. Sri Lanka is home to eight UNESCO
World Heritage Sites.

List of famous tourist attractions

 Beaches and lagoons

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 Historic or Archeological Sites

 National Parks

 Proposed for Elephant watching

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  Adventure Sports

THE NEW TREND OF TOURISM IN SRI LANKA

Just over a year ago, Sri Lanka was facing in developing its tourism industry. Of course, that was
during the latter stages of the war, and now after the ending of the war, there has been a dramatic
turn-around of the industry. Hence it may be worthwhile re-visiting the issues.

For the last seven months that ended July 2010, arrivals are up almost 50 percent year-on-year
(YOY) (341,991), with earnings also keeping pace at 69 percent growth (Quarter 2; US$ 244.5
million).The hotel and travel Colombo Stock Exchange (CSE) index increased by 199 percent
for 2009. Today tourism is on everyone’s minds, and it is difficult to open a local newspaper
without seeing at least one article on tourism. There are tourism “experts” cropping up at the rate
of a-dime-a-dozen, as everyone tries to hitch a ride on the bandwagon.
All this euphoria gives rise to the question about whether Sri Lanka Tourism is well on the way
to recovery and growth or not.

The answer is a very emphatic “yes” — in the short term. There is no doubt that pent-up demand
for the destination, which has been inaccessible for many years, is driving growth. At the cost of
being labeled a pessimist and a devil’s advocate, I am of the view that all this spectacular growth
we see is definitely short term. In my mind, the challenge is whether these growth patterns can
be translated into long-term sustainable growth. Even if we sit back and rest on our laurels,
tourism will certainly chug along growing at a leisurely pace of 5-10 percent YOY. But if we
want to play catch up with our competition, grow exponentially, and propel Sri Lanka tourism to
be in the forefront of our economy, then there are many complex challenges ahead.
Competition from the region with the global financial crisis now petering out, very soon our
Asian neighbors, such as Thailand (who had their own series of problems), Malaysia, Singapore,
Bali, etc. will get their act together and join the fray, with strong promotional campaigns
strengthening their already solid differentiated brands and positions as prime tourism
destinations. Singapore is already re-branding from their squeaky clean image to a relatively
more exciting destination with casinos opening up. July of this year saw their highest arrivals
ever for a single month at one million visitors. The product offering of these countries is far
superior to what Sri Lanka can offer on a one-to-one comparison.
Hence as a first step, the ageing Sri Lanka hotel plant has to be refurbished and upgraded on the

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fast track. It is good to see that some 1,500 existing hotel room stocks are currently under
refurbishing and upgrading.

We can include all the new trend of tourism in the following main categories

 Sharp increase in tourism in 2010

The peace dividend for Sri Lanka in 2010 was a sustained increase in tourism receipts. This was
the first full year of peace and stability since internal strife ended in May 2009. The removal of
advisories from important Western markets quickly put Sri Lanka into the consideration plans of
tourists. Unwilling to disturb the rising trend, the government decided to continue with the free
visa on arrival scheme.

 Sri Lanka moves to legalize gambling

Taking a cue from neighboring countries, the government of Sri Lanka legalized gaming zones
in the country in November 2010. While gambling in some form existed anyway in the country,
this was an attempt to regulate and garner more revenue by putting into place a law and
designating specific areas. As the experience of Nepal and Macau showed, casinos can open up a
new line of tourism receipts. Predictably, this move evoked mixed reactions in the country.

 Eco-tourism in Visit Sri Lanka 2011 growth strategy

Sri Lanka built up eco-friendly tourism, with wildlife as its eighth pillar of growth, joining
heritage, beaches, sports, adventure, wellness, scenery, friendly people and festival tourism. Eco-
tourism sits well with more eco-friendly minded Western visitors. The country plans to develop
12 zones for eco-tourism, highlighting the fact that it is possible to see blue whales off its
southern coast between November and April every year and in the same country visit rain forests
with a wide variety of birds.

 Increase in flights drives value growth in 2010

Jet Airways, Kingfisher and Indian Airlines all doubled their flights from Mumbai, Delhi and
Chennai. Spice Jet, which obtained permission to fly to Colombo, started operations in October
2010. Given that India provides the bulk of short-haul visitors to Sri Lanka, this enhancement of
capacity is vital for growth. Sri Lankan Airlines started flights to Shanghai, adding to Beijing
and Hong Kong. In 2010, China Eastern Airlines became the first Chinese airline to fly to
Colombo. This development follows China’s greater involvement in Sri Lankan projects and
businesses.

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  Sustained tourism growth forecast

The forecast for Sri Lankan tourism is strong and sustained growth. Arrivals are projected to
grow at a CAGR of 6% over the forecast period. As the country stabilizes and gets its tourism act
together, investment in hotels, destination infrastructure and training is forecast to increase.

 Engine of Growth

Almost everyone talks about Sri Lanka tourism being the engine of growth and expects it to play
a pivotal role in the economy. This is nothing new, and we have heard this through the past
decade.

However, it has never really translated into action by successive governments and never has it
being given its rightful place in the national mindset.

There are many examples as to how the government pays lip service in positioning Sri Lanka
tourism as the engine of growth. For example, it is now four years since the annual Presidential
Awards for the Tourism Sector was set up, but never have the awards been presented by the
President. In fact, it has been gradually downgraded from the initial presence of the prime
minister as the chief guest, now relegated to a deputy minister to do the honors.
However, perhaps for the first time we see some signs of steps in the right direction in the
consolidation of tourism along with other related subjects under one powerful ministry. The
results of the exercise are still to be seen.

 Tourism Earnings

Earnings from tourism amount to only about US$326.3 million annually (2009 CBSL) , having
slipped down to the sixth position among Sri Lanka’s foreign exchange earning sectors.
However, current trends show a dramatic increase because of the hotel rate price correction that
is taking place in the market now. Given the current trend, it should easily surpass US$500
million this year.

Tourism, especially in the Asian region, has a huge multiplier effect, which has a great bearing
on the livelihoods of a very large proportion of population. In a study done and quoted by Air
Asia, it was revealed that while tourism earnings of Malaysia and Thailand amounted to some 6-
8 percent of their respective GDPs, when the multiplier effect, which is about 12 times, is
applied, the impact on GDP shoots up to close to 35 percent! In Sri Lanka, tourism accounts for
less than 1 percent of the GDP, but will certainty increase with the development of tourism in the
post-war scenario.

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  Growth Targets

Sri Lanka tourism was suddenly put into somewhat of a spin about a year ago, when the
President came out with a target of 2.5 million tourists by the year 2016. We certainly do not
know how this number was arrived at, and even now, no one has really questioned it. There is
certainly no harm in setting out Big, Hairy, and Audacious Goals (“BHAG,” to borrow from
management parlance ref. James Collins & Jerry Porras).

There are two schools of management theory in goal-setting and planning. One is the
conservative method of taking stock of where you are, what your resources are, what
opportunities there are, etc. (SWOT Analysis) and then deciding on your goal. The other school
of thought is where the analytical assessments are enhanced with and tweaked with an element of
emotion and gut feeling, where the leader, using his in-depth experience, plants a much bigger
and more ambitious (audacious) goal. Subsequently, the planners and operational experts
somehow try to muster up sufficient resources and work out strategy and plan to achieve this
goal. So for Sri Lanka, it is the latter that has taken place, and for better or worse, a 2.5 million
target of tourists (or something very close to that) by 2016 is now an accepted fact among
everyone in the industry.

 Arrivals vs. Earnings

It is obvious that arrival figures alone do not give the correct picture. Earnings from tourism is
also important, or in fact, more important than arrival numbers.
There are two ways of “skinning a cat:” — we can have 1,000 tourists spending US$50 per day
bringing in US$5,000; or — we can have 50 tourists spending US$1,000 each, bringing in the
same US$5,000 revenue.  One needs to, therefore, take a good hard look as to where Sri Lanka
tourism would like to position itself – does it have to play the numbers game, or can it go down
the qualitative route. The answers are not easy.

The qualitative route calls for the attraction of the high-end market. While all of us would like to
follow this strategy, one must pause to take stock of the practical realities. This will require not
only high-quality hotel rooms, but it will require a whole horde of other specialized
infrastructure requirements and improvements in the supply chain to cater to this discerning
clientele. It will require a paradigm shift and re-positioning of the entire fabric and delivery of
the tourism product and service in the country. Other than for the small boutique hotel segment,
none of the more conventional higher-end properties can really cater to such top-end discerning
clientele currently, given the fact that they are still catering to the mass-market segment as well.
Such a changeover may be possible over a considerable period of time, to completely shift the
perception of the destination in customers’ minds, and to completely change the product
offering. (Currently Sri Lanka is perceived as a value-for-money, cheaper-end destination.) The
question is do we have the time?
If we need to fast track development and reach for high, sustainable growth (and BHAG’s), we
will have to look at higher numbers who is may somewhat less demanding. This has been the

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success story of most Asian countries in the forefront of tourism development today, such as
Singapore, Malaysia, Thailand, Vietnam, and Cambodia, who drive millions of visitors per year.
Certainly there will still be room for the high-end boutique hotel clientele and other niche
markets, but that will only constitute a part of the overall market mix and will not be the
predominant segment.

 The Room Requirement Controversy

There has been a lot of controversy generated by the estimates put forward for the number of
rooms that need to be built to sustain 2.0-2.5 million tourists annually. Calculating and
forecasting the number of rooms required is somewhat complex, because it depends on many
factors. The main drivers are: occupancy, average length of stay per tourist, seasonality, and
dispersion of occupancy into different regions.

Currently, the mix is predominantly weighted towards the leisure traveler seeking a beach
holiday, which results in a longer average stay of 10 days per visitor. There is strong seasonality,
with the months of January and February having sharp peaks, calling for larger number of rooms
during this period, while the months of May and June have a very low occupancy. Currently
occupancy is generally concentrated around the southern and western coastal areas where the
largest number of hotel rooms is situated.  If these parameters are slotted into the equation, the
room requirement works out to around 50,000. Thus to achieve the 2016 target, some 35,000
more rooms will have to be built by 2016 (currently we have approximately 15,000 rooms in
stock).

Assuming an average of 100 rooms per hotel, this will translate into building another 360 hotels
in the next six years. Firstly, it is difficult to envisage where such vast amounts of land suitable
for tourism development, to build some 300+ hotels, can be found in the country. Even if we can
find the land and fast track such developments, a fully-fledged conventional hotel will take at
least two years to build and commence operations. It does not take too much expertise to realize
that this will be virtually impossible, and, therefore, we have to look at a different model.
After some in-depth analysis and study of emerging tourism trends, especially in the Asian
region, the tourism private sector came to the conclusion that the mix of tourists should move
away from dependence on “sun and sand” and attract more visitors seeking entertainment,
conventions and incentives, and specialized interests. This would then drastically change the
market mix of visitors to the country and reduce the average stay to around six days per tourist.
With the development of tourism in the east, seasonality will be evened out, and the tourism
product will be spread more equitably around the country.  When these new parameters are
worked into the equation, the total room requirement reduces dramatically to a more manageable
total of 28,000 odd rooms, which then calls for the development of only a further 13,000 new
rooms. This is certainly a more manageable and feasible option.

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  Environmental Issues

In reaching for these large arrival numbers, there has to be careful thought given to
environmental sustainability issues. If some 13,000 extra rooms are to be built in the country
(which will translate into 100 or more new hotels) with over two million tourists unleashed
annually in the country, without proper planning, there is bound to be serious environmental and
sustainability issues. Such large-scale and fast track growth has to be carefully planned and
managed within specific tourism zones to prevent environmental and cultural degradation. This
is the reason that the private sector has suggested large-scale zonal development of tourism in
building these additional 13,000 rooms on the fast track.

This will require large-scale resort developments on a planned basis in at least 4-5 designated
zones in Sri Lanka. Individual hotel developments will not suffice. Such well-planned, large-
scale tourist resorts can be designed to encompass sound sustainable environmental practices
(e.g., common self-contained sewage disposal facilities with recycling of water, solar lighting for
resort public areas, no-build green belts within resorts, etc.)

Such organized and well-managed, large-scale developments contained in several designated

zones will help mitigate most of the possible negative fallout of the socio-cultural and
environmental aspects. Building and subsequent maintenance should be under strict
environmentally-sustainable guidelines. Large numbers of small-scale development strewn all
over will not be a viable proposition to maintain Sri Lanka’s environmental sustainability nor
will it be sufficient to drive the exponential growth required.
Need for Outsourced Resort Development Model

In the ideal scenario, these developments should be outsourced to foreign or foreign/local

collaborations (perhaps with a greater bias towards local participation) to develop, market, and
operate these resorts on a BOT/PPP basis, under a special set of incentives and laws (similar to
an economic investment tourism development zone). These mega BOT/PPP developers should
be called upon to undertake the provision of all internal infrastructure activities within these
designated resorts, including the required sustainable environment practices within government
guidelines, and then attract local and foreign hotel companies to undertake individual
development within these zones (already identified development areas such as Kalpittiya,
Kuchcheveli, Pasikuda, Arugambay, etc., should be included).

 Public–Private Sector Partnership and Tourism Reforms

For over a decade, the private sector lobbied, quite legitimately, for a greater say in the affairs of
tourism, given the fact that the entire hotel infrastructure is privately owned and funded.
Proposals for such a partnership between the state and private sector was formulated , debated,
modified by successive governments, and finally a landmark legislation was passed unanimously

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in parliament in 2007, laying the framework for a private sector-public sector collaboration
framework.

Four distinct entities were set up to run the affairs of Sri Lanka tourism, somewhat along the
lines of a corporate structure, with both private sector-public sector board members. The private
sector voluntarily offered to partially fund this exercise through the payment of a new 1 percent
CESS and the Tourism Development Fund was set up under the Finance Ministry Act No. 25 of
2004. A good foundation was laid, and the new frame work began to work very satisfactorily.
Multiple changes of ministers in quick succession, followed by the inevitable changes in
individual chairmen of the institutions, disrupted the smooth development of this process.  The
initial success of this private sector-public sector partnership was seen as a model that could be
duplicated in other sectors as well, and even donor agencies such as the World Bank considered
this an important example to be emulated in other developing countries.

However, there are currently far-reaching structural changes being contemplated to this success
story, which will effectively limit private sector participation in the future. There has been no
discussion or consultation with the private sector regarding the proposed changes. It is important,
therefore, that the private sector is consulted and made a part of this evaluation and development
process.

 Promotion and Branding the Destination

Reaching towards large ambitious goals is certainly quite good and commendable. But at the
same time, we must know exactly what Sri Lanka tourism stands for. How do we as a nation
want Sri Lanka to be seen and portrayed as a tourism destination? Without deciding what our
competitive advantage is and planning out our strategic position, we will not be able to sustain
exponential growth targets.

At a recent public forum on tourism, the leading local exponent of positioning, Dr. Uditha
Liyanage, who was very closely associated in the now defunct branding exercise for Sri Lanka
tourism, very clearly brought out the need for Sri Lanka to decide what it stands for as a tourist
destination or even, for that matter, as a nation.

Unless and until we have a clear idea of what Sri Lanka’s strategic position is in the market, no
amount of infrastructure development, marketing, and promotions will be successful in the long
term. We need to figure out who we want to be and what our competitive position is.  Our
deliberations a few years back revealed that the ideal positioning for Sri Lanka tourism was
“Asia’s authentic and compact island providing a diverse array of natural and other attractions
and experience.” From this stemmed the vital brand architecture of:
- diversity … unique

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- unspoiled … traditional
- compact … authentic
- indigenous … exotic
Therefore, even if the “small miracle” has fallen by the way side, it is important that we retain
this brand architecture in all our proposed developments to ensure environment sustainability.

SRI LANKA TOURISM TREND CONTINUES UPWARD; THROUGH STATISTICAL DATA

- Sri Lankan tourist arrivals for November climbed by 20.1 percent to 44,311 compared to a
year ago, the government reported. Arrivals were boosted by more visitors from key markets
like the United Kingdom, Germany and India.

- South Asian arrivals continued to grow in double digits, up 23.3 percent to 13,371. India
generated 8,769 visitors, up 14.7 percent, and Pakistan 681, up 29.0 percent. But arrivals
from the Maldives fell 4.5 percent to 3,586.

- The number of visitors from the Middle-East shot up 200.3 percent to 2,886.

- Tourist arrivals in Sri Lanka in January crept up a better-than-expected, 0.64 percent

compared with a year earlier, given an escalation in violence on the island.

- This year, the tourism authority aims to have 600,000 foreign visitors to Sri Lanka and a 43
percent increase in foreign earnings from tourism to $550 million, de Alwis said. Sri Lanka
failed to achieve last year's target of 600,000 tourist arrivals due to the violence.

- Sri Lanka Tourism Development Authority said in a statement that arrivals from the Middle
East rose 80.6 percent in the January to March period compared with a year earlier. In March
alone arrivals were almost four times higher than a year before.

- The number of visitors from Russia in January-March was 58.3 percent higher than a year
earlier. French arrivals jumped 93.5 percent and those from Britain 11.9 percent.

-Tourist arrivals fell 11.7 percent to 494,008 in 2007, with the renewed violence blamed for
the failure to reach a target of 600,000. Earnings from tourism fell 6.1 percent to $385
million.

- Sri Lanka attracted 327,902 tourists during the first five months of 2011 compared to
233,922 tourists in the first five months of 2010, which is a 40.2 percent increase on year on

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 year basis. Tourist arrivals increased by 46.1 percent in 2010 to 654,476 from 447,890 in
2009 surpassing all the previous arrival records.

- Tourist arrivals in Sri Lanka amounted to 48,943 in May of 2011 which amounted to 48%
increase over the same period last year.   Majority of visitors in the month were from India
and East Asia.  Tourist arrivals for the five months have amounted to 327,902 registering a
40.2% increase over the same period last year.

Tourism development strategy finalized

The Sri Lanka Tourism Development Strategy for 2011-2016 has been finalized by the Ministry
of Economic Development and Sri Lanka Tourism and will be presented to the Cabinet shortly,
said Chairman, Sri Lanka Tourism, Dr. Nalaka Godahewa.

He said that the tourism development strategy will be launched in the second week of August by
Economic Development Minister, Basil Rajapaksa.“Tourism in Sri Lanka has been on a growth
trajectory and the industry is confident that the strategy will help achieve targets envisaged in the
tourism development plan”, Dr. Godahewa said.

Tourism in Sri Lanka has been booming since mid-2009 with the number of arrivals surging
rapidly on a month-on-month basis. The number of arrivals during the first six months this year
was 381,538, up 36.9 percent from a year earlier. Revenue from the industry during the first six
months was US$ 370.1 million, up 50 percent from a year earlier. Dr. Godahewa said that Sri
Lanka Tourism has been revisiting 22 categories of regulations with an industry expert panel
during the past six months to modernize regulations to suit the needs of the tourism industry and
promote interests of the country.

“Around 50 percent of the work on the project has been completed and it will be finalized within
the next three months”, he said.

“Wildlife and environmental protection, regulations on whale watching and hotel categorization
are vital as tourism is booming” Dr. Godahewa said. Sri Lanka Tourism with government
managed properties will introduce an electronic ticketing system which is currently being
developed by Dialog as a CSR project.

Dr. Godahewa said that the new ticketing system will help tourists check prices to various sites
and plan their tours better.

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Sri Lanka tourism has formed a committee comprising members of the Sri Lanka Association of
Hoteliers, Sri Lanka Association of Inbound Tour Operators, Sri Lankan Airlines and the Sri
Lanka Tourism Promotion Bureau, to agree on a joint strategy for marketing communications.

“There have been diverse views on how marketing communication should be carried out.

A consensus on the issue is vital”, Dr. Godahewa said. According to tourism industry experts’
development in tourism has been slow due to lack of strategic marketing and promotion of the
destination.

”Except for media advertising there is no reduction in other forms of marketing promotion such
as trade fairs, conventions, seminars and visiting journalist programs” Dr. Godahewe said.

Conclusion

Sri Lanka needs to see tourism grow rapidly and provide the impetus to drive the economy
forward and play an important part in improving the livelihood of Sri Lankans.

- In doing so, there will be a price to pay, but we have to carefully minimize the impact on the
environment and on our culture.

- There has to be a clear branding and positioning of Sri Lanka tourism and these key attributes
should be maintained and safeguarded in all developments that will be undertaken.

- Large-scale, mega-tourism developments, which unfortunately will be necessary, must be

limited in order to carefully zone selected tourism areas in the country under strict environment
planning guidelines.

- A strong private sector-public sector task force must be mandated and authorized to drive the
development of Sri Lanka tourism under these guidelines.
(Srilal Miththapala is a wild life and elephant enthusiast. He is also President, Tourist Hotels
Association of Sri Lanka.)

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 REFERENCES

 http://www.google.com
 Editorial of Sun Day Observer
 Editorial of Sunday Leader
 http://www.wikipedia.com

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