Hotels Association Chief warns of total collapse if debt moratorium not extended

• Reveals crisis has forced occupancy in hotels to plunge to 10-20%
• Calls on political parties to unite immediately Urges best heads must come together and lead the country out of current crisis

Keeping party politics aside, The Hotels Association of Sri Lanka (THASL) President M. Shanthikumar yesterday called on all Opposition political parties to unite, put the best heads together and lead the country out of the current crisis.

"If there is anyone in the opposition with a real love for the nation, they will come forward unconditionally to lift the country out of this mess. We cannot slide down further, the situation is precarious,” he said. 

“There are some excellent, very efficient and knowledgeable parliamentary members and we are very confident that all of them combined as one with the Prime Minister will greatly help to lift Sri Lanka out of troubled waters,” Shanthikumar added.

Tourism is a key foreign exchange earner. In fact, it is the number one net foreign exchange earning industry in Sri Lanka. The hotel investment alone exceeds $ 15 billion. The direct and indirect employment in the Tourism industry exceeds 500,000 with the accommodation sector employing over 70% of the workforce. 12% (3 million people) of the country's population are dependent on Tourism. 

There is no data available on the multiplier effect of the Tourism industry, where the arrival of a single tourist benefits the fishmonger, vegetable seller, handicraft seller etc.

Additionally the informal sector consisting of small-scale businesses form another large part of this industry with no data available. It is not wrong to estimate that in accommodation, the inventory in this segment may be as large as the formal sector situated across the country including in some of the remotest villages.

THASL President said there is a drastic reduction in flight frequencies and foreign missions have issued travel advisories against travel to Sri Lanka. Hence, the immediate future for tourism looks very bleak and the tourism industry is just on the verge of collapse.  

He said hit by the Easter Sunday attacks in early 2019 and just during the recovery with the outbreak of the pandemic which spread for over 2 years and now the economic and political crisis in the country.  Occupancy forecasts for the month of May were at 65% to 70% but sadly hotels may not even achieve 20% occupancy due to the large-scale cancellations which came in over the past 3 weeks. The month of June will drop to less than 10%.

“What do we do with the workforce? How do we keep hotel plants operational with the escalating costs and a complete ban on some goods such as dairy products, imported liquor etc,” questioned THASL Chief. “These are critically important to service a tourist. How do we run tourist buses, hotel generators, hotel kitchens and other machinery without diesel, gas etc.  This is very serious. The SME sector is struggling to survive,” he added,

According to Shanthikumar the tourism industry survival so far has been only due to the Moratorium on capital and interest payments extended by the Government immediately after the Easter Sunday attack in 2019 with extensions during the COVID 19 pandemic.

“The Moratorium is due to end in June 2022 and our repeated requests to extend the same until tourism sees some stability has been rejected.  I would like to categorically state that the majority of our members will not be able to settle the loans and there is bound to be large scale defaults by the private sector. We seek the authorities to extend the moratorium until such time the tourism industry gets the support of a donor agency to provide relief to reduce the debt burden which will help sustain the industry,” he said.

“If not, closures and other disastrous actions are imminent in the near future. This will undoubtedly jeopardise the dollar inflow to the country even further,” Shanthikumar warned.

Therefore THASL called upon all political parties to join hands together and help bring economic and political stability creating a conducive environment for tourism to thrive and improve the foreign exchange earnings. “This is the need of the hour and should be actioned without any further delay together by all concerned,” Shanthikumar emphasised.