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Worst winter season for tourist hotels

Ranjaka de Mel, Srilal Miththapala and Hiran Cooray

By Nirmala Kannangara

The impact of the global economic downturn on Sri Lanka’s tourist industry has left almost 970,000 direct and indirect dependents of the industry redundant according to the Tourist Hotels Association of Sri Lanka (THASL) statistics.

For hotels the 2008 winter season was the worst recorded leaving owners with no option but to begin laying off staff.

“According to SLTDA statistics, from January to March 2009 arrivals from major tourism generating markets mainly from the United Kingdom, Germany, France, India, the Netherlands and Middle East, dropped by 21.3% compared to the same period in 2008,” President THASL and Chief Executive Officer and Director Serendib Leisure Management, Srilal Miththapala told The Sunday Leader.

“In January, February and March 2009 the drop in arrivals recorded was 32.4%, 15.7% and by 10.5% respectively, compared to the same period last year. Between January to March 2008, 135,516 tourists arrived in the country while it was only 106,516 in 2009 which is a clear indication of how the industry has suffered,” claimed Miththapala.

Despite the downturn tourism remains the nation’s fourth largest foreign exchange earner and the decline in the industry is causing wide-spread suffering.

“According to surveys carried out by the THASL, nearly 242,064 people directly employed in the tourist industry have lost their jobs while a further 756,192 indirect dependents have been left vulnerable due to the situation. Food suppliers have been badly affected as hotels have failed to pay them their dues,” added Miththapala.

Worst period

Miththapala further said that the industry expects the coming summer months to be the worst period the industry has ever faced.

“Primarily this is due to the external economic situation as people are either postponing their vacations or thinking of alternative, closer destinations and looking for value for money bargains. In this backdrop Sri Lanka Tourism in association with the THASL, Sri Lanka Inbound Tour Operators (SLAITO) and SriLankan Airlines has launched a promotional campaign in the UK, which is still the most resilient and largest market with a buy one and get one free (BOGOF) offer.

This is not a discount but a promotional campaign where we hope to stimulate interest in Sri Lanka and create word of mouth advertising that Sri Lanka is a safe and value for money destination which has up to now been proving quite successful,” claimed Miththapala.

He further said that although May, June and July are generally gloomy months, the next 4-5 months would be far worse than average and hotels would struggle to meet their overheads.  Many hotel owners are expected to close down sections of their hotels in order to save money over the summer period.

“The government gave us certain incentives in order to keep the industry going. Electricity surcharges were removed which was a good move but the implementation of some of the moratoriums from banks are still not quite clear and as a result we have requested and forwarded proposals to the government to give assistance to help our cash flow by way of an incentive scheme to enable hotels to at least pay salaries and prevent large scale retrenchment based on occupancy forecasts,” he further added.

According to Miththapala THASL expects some form of recovery by December this year but the improvement would be very slow. He further said that the city hotels for the first time had felt the downturn worse than resorts and their occupancy has been as low as 20% which is an extremely bad situation.

Bounce back

However Managing Director, Jetwing Hotels, Hiran Cooray is confident the industry will bounce back with the dawn of peace and said that the industry would get renewed confidence now.

“The present downturn in tourist arrivals is a result of the global recession and with the dawn of peace we can expect a lot of foreign investment which will help the industry situation,” Cooray told  The Sunday Leader.

However when asked whether his hotels too have started retrenchment and laying off staff Cooray said that although retrenchment has been taking place in the industry Jetwing hasn’t been laying off staff and has instead stopped filling vacancies.   

“In order to survive we have to take some difficult decisions but we have neither laid off staff nor failed to pay our creditors,” added Cooray

Cooray further said that the promotional campaigns initiated by SLTDA would be helpful to promote Sri Lanka as a safe tourist destination.

Meanwhile Managing Director, Amaya Resorts and Spas, Lalin Samarawickrema told The Sunday Leader that he has introduced certain promotions in his hotels for locals and expatriates in order to get a better cash flow.

Promotional campaigns

“Amaya resorts have introduced a promotional campaign through credit cards to get a 15% discount on stay over for locals and expatriates. I am personally against the BOGOF introduced by Sri Lanka Tourism, as it would definitely impact the local industry very badly. This would be something like digging our own grave as we are depicting our country as a problematic destination to the world. Neither the country nor the industry would be benefited through such promotions but only the third party. By selling cheap we are damaging our reputation – buyers will wonder why a country is so desperate to sell rooms and this will impact the industry and the image of the entire country in the long term,” added Samarawickrema.

When queried as to whether they too have started laying off staff, Samarawickrema said that since their occupancy levels have come down they had to send off contractual staff as a precautionary measure and added that there was a ‘slight delay’ in paying their service providers due to the credit crunch.

“Although we have to bear the credit crunch we have not faced any issues with tax, vat and salary payments. We have to collect up to Rs.50 million in debts from tour operators and in return we owe our creditors. However we are able to survive with our reserves,” Samarawickrema said.

However he said that due to the low occupancy certain wings of Amaya resorts had to be closed down on rotation basis.

Meanwhile General Manager Marketing, Ocean View Resorts, Ranjaka de Mel told The Sunday Leader that to date they have not had to lay off their staff although their two properties Villa Ocean View, Wadduwa and Induruwa Beach Resort, Bentota have suffered a sharp decline in tourist arrivals.

“Since our hotels are owned and managed by Ceylon Shipping Lines which is one of the top blue chip companies we have not faced a situation where we had to lay off staff. We have given the maximum possible advantage to tour operators and travel agents as we have to help each other during difficult times like this. Buy giving different incentives to foreigners we are indirectly telling the outside world that we are cheap but not that we are good,” added De Mel.

He further said that although due to the global melt down the industry has to be flexible and extend discounted rates going below cost recovery levels not only makes it a futile exercise but also degrades the country.

De Mel further stated that the hotel’s forward bookings are way below their projected occupancy level and that they too would have to take all the possible precautionary measures in order to survive in the short term if the current downturn continues.









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