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Lankan tourism sector pleads for help

world Updated: Jul 03, 2007 20:21 IST
PK Balachandran
PK Balachandran
Hindustan Times
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Badly hit by the on-going war and the constant terrorist threat to the capital city of Colombo, the Sri Lankan tourism sector has pleaded with the government to immediately give it a number of facilities to enable it to tide over the crisis.

The Tourist Hotels Association of Sri Lanka (THASL) and the Sri Lanka Association of Inbound Tour Operators (SLAITO) have written to the Minister of Tourism seeking relief measures like interest free loans to help pay the salaries of staff; a two-year moratorium on repayment of loans; and a temporary exemption from the payment of VAT.

The occupancy in Colombo's hotels (with 3209 rooms) has varied between 40 and 46%. In the circuit hotels, the occupancy averages between 25 and 40%. Many of the hotels are cutting rates drastically to attract domestic tourists. Some hotels on the southern coast from Colombo to Galle function only on weekends.

Tourism revenue has come down by 20%. The Central Cultural Fund, which administers entry into the ancient cultural sites, has reported a 48% fall in revenue between January and May this year, as compared to the same period in 2006.

About 1,500 hotels staff had had to be retrenched by May this year.

The tourism sector had suffered heavily in the December 2004 tsumani also, and had invested LKR.7.5 billion in rebuilding and refurbishing. But before it could savour the benefits or a refurbished industry, the war started. It began in August 2006, and is showing no sign of abating.

Peace is key

Although the hotels and tour operators associations did not call for an end to war, and had only sought financial relief, it is undeniable that war has been the main cause of their problems since the tsunami. The sector had prospered in the years of peace and suffered in the years of war.

The latest report of Bartleet Mallory Stockbrokers (BMS) says that in the first year after the Ceasefire signed in 2002, Sri Lanka's earnings from tourism went up by 31%. And for the first time, 500,000 tourists came in 2003. The rise, till date, has been 65%, with 2006 seeing an income of $ 410 million.

"However, the current unrest in the country has caused growing concerns among hoteliers during the current financial year, with occupancy levels plummeting to an all-time low in 5 years," the report said.

In 2006, there was a marginal 1.6% rise in arrivals. But in the year 2007, they had come down by 23.3%. By 2007 end, the fall is expected to be 40%.

Small resorts suffer most

While the well heeled major hotels feel that they can pull through with 40% occupancy, the small and budget hotels are feeling the pinch badly. Many of the smaller wayside resorts were either liquidating or taking loans to pay staff salaries, the BMS report pointed out.

Tourism in the south coast, from Colombo to Humbantotta, has been the worst hit both by the tsunami and the war. And the impact of this on the industry has been great because out of the 14,218 rooms in the island (in 2006), the south coast accounted for 5,112.