• Industry insists there are more issues to be resolved and further support is needed if country is to benefit from quicker revival of tourism

The Hotels Association of Sri Lanka (THASL) President M. Shanthikumar yesterday expressed regret that the potential of tourism for economic recovery was being underestimated by the Government, adding that the sector needs immediate attention and support to avert a bigger crisis. 

“The tourism industry is confident of its ability to contribute to the revival of the country’s economy. Its true potential is still very much underestimated,” Shanthikumar said, adding that every dollar earned by the industry is being kept within the country. He said that, as an industry, tourism was the country’s number one net foreign exchange earner. 

Whilst expressing gratitude to the Government and the regulator for the support extended following the Easter Sunday attacks and the pandemic, by way of a relief package including a moratorium on capital and interest repayments, the THASL Chief said that there was a lot more to be done. “Initial support post-Easter Sunday setback and COVID kept the sector afloat during the worst time in its history. However, there are more issues to be resolved and further support is needed,” he added. 

The THASL chief called on the Government to think of ‘out of the box’ models to relieve the industry’s financial burden, such as by restructuring the industry’s mounting debt in this unprecedented situation. “This is needed for our survival and revival,” Shanthikumar stressed. 

He said the introduction of a social security contribution tax of 2.5% on total revenue would have a direct impact on tourism growth in the already ailing sector. A deferment for a period of two years until the return of near normalcy would help the industry glide through the initial few months in tourism revival, he added.

“We also ask the Government to make the required changes to tourism tariffs, levies, fees, etc., to be in line with all other industries in the country. Presently the demand to pay 1% on total turnover as a Local Government tax, and the electricity tariff for hoteliers, is totally discriminatory. The hoteliers in distress will never be able to settle the outstanding amounts demanded by the Local Government authorities, as the sector is presently trying to earn every dollar to pay the monthly salaries of employees and run their day-to-day operations. We need the leadership of the country to understand the state of the hoteliers and to waive all past dues demanded by Local Government authorities,” he pointed out. 

“We are already paying a 1% tax on topline revenue as TDL to be used for development and promotion of tourism,” he said, adding that 80% of supplies for the hotel sector are sourced locally in addition to paying taxes for all imported items such as liquor, meat and other supplies. “These generate revenue to the country. The hotels are subject to many other license fees and levies, such as liquor licences, garbage collection, etc. Too many taxes, etc., will not help the sector and it will lose its competitive edge in the marketplace, which will eventually slow down the growth in tourism. In comparison to other export industries, taxes on the tourism sector are relatively high.” 

According to the THASL Chief, the investment of the private sector is estimated at $ 20 billion with hotels alone at $ 15 billion. It generates over 600,000 direct and indirect employment, with 80% employed in the hotel sector, he added, noting that over 12% of the population are dependent on tourism. 

“Colombo has 3,000 new luxury rooms opening for operations by the end of 2023. Investments in tourism projects have continued to flow even during the pandemic. Already approval had been given in the past two years for another 1,500 rooms across the country. Such is the potential for tourism in Sri Lanka.

“In addition, the indirect income from tourism is rather significant, but there is no data available in the country to assess the same. Meaning, the revenue from indirect business opportunities derived from a tourist travelling around the country is not available. e.g., the handicraft seller on the street, the thambili vendor, fruit sellers, gem and jewellery, etc., which benefits the lower middle class and the poor. 

“We also see a large number of homestay units presently available in the country and have attracted a new segment of travellers to Sri Lanka. There is no data available on the revenue earned by most of these providers as they are not registered entities. Such are the indirect benefits of tourism due to the consumption happening in the country. The benefits surpass all other export industries.”

Shanthikumar also said that the industry has great career growth opportunities. The training provided by hoteliers has created an opportunity for employees to seek overseas careers in hospitality and other tourism-related fields, thereby contributing heavily to forex earnings by way of remittances. On the other hand, contributions to Government revenues also include billions of rupees earned as entrance fees, embarkation levies, etc. 

“If the industry is well harnessed, these revenues are bound to increase in the future, apart from all what we have said so far.

“The focused approach by the Government to introduce strict health and safety guidelines for the industry, carry out a very successful vaccination program and being ahead of most other countries, and then to fully open the borders for tourist travel, has created a conducive climate for tourism. It has also certainly helped the private sector to take the message to the world that Sri Lanka is fully opened, safe and ready to welcome foreign visitors.”

Shanthikumar also praised the efforts made by the Minister of Tourism Prasanna Ranatunga for supporting the industry and telling the entire leadership of the country the importance of tourism, as well as the challenges and concerns of the industry, during his speech in Parliament a few days ago. 

However, Shanthikumar reiterated that the industry was presently in distress and needed help. “The SME sector has come to a virtual standstill and needs Government support. We, therefore, seek the assistance of the Government to restart and survive.” 

 

Budget 2022 has not extended any relief, charges Anuradhapura  Tourism and Hoteliers Association