Tourism Industry Opportunities and Threats in Sri Lanka

Opportunities
-attraction rich Northern and Eastern Provinces are now free from the civil war and can be easily
accessible
including road network, electricity, water,
sea and air travelling, airport, harbour, etc.
part of the Tourism
Industry. This Investment Facilitation provides a lead role in facilitating and managing investment projects
across all industry sectors, particularly those complex projects requiring extensive cross-government
coordination and negotiation.
d investment facilitation assistance;
specialist advice on the development approvals process; statutory approvals coordination; site location services;
advice on infrastructure and utility requirements; continuing client support; and investment climate advocacy
published by the Central
Bank of Sri Lanka to give a comprehensive guide to the prospective investors of Sri Lanka
der the Ministry of Economic Development directly
oversees the development of Tourism in Sri Lanka with other relevant government organizations. The SLTDA
was formed as the apex body for SriLanka Tourism under Section 2 of the Tourism Act (No. 38 of 2005). The
organization (Formally known as Ceylon Tourist Board / Sri Lanka Tourist Board / Sri Lanka Tourism
Board) is committed towards transforming Sri Lanka to be Asias foremost tourism destination. The SLTDA
will strive to develop diverse, unique and quality tourism services and products that would make Sri Lanka as a
unique destination, globally.
opportunities.
ones, with all the necessary infrastructure facilities,
thus the investors do not need to invest on the basic infrastructure
-term (10 years) Infrastructure and Product Planning and Development Plan
have been implemented for the Tourism industry. This strategic plan is based on market demand for high and
mid-end markets.
Tourism Promotion Bureau
to handle promotion of tourism overseas along with local travel agents
Development Zones where
investors will be encouraged to invest.
recreational facility
development in identified locations.
on BOI concessions
and mobilizing foreign funding.
involved in establishing,
updating and regulating industry standards in the travel and tourism industry, registering and licensing tourist
service providers, inspecting and monitoring tourist establishments and service providers, and formulating and
regulating prices charge for tourist services.
foreign currency
encashment and all related activities
order to develop, enforce and maintain
locally and internationally accepted standards in relation to the tourism industry and other related industries
Threats
Tourism services,
causing minimal profit margin for the players
Sri Lanka become
comparatively lower
8. Potential Risks and Assumptions
over invest in the tourism industry, so only the required number of
investors are attracted and they play a role in the Tourism Sector
expected and
projected trend continues in terms of tourist arrival and tourism industry expansion
that there will not be
any hindrance for them to spend as they do at present
ears, there will not be any other tourist destination in the world which becomes
exclusively attractive to the prospective and targeted tourists
tourists are attracted to
Sri Lanka
development and it
continues to facilitate the development of the Sector
Authority with any other
statutory body for the tourism development in Sri Lanka
the tourism
promotion all over and could be continued without any hindrance
t does not introduce any new tariffs, restrictions and limitations on Foreign Direct Investment,
Tourism Industry and its allied services (when purchasing and importation)
r travelling between
destinations and air / sea port is minimized

Constraints
As is the case in many countries, in Sri Lankan the tourism sector may not be as effective in realizing its
ambitions and as successful in reaching the targets defined in recent years as it could be because people are not
working together as effectively as they could. Many stakeholders interviewed for this case study expressed
regret that there is at this moment no united effort to promote Sri Lanka as a tourism destination. The Tourism
Cluster formed in 2000 at the initiative of and with aid from USAID, made a promising start in devising a
unified, sector-wide strategy to enhance the competitiveness of the Sri Lankan industry. However, realizing
their ambitions has been hindered by not only the tsunami and violence, but also by differences of opinion over
aspects of the New Tourism Act between public and private sectors, and by what is defined as personality
clashes.
SMEs feel that they may be better off working together instead of relying on the established tourism
organizations and suspect the larger companies that dominate the boards of pursuing their own interests.

This is all the more regrettable since, with the arrival of the internet is the responsibility of, the way we
construct images of places has changed profoundly, both from a supply projecting of identity as well as
demand perceiving of images perspective. As opposed to a one way push process of supply driven mass
communication, place identity is now being produced, visualized and consumed through dynamic interactive
processes, in physical as well as virtual environments.70 Page 32 sur 37

Initiatives in the field of responsible, alternative, eco and green tourism are likely to suffer from the fact
that each initiator/initiative seeks to establish its own label, standards and accreditation. Much more could be
achieved if the organisations and companies involved would unite their efforts to create one strong concept,
brand and set of standards easily understood by consumers and providers of tourism services alike .
In general, branding can be defined as the precise and pinpointed communication of your company, your
product or service, the value it stands for and the feeling your customer will get from it; and a destination or
place brand as a promise that describes a compelling experience in realistic but competitively differentiated
terms and that offers the visitor a distinct and desired benefit.71

It is clear that in both terms a real understanding of what branding (offline and online) entails is lacking in the
Sri Lankan tourism sector. Branding is often confused with positioning. The tagline Sri Lanka - A land like no
other may convey not clearly enough what Sri Lanka precisely has to offer to tourists Branding requires both a
focus and consistency of message.
In addition, many stakeholders realise that they, and the Sri Lankan tourism sector as a whole, do have to
enhance their knowledge of; quality criteria and critical success factors for websites and e-mail marketing, of
devising a multi-channel strategy for their company, of event management, of CRM and public relations.
Because there is a lack of opportunity for academic tourism management study and a major lack of resources
for academics to attend ICT and tourism conferences or keep their knowledge up to date in other ways,
acquiring knowledge and skills is a matter of private endeavor or studying abroad.

The private tourism sector has always been in Sri Lankan ownership. This is an asset and the reason that not
more than approximately 25 percent of profits leave the country.72 But it is also mentioned as the reason for too
much introspection and too little understanding of external factors. More global players would, according to
insiders and outsiders, stimulate Sri Lankan entrepreneurs to better analysis and optimization of their
competitiveness.

A significant barrier to innovation is the fact that it is hard to start a tourism business in Sri Lanka. Start-up
businesses are extremely rare. The root cause of this can be found in the banking sector where it is hard for
them and SMEs to secure the necessary loans, which are likely to be assessed against capital or property values
rather than future business potential. Interest rates are rarely less than 15 percent and the banks, as typical in
many developing countries focus more on security against assets, rather than management of risk through
partnership with their clients. Page 33 sur 37
The recently established SME Bank does not have a program for the tourism sector, but focuses mainly on
manufacturers. HSBC in Colombia, though, opened a special SME-center recently.