4/11/2011Sri Lankan Tourism industry        BSc. In Business Management (Special) – UGC                                   ...
Group Members(HD UGC 102006)   Jude Anjana(HD UGC 102036)   D.M.M.S Jayakody(HD UGC 102066)   K.S.M.Perera(HD UGC 102062) ...
Table of Content1. Introduction…………………………………………………………………………04-062. Political Environment.....................................
IntroductionFrom early historical times, Sri Lanka has attracted foreign visitors. Many books,particularly by British admi...
However, when most countries in the world were preparing themselves to accommodate thenew jet aircraft by investing on the...
The Private Sector played an important role from the very early days, by providing servicesto passengers who arrived in sh...
Political EnvironmentTourism is the second largest growing business area after information technology in theglobal economy...
As illustrated in the above picture in comparison to the world situation as well as the SouthAsian Regional situation the ...
A unique example of the government tourism policy is the introduction of minimum rates   by the government in the capital ...
 Ports: Work is also underway for the expansion of the existing Colombo port, under the  Colombo South Port Project. Anot...
 Kalpitiya Integrated Resort Development Project: The Kalpitiya Tourism Development  Program, as envisioned by the govern...
This will create negative image in the mind of tourists. Some of the foreign countries have   boycott Sri Lanka’s products...
 Greater competition will facilitate growth  We also expect greater competition with the introduction of new hotels in po...
Economic Environment   The Sri Lankan tourism industry is one of the fast emerging industries of the economy with   averag...
The multiplier effect in the investment on tourism is envisaged in the construction, furniture,transport and food and beve...
Tourist arrivals from 2000 to 2010, clearly showing the rise in tourist arrivals in 2010 (over    the rest of the decade) ...
Arrivals         4         3         2         1         0                  2010             2015             2020  8000  ...
Developing Industry ProfessionalismThe government will improve productivity of the tourism industry, through buildingprofe...
 Setting up a ‘One Stop Shop’ at SLTDA for tourism related investment projects with the  cooperation of BOI, UDA, CCD, EA...
Transport solutions SLTDA has been actively promoting the use of sea planes and light aircrafts as a solution for  reduci...
 Meeting the human resources gap of in related services: Providing necessary training for tour  guides, home stay hosts a...
 A lack of cooperation between the public and private sectors in identified projects. Inadequate infrastructure. A lack...
Socio Cultural Environment   The socio cultural Environment, then, consists of the whole range of behaviors and   relation...
popular global leisure activity. Tourism is vital for country like Sri Lanka due to the largeintake of money for businesse...
Population growth in Sri Lanka                                                                            Percent         ...
Even though Sri Lanka is a traditional country tourist can have most of different varieties offoods belongs to different c...
Tea Culture                                     Being one of the largest producers of tea in the world, Sri               ...
Negative impacts of tourism industry on Sri Lankan culture According to the Sri Lanka Tourism Development Authority surve...
Recommendations for socio cultural environment   The Sri Lanka Tourism Development Authority pay careful attention to thes...
• Enterprise Support Centers - the feasibility of establishing small business support             centers should be studie...
Technological environment   The tourism industry has proved particularly suitable for the adoption of information   techno...
 Tourism courses are increasingly blended to ICT and e-learning in to their teaching  methodology and training in technic...
 Online bookings of accommodation can be done in two ways, such as email request and  online real-time. Some of the large...
Open Jaw’s product portfolio includes:   •   X distributor integration platform and business rules engine that enables tra...
Natural environmentalSri Lanka Tourism having embarked on International Tourism industry since the mid 60s hastreaded a pa...
Natural Environmental factors which affects the tourism industry in Sri Lanka.   The natural attractions of Sri Lanka are ...
The scientists found these corals can live 5000 and 10000 years.In Sri Lanka, fisheries supply   over 50 percent of the to...
b) Bentota   A popular beach destination, it is about an hour to 1-1.5 hours drive from Colombo. The   adjoining town of B...
 The hill country, with scenic landscapes, major natural attractions, forests providing  trekking and panoramic views, wa...
National Parks and Bird Sanctuaries           Sri Lanka has nine national parks and seven bird sanctuaries, which house se...
Sri Lankan Tourism Industry
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Sri Lankan Tourism Industry

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This is a Project Report which was prepared for an Assignment at National Institute of Business Management. This includes a background study and a macro environmental Analysis of Sri Lankan Tourism Industry.

This is done as the Marketing Management module assinment of BSc. In Business Management (Special) Degree of National Institute of Business Management.

Group Members:
P.D.N.J. Anjana
D.M.M.S Jayakody
K.S.M.Perera
N.G.Pathmanathan
T. Kurubaran
T. Subramaniam

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Sri Lankan Tourism Industry

  1. 1. 4/11/2011Sri Lankan Tourism industry BSc. In Business Management (Special) – UGC Marketing Group No 2
  2. 2. Group Members(HD UGC 102006) Jude Anjana(HD UGC 102036) D.M.M.S Jayakody(HD UGC 102066) K.S.M.Perera(HD UGC 102062) N.G.Pathmanathan(HD UGC 102049) T Kurubaran(HD UGC 102081) T Subramaniam Page 2 of 96
  3. 3. Table of Content1. Introduction…………………………………………………………………………04-062. Political Environment.................................................................................................07-13 2.1.1 Opportunity of Sri Lankan Tourism 2.1.2 Threats of Sri Lankan Tourism 2.1.3 Recommendations3. Economic Environment..............................................................................................14-22 3.1.1 Opportunity of Sri Lankan Tourism 3.1.2 Threats of Sri Lankan Tourism 231.3 Recommendations4. Socio Culture Environment........................................................................................23-30 4.1.1 Opportunity of Sri Lankan Tourism 4.1.2 Threats of Sri Lankan Tourism 4.1.3 Recommendations5. Technology Environment...........................................................................................31-35 5.1.1 Opportunity of Sri Lankan Tourism 5.1.2 Threats of Sri Lankan Tourism 5.1.3 Recommendations6. Natural Environment.................................................................................................36-44 6.1.1 Opportunity of Sri Lankan Tourism 6.1.2 Threats of Sri Lankan Tourism 6.1.3 Recommendations7. Legal Environment.....................................................................................................45-51 7.1.1 Opportunity of Sri Lankan Tourism 7.1.2 Threats of Sri Lankan Tourism 7.1.3 Recommendations8. Marketing Environment.............................................................................................52-68 Page 3 of 96
  4. 4. IntroductionFrom early historical times, Sri Lanka has attracted foreign visitors. Many books,particularly by British administrators, have been written based on the different attractions ofthe Island. The first attempt to develop tourism in Sri Lanka was made by the colonialgovernment prior to the Second World War. The Government Tourist Bureau was set up in1937. Although international tourism in the modern sense was unknown at the time, theobjective in setting up the Bureau was to provide facilities and services to the large volumeof passengers who sailed between the West and the East through the port of Colombo onpassenger ships.Sri Lanka’s primary location on the world sea lanes attracted many cruise ships, freightersand other vessels. Passengers that entered the port of Colombo disembarked and enjoyedsightseeing in Colombo, Kandy and their surroundings. The Tourist Bureau’s primaryresponsibility was to service these passengers when they came ashore by greeting them andproviding sight seeing tours. Although accurate records are unavailable, it is estimate thatapproximately one hundred thousand to two hundred thousand passengers visited thecountry per annum. The Tourist Bureau ceased its operations in 1940 due to thecommencement of World War II. Due to the War there was little tourist activity.Sri Lanka gained independence in 1948 and the new government decided to revive touristactivities by setting up the second Tourist Bureau which came to be known as theGovernment Tourist Bureau. The Government Tourist Bureau which was set up in 1948functioned under the Ministry of Commerce for some time and was brought under theMinistry of Defenses. The functions that were assigned to the revived Tourist Bureau weremuch wider than its earlier responsibilities. In addition to providing meeting and greetingfacilities it was entrusted with the functions of undertaking tourist promotional workoverseas and to develop tourist accommodation facilities. An officer designated as Directorwas placed in-charge of the Bureau and separate divisions were entrusted with the tasks ofhandling the new functions assigned to it.During the 1950s there was a rapid growth of international tourism and it extended to allparts of the world. International tourist arrivals increased at an annual average rate of 7.1%from 23.5 million in 1950 to 561.0 million in 1995 more than a 22 fold increase over aperiod of four and a half decades. During this period, the average yearly growth rate hasbeen as high as 10.6% which however has gradually slowed down to 4.1% in the 90s.This was largely due to the introduction of jet aircraft for civilian transport after World WarII. Consequently it became necessary for the countries to build new airports with wider andlonger runways and parking bays, larger spaces, and terminal buildings with modernfacilities. Page 4 of 96
  5. 5. However, when most countries in the world were preparing themselves to accommodate thenew jet aircraft by investing on the expansion of their airports, Sri Lanka unfortunately didnot prepare itself and lost out on the opportunity to get it established as the main gatewaybetween the West and the East. Singapore instead gained that advantage. Improvements tocountry’s airport, Katunayake, were carried out only in 1965 and the new terminal buildingwas opened in March 1968.As the development of accommodation facilities is a primary requirement of the promotion oftourism this task was also entrusted to the Government Tourist Bureau. The Bureau tookadvantage of a network of accommodation establishments constructed during the British rulenot particularly for promotion of tourism but for the use of planters, the business communityand government officials whilst on duty. These accommodation establishments included theresidences of some of the colonial governors, which were later converted into hotels. Theseincluded the Galle Face Hotel in Kandy, Grand Oriental Hotel, the Mount Lavinia Hotel,Queens Hotel and Suisse Hotel in Kandy, Grand Hotel and St. Andrews Hotel in NuwaraEliya, Bandarawela Hotel and New Oriental Hotel in Galle. These hotels were renovated andwere used as prime accommodation facilities for foreign visitors. In addition facilitiesdeveloped during the British rule, were turned into Tourist Rest-houses. Theseaccommodation establishments were developed in places of scenic beauty such as Ella,Belihul Oya, Horton Plains, Pussellawa, Polonnaruwa, Sigiriya, Dambulla, Tissa Wewa,Nuwara Wewa, Kitulgala, Bentota, and Tissamaharama.Apart from the accommodation establishments referred to above, no efforts were made toconstruct accommodation facilities for foreign for tourists. It should be noted that the privatesector was neither interested nor encouraged to build modern hotels to attract foreign tourists.It should also be mentioned that no new hotels were built for nearly a century up to 1969.During that year the Blue Lagoon Hotel at Talahena, Negombo came into operation. Despitethe fact that during the 1950s hotels with international brand names were constructed theworld over, particularly in East Asian countries, neither the government nor the private sectormade any attempt to attract and construct, hotels of international fame in Sri Lanka.One of the significant developments in the early 1960s was the realization of the need todevelop skilled manpower in the hotel and the catering sector. In 1964, the Prime MinisterMrs. Sirimavo Bandaranaike set up Sri Lanka’s first Hotel School, which was created todevelop skilled manpower for existing accommodation establishments. Set up at the ColomboClub at Galle Face Colombo, the Principal and the Lecturing Staff were expatriates and thethree year Degree programme covered all aspects of the Hotel and Catering Services. Thecurriculum was subsequently changed to a modular scheme, with basic level course leadingto Intermediate and Higher Levels of Management. Page 5 of 96
  6. 6. The Private Sector played an important role from the very early days, by providing servicesto passengers who arrived in ships and came ashore for day trips and also for foreign visitorswho stayed in the country for a minimum of one night. They were providing a range ofTravel Agency facilities such as meeting on arrival, transfers to hotels, reservation ofaccommodation, arranging tours, guiding etc. The four main companies which wereproviding these services at the time were, Ceylon Carriers, Ceylon Tours, Quick haws, andBobby Arnold a Tours. There was also a limited fleet of Cars (Jetty Hiring Cars) at theColombo Harbour to provide transport facilities to foreign visitors. However, for the firsttime an organized taxi service was provided to both foreign visitors and local residents byQuick haws.It was the function of the Government Tourist Bureau to handle promotion of tourismoverseas. However, local travel agents and some of the hotels also undertook their ownpromotional activities to attract the tourists. Consequently, tourists arrived in the form ofindividuals and small tour groups on passenger liners as well as by air. The tourists whoarrived by air used either scheduled air services or arrived by special charters.The Tourist Bureau did not have any tourist promotional offices overseas. Hence, they had tocarry out their promotional activities through Sri Lankas Missions overseas. The Bureauproduced a variety of promotional material such as tourist literature to highlight the multitudeof tourist attractions and facilities available in Sri Lanka. Travel brochures, travel guides,folders, posters and films were used as promotional material. Distribution was done byoverseas travel trade and local travel trade through Sri Lankas Missions overseas and theBureaus information offices and outlets. In addition, there was also limited participation inoverseas Travel Fairs.This is how the tourism has been grown gradually and this report provides the latest changesin the macro environment (basically the report was prepared according to the PESTLEanalyses) of the tourism and their implications in tourism sector, Sri Lanka. Page 6 of 96
  7. 7. Political EnvironmentTourism is the second largest growing business area after information technology in theglobal economy. Many of the economies are successful in marketing their country anddestinations and generating a substantial amount of foreign exchange from tourism Sector.Even countries with poor level of infrastructure and facilities are able to attract investors toinvest money in their country for tourism promotion.Tourism marketing is a very complex phenomenon because the number of uncontrollablefactors is more than the number of marketing mix variables. Though the conventionalmarketing wisdom says that the larger political factors affect the marketing offer in productmarketing but it is more prominent in the case of tourism. The political upspring, terrorism,religious fundamentalism, level of crime perception by the foreign tourist affects theprospects of a destination. Sri Lanka is also facing a down turn in the tourism business due tothe above reasons. The factors of low per capita tourist investment sustained effort fortourism marketing by the developing countries have become secondary today.The tourism business is largely governed by the non-marketing factors than pure businesspropositions in South Asia. The geo political developments and the kind of social backgroundhave largely affected the perception of the foreign tourists negatively for which the inboundtraffic is in a down turn. The decision to establish or maintain a direct investment positionabroad necessitates addressing the issue of risk that confronts multinational firms. In theexamination of any foreign direct or indirect investment opportunity, the environmentencompasses numerous areas of concern for the investing firm. One of the main functions ofrisk analysis is to determine when and how economic and non- economic factors can affectthe foreign investment climate in a particular country, given that risk is a direct outcome ofthe political and non-political realities faced by international business. Furthermore, thisactivity is even more crucial in the current global marketplace, given the increasinglycomplex and uncertain environmental conditions faced by international tourism promoters,particularly to developing countries. Page 7 of 96
  8. 8. As illustrated in the above picture in comparison to the world situation as well as the SouthAsian Regional situation the share of government expenditure for travel and tourism sector inSri Lanka is very high which reflects the government’s view of its promising economicperformance in the years to come.Opportunities for Tourism IndustrySri Lanka witnessed a strong upsurge in tourism after the end of the civil war in 2009.Tourism, which forms 0.6% of the total GDP of the country, was one of the fastest growingsectors in the Economy, growing by39.8% in 2010 over 2009. The data provides the touristarrivals from 2000to 2010, clearly showing the rise in tourist arrivals in 2010 (over the rest ofthe decade) with political stability and economic resurgence of the country. With Sri Lankabeing ranked at the first position in the “31 Places to go in 2010” published by the New YorkTimes, co-hosting the Cricket World Cup from February to April 2011, and the year 2011being declared as the “Visit Sri Lanka” year by the government, the country witnessed recordlevels of tourist arrivals in the early months of2011; a trend that is expected to continue forthe remainder of the year.The Board of Investments (BOI) in Sri Lanka is offering incentives for development of hotelsand other tourism facilities. According to the BOI website, the government currently offers afive-year tax holiday on any project with a minimum investment of US$500,000. Toencourage projects in the northern and eastern provinces, the government offers additionalincentives, depending on the nature and scale of the project. It is interesting to note that allcountries forming the top ten source markets for Sri Lanka have been provided the option of a‘Visa on Arrival’ by the Sri Lankan government. Currently, approximately 80 nationalitiesare allowed the option of obtaining a visa on arrival for tourism purposes, which is valid for aperiod of 30 days. This illustrates the pro-tourism stance of the government. The government has set a target of receiving 2.5 million tourist arrivals by the year 2016. In order to achieve this target, several promotional and developmental activities have been initiated. One such promotional initiative is the declaration of the year 2011 as “Visit Sri Lanka Year”, where each month is promoted with a special attractionand festival. Sri Lanka received the massive opportunity to organize the common wealthgames in Hambantota. The Commonwealth Games will provide an opportunity for thecountry to showcase its tourist attractions and build a better infrastructure. Page 8 of 96
  9. 9. A unique example of the government tourism policy is the introduction of minimum rates by the government in the capital city of Colombo. In order to help the hotel industry, which was suffering from very low rates owing to weak demand during the civil war, the government introduced minimum rates for rooms and food and beverage services according to the star classification of the hotels. The hotels in Colombo are now required to charge above or equal to the minimum rates for each type of customer segment, as specified by the government. Although the policy received substantial resistance from travel agents and tour operators in the beginning, it helped bring the rates to sustainable levels. Before the introduction of minimum rates, upscale hotel rooms were being sold in the range of USD 35- 45, as a result of which the hotels were not able to generate sufficient revenues to cover their expenses. However, the government has announced two consecutive upward revisions in the minimum rates in a short span of four months, which might affect the demand for hotels in Colombo, at least in the short term. Government also involved developing the infrastructure of the country in order to create opportunities and support the tourism industry. Along with the development of new tourism destinations, the government is simultaneously placing emphasis on infrastructure development, with the construction of airports, ports, roads, and power plants. Airports: The country currently has one major international airport, the Bandaranaike International Airport in Colombo, with 20 operating airlines that provide 277 incoming flights per weeks in the high season. The airport currently has the capacity to handle 7 million passenger movements; it can handle a significant increase in passenger traffic even without expansion. However, keeping in mind the projected increase in tourist arrivals in the coming years, an expansion and modernization of the airport is planned. A new passenger terminal building with segregated departure and arrival areas, new parking aprons, and additional area with duty free retail are proposed to be added in Phase II of the airport development, which would increase the airport capacity to 12 million passengers. The work on Phase II is proposed to start in 2012. A second airport is also being planned in Hambantota, in the south of Colombo. The construction of the airport is underway, and it is expected to be completed by 2013. In the first phase, the airport is expected to have a capacity to handle 1 million passengers. Page 9 of 96
  10. 10.  Ports: Work is also underway for the expansion of the existing Colombo port, under the Colombo South Port Project. Another large port facility is being developed at Hambantota, with considerable Chinese investment. Roads: Several road development and expansion projects such as the Southern Highway Project, Colombo - Katunayake Expressway, National Highway Sector Project and Road Sector Assistance Project are underway to improve the road connectivity to various cities. Power: The government is working towards the goal of being self-sufficient in terms of power generation. The first phase of the Norochcholai Coal Fired Power Plant was declared operationalin 2011; work is also underway on the Upper Kotmale power plant, Trincomalee Coal Fired Power Plant, and the Kerawalapitiya power plant. Although efforts are underway to preserve and maintain the existing tourist attractions, the government is also promoting the development of new tourism destinations in Sri Lanka, especially in the northland east of the country, to encourage economic growth in the area. The major tourism projects that have been announced by the government with the view of developing the country as a major tourism destination in South Asia by 2015 are summarized below. Dedduwa Lake Resort: Proposed development of resorts over an area of 1,800 hectares, located to the east of Bentota. The project is in its initial planning stages. Eastern Province Region Development: The government is encouraging the development of areas in the Eastern province, including Passikuda, Arugam Bay, Trincomalee, Waakarai, Verugal and Kalkudah, in order to accelerate economic development in the region. Two notable projects in the region are Kucchaveli and Passikuda. Kuchchaveli Resort Development: An area of approximately 500 acres has been identified for tourism development, near the Nilaveli Beach in Trincomalee. According to the SLTDA, this development is proposed to include more than 3,000 hotel and resort rooms, along with theme parks and water park facilities. A conceptual zoning plan is currently being prepared for the area by the SLTDA with the assistance of the Urban Development Authority (UDA). The government is currently inviting applications from private investors to develop hotels and resorts in the region. Passikuda Resort Development: The SLTDA has finalized the conceptual design and isundertaking the economic impact assessment for a resort development onapproximately 150 acres of land close to the beach Page 10 of 96
  11. 11.  Kalpitiya Integrated Resort Development Project: The Kalpitiya Tourism Development Program, as envisioned by the government, will include 17 hotels with a total capacity of 5,000 rooms and 10,000beds upon completion, along with an amusement park, golf course, race course, and a domestic airport at Uchchamunai. The 13-kilometre-long stretch comprises 14 islands, of which nine belong entirely to the government while the rest are owned partly by the government and partly by private investors. Currently, the project is in the initial stages with the government inviting bids for leasing out the islands. Two islands have been leased out to foreign investors – Vellai Islands for a sum of SLR 3.7 million (approximately USD 34,000) for the first five years to Sun Resort Investment Lanka Private Limited and the Ippantivu Island for SLR 14 million to Qube Lanka Leisure Properties Private Limited. Threats for tourism industry As political risk introduces additional elements of uncertainty into the rules governing tourism investment projects, the risk of capital loss is raised for longer- term projects. Hence, overall productivity in an economy is likely to be lowered via a shift in the marginal efficiency of investment schedule. Political risk also negatively influences the timing and pricing of the tourism production process. We have identified that political risk, lack of investment capital and distance from major tourist- generating markets as barriers to tourism promotions in Sri Lanka in general. Negative images, lack of foreign exchange for tourism development, lack of skilled manpower, weak institutional frameworks for tourism planning, political instability caused by communal violence, civil war conflicts are inhibitors to tourism development. However, little is known about how international tourism firms perceive political risks and other general barriers and threats to tourism promotion in Sri Lanka. Common political factors which affect the tourism industry are revolution, civil war, factional conflict, ethnic violence, religious turmoil, widespread riots, terrorism, nationwide strikes/ protests/ boycotts, cross- national guerrilla warfare, world public opinion, repatriation restrictions, leadership struggle, high inflation, bureaucratic politics, border conflicts, high external debt service ratio and creeping nationalization. Last thirty years Sri Lanka also faced the civil war and it affected the tourism industry of Sri Lanka. Even the war has come to an end still the government is facing the issues such as Channel 4 and human rights issues, and these factors influence the tourism industry in negative manner and it affects the country’s image as well. Organizing elections frequently also create threat to the tourism industry because during the election period in some places to control the situation cur hews are implemented. Page 11 of 96
  12. 12. This will create negative image in the mind of tourists. Some of the foreign countries have boycott Sri Lanka’s products in their country due to the violation of human rights during the war time. For example government invested and spent on IIFA program but it was not a successful event for Sri Lanka because the big stars have boycotted the event. They didn’t visit Sri Lanka because of the protests held in their country by asking them not to visit the place. Currently Sri Lanka is having negative relationship with some foreign countries therefore the export and import of Sri Lankan products will be decreased and it affects the tourism industry as well. Even though Sri Lanka has got rid from the war still facing the political instability and security issues. Future Trends, Challenges, and Recommendations Infrastructure growth to fuel tourism growth To ensure rapid growth of tourism in the future, tourism projects will need to be complemented with infrastructure development. We expect that with improvements in road infrastructure and development of the new airport in Hambantota, various new destinations will emerge in the country, especially to the north and the east, as these areas have abundant natural beauty to attract tourists but currently suffer from poor connectivity. We expect more airlines to operate in the country as the second airport develops. Airlines such as Etihad have recently started operating flights to Sri Lanka; an increase in frequency of current operational airlines and charter movements in the winter months from Europe and Russia is also expected. Source markets in Asia and Middle East to drive demand. Sri Lanka’s proximity to source markets such as India and its connectivity to the Middle East and China will help in sustaining tourism growth. The rise in per capita income and therefore consumer spending in these source markets will aid the growth in tourism. Growth of MICE segment As new hotels with large inventories and meeting spaces enter the market, we anticipate Sri Lanka to become a lucrative MICE destination, especially for companies located in India. Page 12 of 96
  13. 13.  Greater competition will facilitate growth We also expect greater competition with the introduction of new hotels in popular destinations such as Colombo, Kandy, Bentota, and Sigiriya, and Galle. We expect the existing hotels to undertake phased renovations to effectively compete with the upcoming hotels. Also, with the increase in income from hotels over the past few years, we expect an increase in the number of hospitality related transactions and mergers and acquisitions. Challenge of attrition to other destinations Currently, the hotel industry witnesses significant employee attrition to countries in the Middle East and to the Maldives and India. However, with a more stable political environment and improvement in quality of living in Sri Lanka, we expect the attrition to gradually decline. We also expect the hotel companies, especially the domestic companies located in the country to undertake long and medium term hospitality training programs and regularly undertake competition benchmarking for compensation to retain the talent. Shortage of skilled labor As new players enter the market, the projected growth in tourism will be accompanied by shortage of skilled labour. We anticipate the need for relevant hospitality education institutions as the contribution of the tourism sector to the overall economy increases. Page 13 of 96
  14. 14. Economic Environment The Sri Lankan tourism industry is one of the fast emerging industries of the economy with average annual revenue of US $ 500 million at present. It is the sixth largest foreign exchange earner in Sri Lanka. It has created employment for about 125,000 persons. At present, nearly half a million tourists visit the country every year. Sri Lanka has exotic sandy beaches, large greeneries, historical artifacts, and a good climate, spectacular landscape in the highlands, a rich biodiversity and friendly and welcoming people. These distinctive opportunities will be utilized to develop the tourism industry as a major growth sector in the development of the economy. In present Sri Lanka has achieved a high growth in tourism industry with the current political stability as well as the opening of the North and East to tourist. Today Sri Lanka tourism contributes enormously to the Sri Lankan economy. Because after the end of the civil war in 2009, Sri Lanka witnessed a strong upsurge in tourism. The government’s vision is to transform Sri Lankan tourism sector, by 2020, to be the largest foreign exchange earner in the economy; position Sri Lanka as the world’s most treasured and Greenest Island and attract high spending tourists while preserving the country’s cultural values, natural habitats and environment. The government has targeted 2.5 million tourists by 2016 and room capacity of about 45,000 to meet this target. This sector is also expected to receive investments in excess of US$ 2 billion in the medium term in areas of luxury hotels, high quality residencies and high end shopping malls. The Government recognizes the multiplier effect of tourism development in creating employment opportunities and distribution of wealth through a variety of economic activities predominantly in the SME sector, taking the advantage of SMEs being able to link micro enterprises from one side and large scale corporate sector on the other side. Some of the key objectives to be achieved through the 5 year strategy are as follows: • Increase tourist arrivals from 650,000 in 2010 to 2.5 Mn by 2016. • Attract USD 3,000 Mn as Foreign Direct Investment (FDI) to the country within 5 years. • Increase the tourism related employment from 125,000 in 2010 to 500,000 by 2016 and expand tourism based industry and services all island. • Distribute the economic benefits of tourism to a larger cross section of the society and integrate tourism to the real economy. • Increase the foreign exchange earnings from USD 500 Mn in 2010 to USD 2.75 Bn by 2016. • Contribute towards improving the global trade and economic linkages of Sri Lanka. Page 14 of 96
  15. 15. The multiplier effect in the investment on tourism is envisaged in the construction, furniture,transport and food and beverage industries in the country. Estimates reveal that theseindustries will provide new direct and indirect employment opportunities to about 350,000people.The end of a three-decade long civil war in 2009, Sri Lanka has witnessed unprecedentedgrowth and with a real GDP growth rate of 8% in 2010, a jump of 125.2% in the stockmarket in 2009, and 32% year-on-year growth in tourist arrivals in 2010, and also Thecountry with a per capita income of USD 2400 in 2010 enjoyed 8% economic growth. SriLanka is on its way to becoming a major tourism destination in South Asia.There has been a surge in tourism arrivals immediately after the conflict with record 46%growth in 2010 with total arrivals surpassing 650,000 confirming the fact that Sri Lanka hasbeen globally acclaimed as one of the finest destinations for the discerning traveler searchingfor peace, tranquility and multi faceted attractions. And also, according to officialinformation, March 2011 arrivals were the highest ever for a single month since December2010. Its 84000 visitors came.Statistical data of tourist arrivals in 2009- 2010 Page 15 of 96
  16. 16. Tourist arrivals from 2000 to 2010, clearly showing the rise in tourist arrivals in 2010 (over the rest of the decade) with political stability and economic resurgence of the country. With Sri Lanka being ranked at the first position in the “31 Places to go in 2010” published by the New York Times, co-hosting the Cricket World Cup from February to April 2011, and the year 2011 being declared as the “Visit Sri Lanka” year by the government, the country witnessed record levels of tourist arrivals in the early months of 2011; a trend that is expected to continue for the remainder of the year. In the present Sri Lankan government has started policy framework to support for investors and industry to increase its growing rate. The restoration of a simple tax regime. Simplification of licensing procedures. Reduction of the high electricity tariffs. Unification of the regulatory environment and creating a single authority for tourism promotion. Creating opportunities to promote shopping of internationally reputed branded products and entertainment. Simplification of the investment approval process by setting up of a “One Stop Shop” for tourism related investments. Streamlining the process of alienating government land for tourism development projects. Attracting internationally reputed tourist hotels and, above all Environmentally friendly, clean-city concept for urban development. Increase of tourist arrivals and earnings Tourism revenue rose 54.7 percent in first four months of this year to $270.6 million compared to the corresponding period last year after jumping 64.8 percent year-on-year to a record $575.9 million in 2010, the central banks latest data showed. The booming tourism investments have boosted 2011 first quarter foreign direct investment (FDI) to a record $236 million. The sector is expected to attract more than 4 million tourists by 2020. The sector is also expected to generate employment for about 1 million persons and income amounting to about US$ 8 billion. Regional cooperation will be strengthened to increase tourism openness through the relaxation of regulatory barriers. International and local air lines are encouraged to operate in Sri Lanka. Comprehensive market promotion campaigns will be implemented to build a positive perception on Sri Lanka globally. A Tourism Centre will be established of special cultural importance to Asia to attract religious tourists from neighboring countries. Major cities of the country will be developed to be attractive tourist cities in Asia Page 16 of 96
  17. 17. Arrivals 4 3 2 1 0 2010 2015 2020 8000 7000 6000 5000 Earnings 4000 3000 Column1 2000 Column2 1000 0 2010 2015 2020A Conducive taxation strategy for tourismAnd also today government is conductive a friendly taxation strategy for tourism industry. Tocompete in the international arena, the service Taxes have been simplified for the benefit oftourism standards must match the global expectations. Industry the profit / income are subjectto a 12% “It must also be ensured that the maximum benefit of tourism is passed on to thecommunity and economic growth is supported through domestic value creation.” tax.The upfront cost of investment in leisure and tourism related activities and plant andmachinery as well as branded consumer products are subject to low taxes. Duties on vehicleshave been reduced to promote tourism related services. Taxes imposed at various levels ofgovernment are being consolidated to make an industry friendly tax regime. Page 17 of 96
  18. 18. Developing Industry ProfessionalismThe government will improve productivity of the tourism industry, through buildingprofessionalism in the travel and hotel industries. The private sector will be encouraged to setup world renowned human resource development centers to meet the emerging needs of thetourism industry locally and abroad. Hotel management and tourism promotion subjects willbe provided in the curriculum of university academic programmers.Simultaneously, the government will extend maximum support to the private sector traininginstitutions with a view to maintaining the standards of services. Licensing of tour guides inorder to standardize their service (through a competency test) and accreditation of travelagents will be undertaken.Improving Service StandardsSafety standards and security aspects of tourism will be given a high priority. Regulatorybodies will be strengthened to ensure the quality standards of products and security aspects oftourists. Rules, regulations and institutional mechanisms relating to the protection of touristsand the environment will be strengthened. Strict policy vigilance and monitoring will beconducted to minimize tourism related crimes and abuses.INFRASTRUCTURE To a greater degree than most activities, Travel & Tourism depends on a wide rangeof infrastructure services - airports, air navigation, roads, railheads and ports, as well as basicinfrastructure services required by hotels, restaurants, shops, and recreation facilities. It is thecombination of tourism and good infrastructure that underpins the economic, environmentaland social benefits. It is important to balance any decision to develop an area for tourismagainst the need to preserve fragile or threatened environments and cultures. However, once adecision has been taken where an area is appropriate for new tourism development, or that anexisting tourist site should be developed further, then good infrastructure will be essential tosustain the quality, economic viability and growth of Travel & Tourism. Good infrastructurewill also be a key factor in the industry’s ability to manage visitor flows in ways that do notaffect the natural or built heritage, nor counteract against local interests.Latest ImplicationsGovernment is estimated that 2.5 Mn tourist arrivals by 2016 will require around 45,000 hotelrooms catering to the tourism industry. However as per end 2010 statistics, the country hasonly 22,735 SLTDA approved hotel rooms. This means the industry has a task of addingaround 22,500 rooms to the current capacity, during the next five years. At the same timemost of the current facilities also need to be refurbished. In order to facilitate the process ofbuilding room capacity SLTDA has taken the following initiatives: Page 18 of 96
  19. 19.  Setting up a ‘One Stop Shop’ at SLTDA for tourism related investment projects with the cooperation of BOI, UDA, CCD, EA and other relevant line agencies, to be able to considerably reduce the time spent by investors to obtain necessary approvals. The land alienation process has been simplified and several resorts and city hotels are being promoted in the development policy strategy. Instead of SLTDA attempting to develop resorts, the lands will be made available to potential investors who have the financial capability to pay upfront for a 99 year lease and they will be given the freedom to develop these resorts within the national tourism guideline. Small land blocks are available on an outright basis for foreign investments, provided investment in the land alone is in excess of USD 50 Mn, for the development of city hotels. A group of specialists have been engaged to develop a land bank, which includes both government and private lands, which are made available to the potential investors. This project covers the entire island and will be a key contributor towards building provincial level tourism. A number of other tourism related projects has also been identified to support the overall growth of tourism in the country. The potential investors are encouraged to consider the following opportunities: Golf courses, race courses, water parks, theme parks, marinas, shopping malls, entertainment studios, adventure sports light aircraft services/sea planes, boat manufacturing/boat hiring, convention/exhibition centers, taxi services, gaming cities (perhaps isolated from general public and in special zones) With the growing investments in tourism industry, the Government is committed to design policy strategies to integrate banking and financial institutions, construction industry and professionals, agriculture industry and a wide range of service oriented stakeholders to work with the full potential of backward integration in such large investments. Dialog is already being promoted by the Ministry of Economic Development and National Council for Economic Development (NCED) to encourage investors to link with the local construction industry and others in the supply chain. Similarly, local economy is being promoted and the tourism sector is encouraged to source its requirements such as fruits, vegetables, spices, food varieties, beverages, textiles and handicrafts, gift items, consumables etc. from local suppliers. The Government Tourism Development Strategy therefore aims at generating a wide range of economic activities related to tourism. Page 19 of 96
  20. 20. Transport solutions SLTDA has been actively promoting the use of sea planes and light aircrafts as a solution for reducing the time required by tourists to travel within the country. Given the large number of water bodies in the country, sea planes have become the ideal solution for a high spending tourist. Railway also has a great potential to evolve as a solution for tourist transportation. With a little modification to the current railway tracks and improvements to the carriages enable tourists to take a train journey to anywhere in the country. SLTDA promotes with the railway department, to develop products and popularize train travel by tourists by introducing modern/ refurbished carriages, observation saloons, dining cars etc. Extending the rail track closer to main tourist attractions such as ‘Pinnawala Elephant Orphanage’ is being explored. The old steam locomotives and the narrow gauge railway engines left with the Railway Department could be effectively used as tourist attractions. SLTDA has also taken a special interest in promoting the “Vice Roy Special” steam train to the tourists and tour operators. Strategies are being worked out to introduce a tour bus service circling the Galle Road and Duplication Road connecting Dickman’s Road junction and Colpetty junction and boat services to be expanded connecting the canal system and the Beira Lake to promote Colombo City attraction for both domestic and foreign tourists. Currently only a limited number of airlines provide services to the country. To meet the anticipated demand, actions have been initiated to; (1) increase the frequencies of those airlines currently flying to Colombo, (2) attract new airlines to begin services and (3) promote the network of Sri Lankan Airlines. The airport taxi services are to be regulated and improved to facilitate transport to city hotels and other local destinations. A comprehensive network of roads to reach tourist attractions is being spread throughout the country. Existing roads have been upgraded and elevated roads have been constructed to facilitate transportation. Human resources requirements of the industry Strategies that are used by SLTDA to fill the human resources gap could be divided into two major categories: Meeting the human resources gap of the accommodation industry: Providing necessary training for four major sectors, namely, Professional Cookery, Housekeeping and Front Office Operation. Sri Lanka Institute of Tourism and Hotel Management is specializing in these areas. As the annual output of about 1500 graduates is the industry requirement, incentives will be provided to promote skills in the industry. Page 20 of 96
  21. 21.  Meeting the human resources gap of in related services: Providing necessary training for tour guides, home stay hosts and other formal and informal sector service providers. Sri Lanka Institute of Tourism and Hotel Management is conducting short courses to meet these requirements as well. In order to meet the human resources building requirement, Sri Lanka Tourism also works closely with other interest groups such as, • Local authorities • Local universities • Industry partners • Private sector education institutes • Potential training providers of public and private sectors and • NGOs and CBOs to meet the emerging demand. Promotion of tourism investment The Board of Investment has introduced incentives in the form of tax exemptions, duty-free imports and the relaxation of controls on foreign exchange holdings. The incentives provided by the government have mainly attracted investment in the hotel sector. The present hotel capacity is 13,670 rooms. That figure is projected to increase to 21,000 rooms by 2004, which will accommodate the target of 1 million tourists. Five regional domestic airports to be restructured at a total cost of approx. Rs. 2bn: Rathmalana, Ampara, Koggala, Trincomalee & Jaffna (Rathmalana will be developed as a “City Airport”) Opportunities for Tourism industry Investment opportunities, 4-5 star hotels on the south coast are more attractively positioned than 3 stars and below. Improved accessibility via new highways and conversion of military to domestic airports may make high-end hotels in the Deep South and the East of Sri Lanka viable alternatives to the Galle area. Threats for Tourism industry Inadequate coordination of environmental management and tourism development. A lack of well-trained staff for meeting the various requirements of the tourism industry. An inadequate network for disseminating and exchanging information on the various aspects of tourism. Page 21 of 96
  22. 22.  A lack of cooperation between the public and private sectors in identified projects. Inadequate infrastructure. A lack of improvements in transportation. Insufficient promotional efforts. Airport capacity constraints are not likely to be binding given the option to add larger capacity planes to Colombo routes, Recommendations Introduce measures to attract high-yield tourists. Develop a marketing strategy emphasizing the creation and sustaining of a positive image of Sri Lanka as a substantive and well-established tourist destination offering facilities an experiences that are distinct Sri Lankan products. Establish a domestic tourism strategy to expand the existing product base and encourage a greater level of holiday movements in addition to pilgrim movements. Increase accessibility to Sri Lanka for existing and potential tourist markets, particularly by air. Develop goods and services to meet the increasing needs of the tourism industry, and thus optimize the economic benefit of tourism development to Sri Lanka. Improve human resources development to meet the existing and future needs of a quality tourist destination. Modify the organization of tourism activities in order to bring about related improvements in the private sector, increase coordination between tourism and interrelated sectors, and introduce streamlining to facilitate the development of the tourism sector. Emphasize the environmental, social and cultural aspects to ensure that development of the tourism sector is sustainable, that it meets the needs of the local population as well as international and domestic tourists, and that the future potential is protected and enhanced. Page 22 of 96
  23. 23. Socio Cultural Environment The socio cultural Environment, then, consists of the whole range of behaviors and relationships in which individuals engage in their personal and private lives, including: The characteristics of the population (e.g. age, sex, race or ethnicity, class) Values and attitudes Lifestyles and relationships. Culture is an attribute of groups, and this can mean society as a whole, groups within society, or even groups of societies and nations. For example, the culture of Sri Lanka has been influenced by many things in the past but has managed to retain much of its ancient and rich aspects. Mostly it has been influenced by religion and colonization by the Dutch, the Portuguese and the British. As with other aspects of the environment, the relationship between business, culture and society involves a two-way interaction. Although we tend to think of business as operating according to a distinctive instrumental rationality of profit-and-loss and the ‘bottom line’ it is also influenced by the social-cultural setting in which it is embedded. At the same time business affects the wider culture and society profoundly. These influences can be seen as either positive or negative. For example, a good deal of what we think of as making up the culture of modern society consists of the outputs of private sector businesses in what might be called the culture industries, such as popular music, films, literature, newspapers and magazines. The culture industries make up a significant part of business activity, reflecting the shift from manufacturing to service industries in the wealthy economies. Culture has become increasingly big business as a growing share of consumer expenditure is dedicated to ‘lifestyle’ purchases rather than material necessities. This can be seen in the growth of the wide range of businesses concerned with leisure and tourism. For example, cheap flights have enabled growing numbers to widen their cultural horizons through foreign travel and local travelling which means a traveler can travel locally by using aircrafts. Tourism sector is becoming the most powerful growth engine in the new millennium. Tourism involves traveling to relatively undisturbed or uncontaminated natural areas with the specific objects of studying, admiring and enjoying the scenery and its wild flora as well as other existing cultural and historical aspects. These include places of archeological and historical importance, pilgrimage centers, sanctuaries, national parks, hill resorts and sea beaches, etc. Tourism is traveling for predominantly recreational, leisure purposes, or the provision of services to support this leisure travel. The World Tourism Organization defines tourists as people who "travel to and stay in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited". Tourism has become a Page 23 of 96
  24. 24. popular global leisure activity. Tourism is vital for country like Sri Lanka due to the largeintake of money for businesses with their goods and services and the opportunity foremployment in the service industries associated with tourism. These service industriesinclude transportation services such as cruise ships and taxes, accommodation such as hotelsand entertainment venues, and other hospitality industry services such as resorts.DemographicsReligions in Sri LankaSri Lanka is the 53rd most populated nation in the world, with an annual population growthrate of 0.73%. Sri Lanka has a birth rate of 17.6 births per 1,000 people and a death rate of6.2 deaths per 1,000 people. Population density is highest in western Sri Lanka, especially inand around the capital. Sri Lankas culture also revolves around religion. Sri Lankans are veryreligious because the history of the island has been involved with religion numerous times.There are many Buddhist temples in Sri Lanka and many mosques, Hindu temples andchurches all across the island. The religious preference of an area could be determined by thenumber of religious institutions in the area. The North and the East of the island has manyHindu temples and mosques because a large Tamil and Muslim population resides in thoseareas. The interior of the island is mostly the Buddhist population and there are manyBuddhists residing in all parts of the island because they are the largest religious group in SriLanka. Page 24 of 96
  25. 25. Population growth in Sri Lanka Percent  Religion  Buddhism 69%  Hinduism 15%  Islam 8%Christianity 8%The Buddhist majority observe Poya Days, once per month according to the Lunar calendar.The Hindus and Muslims also observe their own holidays. Sri Lanka was ranked the 3rd mostreligious country in the world by a 2008 Gallup poll, with 99% of Sri Lankans saying religionis an important part of their daily life.Country like Sri Lanka has an opportunity of attracting more religious tourists or the peoplewho are willing to tour for pilgrimage purpose. Because in Sri Lanka there are four differentreligions therefore both religious tourists can visit special temples situated in Sri Lanka suchas Dhalatha Maligawa, thirukketheeswaram, Madu Maatha church and Mosques.CultureSri Lanka was ranked the 3rd most religious country in the world by a 2008 Gallup poll, with99% of Sri Lankans saying religion is an important part of their daily life. Throughout thepast centuries. Sri Lanka has been going through a dramatic make over. A vast majority ofthe Sri Lankan community were only influenced by their own traditional food and nothingmore. But, due to economic growth and intense competition in developed countries,companies have taken themselves overseas to developing nation.Food culture of Sri Lanka The customary diet in Sri Lanka are rice and curry, pittu, Kiribath, Roti, String hoppers wattalapam, kottu, hoppers ("appa"), etc. Jackfruit may replace rice and curries at times. Traditional meals are usually served on plantain leaf. Sri Lanka has long been renowned for its spices. In the 15th and 16th centuries, traders from all over the world who came to Sri Lanka brought theirnative cuisines to the island, resulting in a rich diversity of cooking styles and techniques.Lamprais—rice boiled in stock with a special curry, accompanied by "frikkadels" (meatballs),all of which is then wrapped in a banana leaf and baked—is a Dutch-influenced Sri Lankandish. Dutch and Portuguese sweets also continue to be popular. British influences includeroast beef and roast chicken. Also, the influences of the Indian cooking methods and foodhave played a major role in what Sri Lankans food culture. Page 25 of 96
  26. 26. Even though Sri Lanka is a traditional country tourist can have most of different varieties offoods belongs to different countries. This strategy is used to attract more tourists by hotelindustry.Festivals in Sri LankaEvery year in mid April, Sri Lankans celebrate the Sinhalese and Hindu new year festival. Inaddition, Esala Perahera, a symbolic Buddhist festival consisting of dances and richlydecorated elephants, is held in Kandy, during the month of August. Fire-dances, whip-dances,Kandian dances and various other cultural dances are integral parts of the festival. Tamilscelebrate Thai Pongal, Maha Shivaratri and Deepavali. Muslims celebrate Hajj, Ramazan intheir respective days of the year and Christians celebrate Christmas.Arts and crafts of Sri LankaSri Lankan art originates from religious beliefs, and are represented in many forms such aspainting, sculpture and architecture. One of the most notable aspects of Sri Lankan Art arecave and temple painting such as the frescoes found in Sigiriya and religious paintings foundin temples in Dambulla and Temple of the Tooth Relic in Kandy. Other popular forms of arthave been influenced by both natives as well as outside settlers. For example, traditionalwooden handicrafts and clay pottery are found around the hill country while Portuguese-inspired lacework and Indonesian inspired Batik has become notable. Page 26 of 96
  27. 27. Tea Culture Being one of the largest producers of tea in the world, Sri Lankans drink a lot of tea. Many Sri Lankans drink at least three cups a day. Sri Lanka is also one of the best tea- producing countries in the World and the Royal Family of the United Kingdom has been known to drink Ceylon tea. Tea is served whenever a guest comes to a house, it is served at festivals and gatherings or just for breakfast. Sports in Sri Lanka Sports plays a very big part in Sri Lankan culture because the society was quite rich in educated people, therefore the people had found playing a sport is an important thing in a life. Sri Lankas main sport is Cricket. Every child in Sri Lanka knows how to play cricket, and there are many cricket fields scattered across the island for children and adults to play the sport. The biggest pastime of the Sri Lankan population, after cricket, is watching the Sri Lankan National Team playing cricket. It is common for businesses to shut down when very big matches are televised. This was the case in 1996 when the Sri Lankan team beat Australia in the finals to win the Cricket World Cup. The whole country shut down as though there were a curfew imposed upon the whole island. Threats of Tourism industry A survey by Sri Lanka Tourism Development Authority has highlighted the possibilities of a major impact on national cultural values with a large number of tourists visiting the country. Potential negative cultural impacts are more generally related to areas that had been less attractive to tourists earlier. Although tourism revenues help maximize economic benefits to local communities, a continuous growth in this sector places a great stress on remaining biologically diverse habitats and indigenous cultures. Uncontrolled tourism growth can also cause environmental degradation, destruction of fragile ecosystems, and social and cultural differences, undermining the basis of tourism. Export Development and international Trade Minister Prof. G. L. Peiris said last year "the government is not prepared for the negative effects which might occur due to mass tourism". He also said Sri Lanka has no fear in case of ‘sex tourism’ as the country’s culture does not approve such trade, and the government would step forward to prevent such events if necessary. It is, however, necessary to protect this resource base as tourism is one of the world’s largest and fastest growing industries. Page 27 of 96
  28. 28. Negative impacts of tourism industry on Sri Lankan culture According to the Sri Lanka Tourism Development Authority survey indicates the possible cultural issues are primarily of two kinds namely, tourists engaging in culturally inappropriate behavior due to their lack of awareness about local cultures, and the risks faced by local citizens due to increased associations with tourist. Increased arrival of tourists into an area may also pose threats to tourists due to petty robbery and harassment. Tourists may not be aware of local customs and traditions and they may not be informed of cultural differences and what is deemed acceptable behaviour within a traditional Sri Lankan community. As an example, the report said: "Proper attire for visiting religious sites, acceptable attire for beach areas, asking permission before taking pictures of local people, may not be familiar to tourists. Such seemingly inappropriate behavior, largely due to ignorance, may be perceived as lack of respect for local cultures or as invasion of privacy by residents. Harassment of tourists is also a possibility in a situation where the arrival of tourists increases to an area. In such situations, the harassed individuals can call up the tourism hotline based in Colombo. SLTDA can assign the task of sorting the matter to relevant police divisions through the tourist police in Colombo. The local community will be made aware of the sexual risks that are usually associated with tourism. Spreading threats of HIV/AIDS in areas where tourism is currently a flourishing industry. The case of ‘beach boys’ in the Western and Southern coastal areas has been documented as providing services largely of a sexual nature. Though individuals seem to be voluntarily engaging in these activities, it is usually poverty and the environment around them that push them towards these sexual trades. Drug addiction through associations with tourists may also be of concern for communities the survey pointed out. Tourism can cause child labor and child abuse. Introduction of casinos to attract tourists may destroy the culture of Sri Lanka. Sri Lankan culture may affect the development of tourism industry. Example: Sri Lanka has refused to issue a visa to R & B star Akon. The ban came after protests over one of the star’s music video featuring scantily-clad women dancing in front of a statue of Buddha. Page 28 of 96
  29. 29. Recommendations for socio cultural environment The Sri Lanka Tourism Development Authority pay careful attention to these possibilities because the negative impacts involved here can cause long-term social problems that can affect Sri Lankans in general. These risks can also lead to a decrease in the number of tourists wanting to visit a certain area if the issues accelerate to an extent of giving that particular area a bad reputation. Therefore controlling these risks as much as possible will not only benefit the local community but will also safeguard the sustainability of the tourism industry in a given location, the report showed. Sri Lanka Tourism Development Authority intends to develop sustainable tourism and as recommended at the World Summit in 2002, to develop community-based initiatives on tourism to build the capacities to diversify tourism products, while protecting culture and traditions and effectively conserving and managing natural resources. The product development focus will be to build on traditional areas like Ayurveda, natural and cultural heritage unique to Sri Lanka, survey pointed out. Tourism can contribute in a positive manner to socio-economic development and environmental protection, as Sri Lanka is focusing on tourism to be the third largest foreign exchange earner by 2016," Sri Lanka Tourism Development Authority Director-General S Kalaiselvam told the Island Financial Review. Cultural heritage sites should be screened for carrying capacity, pollution, vibration, and erosion. Development of the proposed Cultural Centre in Colombo and satellite centers in the provinces should also include presentation, exhibits in culture, handicrafts, local foods and beverage, and performing arts for tourist benefits. A national dance festival and other festival events that highlight national produce, e.g. tea, fishing and spices should be developed. Local interest and pride in traditions and customs should be promoted and sustained. Presentation and status of Ceylon Tea should be improved in hotels and restaurants and encouragement given to tea promotion and tea parlors. A national public relations and public awareness campaign should be drawn up to educate the public about the nature of tourism, tourism policy and plans, and benefits and opportunities created by tourism. An information brochure should be prepared for distribution to tourists, including information on the cultural development policy, local handicrafts, customs and acceptable behavior patterns in Sri Lanka. All districts should be screened for vulnerability assessment. Prospective developers of tourism facilities should undertake a social impact assessment for proposed development. A multi-agency approach should be adopted to involve the community in tourism development, including the following: • Skills Training - small business development advisors should convene with the participation of ILO and Janasaviya. Page 29 of 96
  30. 30. • Enterprise Support Centers - the feasibility of establishing small business support centers should be studied, possibly with the assistance of ILO or USAID; • Handicraft Training - assistance in the development of the handicraft sector should be set up with the involvement of ILO, Ministry of Tourism and Rural Industrial Development and Janasaviya; An Ayurvedic Centre and treatment at hotels that range from beauty care to stress relief should be promoted a long with sales outlets for packaged Ayurveda products and registered Ayurveda establishments for information’s. Promote Sri Lankan cuisine, traditional vegetables and fruits should be promoted. A sound cooperation and coordination among public and private sectors, and tourism organizations will be ensured through the establishment of a “Domestic Tourism Unit”. The formed unit should consist of statistical information like number and variation of tourists, number of overnight stays, accommodation facilities used and change in tourism activities according to the age, gender, and level of education and wealth of tourists. Culture: We should give a general idea or a taste of our culture tourists, but not an overdose. It is important to be careful in selecting the items of our culture, religions, historic places, herbal medicine, traditional food, music and dancing. At the same time, we should be able to appreciate the different cultures from which the tourists come, as sometimes a lack of understanding of the other cultures results in conflicts. We should develop a positive attitude towards tourism. Community: Our communities, villagers near hotels, employees of tourist establishments should be educated about the benefits of tourism as well as the different cultures of tourists. Without the support of the employers, the employees and the local community, it will be difficult to ensure satisfying the needs of tourists in keeping with the expected standards. Activities: Activities in hotels from welcoming tourists on arrival to accommodating the last minute of their stay should be properly planned in order to satisfy the tourists’ needs and give them a taste of our culture. Welcome to tourists at hotels should include traditional lamps, and in the case of very important persons, cultural dancing and pageants. This no doubt will leave a lasting impression in the minds of our visitors. Some hotels organize staff plays with cultural themes such as special New Year celebrations, National Day celebrations, traditional food festivals, etc. All hotels should perform such activities. Suitable traditional dishes, slightly altered to meet milder palates, should be offered to tourists with a range of choices. Religious events too can be included in the activities so as to give an idea of what we have been preserving for 2500 years. Page 30 of 96
  31. 31. Technological environment The tourism industry has proved particularly suitable for the adoption of information technology because of its dependence upon the supply and exchange of information throughout the production and distribution chain. As an extremely information intensive industry, tourism is undergoing rapid and radical modern changes. A wide range of opportunities discover on daily basis through the use of information and communication technology. Now information technology is being used for a variety of functions in the tourism industry, ranging from an internal organization role to external communication between different parts of the industry. The continuous development of information technology has profound implications for the whole tourism. Today, a wide range of tourism sectors is taking the advantage of the information superhighway. Technology facilitates the speed and efficiency with which information of the tourism industry is processed, stored, retrieved, distributed and otherwise manipulated. Information technology can reduce costs of information handling, increase speed of information transfer and retrieval and increase customer involvement in the control of transactions. It has flexibility of product specifications and greater reliability of information transferred. Opportunities for Sri Lankan Tourism There is a growing awareness that ICT has drastically changed tourism worldwide. It is of vital importance to acquire the skills and tools and to engage in a multi channel strategy to reach the final customer reducing dependence on foreign media, foreign tour operators and others in the traditional value chain. Merely having a “web presence” is not enough. More detailed knowledge is required of aspects such as usability and search engine optimization and other elements of online branding and marketing. As well as providing content online, there must be services as search facilities, availability checks and online reservation and payment. Sri Lanka, especially Colombo, offers a wide variety of providers of web design, website development and other ICT related applications and services at affordable price levels, this will assist the ambitions of the tourism sector to make the most of information and communication technology. An example of an e -tourism initiative is the ambition of the International Finance Corporation (IFC) of the World Bank group and the South Asia Enterprise Development Facility (SEDF) to implement two online accommodations booking portals in Sri Lanka (based on systems of Worldhotellink.com Ltd) a part of their initiative to develop sustainable tourism in the region, benefiting local communities. The e -Sri Lanka initiative is also important - a stakeholder - led , multi – donor funded national development initiative with the objective to grow the ICT sector and use of ICT as an enabler for socio – economic development is the responsibility of the Information and Communication Technology Association of Sri Lanka (ICTA) Page 31 of 96
  32. 32.  Tourism courses are increasingly blended to ICT and e-learning in to their teaching methodology and training in technical side is necessary. Threats for Sri Lankan Tourism 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 identify 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 virtual environment. Many stakeholders realize that they and the Sri Lankan tourism sector as a whole do have to enhance their knowledge of quality criteria & article success factors for websites and E-mail marketing of devising a multi channel strategy for their company of event management of CRM and public relation. There is a lack of opportunity for academic 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. There is a trouble in making a return on Investment in tourism already so, the organizations in tourism industry hesitant to invest more and make most of the information and communication technologies available. The organizations had their doubts too, whether offering online real-time booking and payment facilities would turn out to be successful or in other words would tourists really trust their credit card details to a website of company far away in Asia. The Sri Lanka sector have to expand their online branding and marketing activities offer the whole scope of internet services – information ,communication ,relationship transaction and entertainment services because the Indian and other Asian markets targeted as well as the specialized high and niche markets cultivated now are populated by internet – savvy travelers. Latest Implications Sri Lanka is promoted on the interest by SLTB with the English website http//: www.srilankatourism.org and language versions for France, The Netherlands and Italy. Subscribing to SLTB –mail news letters are also possible in the French and the Italian website. These two websites also offer a simple trip planner and the opportunity to request a quote. Travel agents and tour operators can access the SLTB back office system view the requests and send out proposals. SLTB websites give an overview of what’s on offer in Sri Lanka and of all registered tourism accommodations and other businesses. The websites also offer detailed practical information. Checking on availability and making online real-time bookings. Page 32 of 96
  33. 33.  Online bookings of accommodation can be done in two ways, such as email request and online real-time. Some of the larger tour operators and accommodation providers in Sri Lanka are only in the process of implementing search bookings engines that allow availability check online real-time booking and trip planning payment facilities as well. To change the tourism board’s administrative process into more ICT driven processers and create, for example, a CRM system, an intranet an extranet for the relations. Visibility of and de-centralized content and allotment management by all registered tourism accommodation. Each accommodation can upload up to 30 images of its property. In time ideally other categories of tourism businesses would be included. To improve the Sri Lanka tourism websites by facilitating online flight reservation and car rental and by offering dynamic packages. The larger companies specially are in the process of enhancing their online branding, marketing and the look -to-book ratio. Sri Lankan tourism sector is a tour operator dominated sector. The private sector is rather insecure in their attempts to move away from being almost totally dependent on foreign tour operators and to engage more actively in a multi-channel communication and distributor policy. Emerging new technologies in tourism industry Ginger hotel The facilities provided at ginger hotel and the use of technology to make guests independent is worth an experience and the kind of money one would spend here makes it an ideal destination for business and ideal travelers. The amenities offered at the Ginger Hotel include safe zone, a state of art security system, laundry service, Wi-Fi internet connection, currency exchange security and vending machines equipped with an array of products ranging from juice. This 24-hour service saves you the trouble of stepping out of the hotel for a purchase. The usage of technology to make both guests and staffs independent and enhance the efficiency of services offered at hotel ginger. Open jaw Open Jaw’s travel software solution portfolio is based on the XML messaging standards of the Open Travel Alliance and is implemented using a modern Java, XML and relational database architecture. As a result it can be deployed in virtually any environment. Open Jaw technologies Ltd headquarter in Dublin, Ireland develops enterprise software for travel companies based on XML and Web services technology. Open Jaw’s products include X Rez Internet booking engine and X Distributor a rules based middleware platform for supplier integration, distribution channel management and dynamic packaging. Page 33 of 96
  34. 34. Open Jaw’s product portfolio includes: • X distributor integration platform and business rules engine that enables travel supplier integration , distribution channel management and dynamic packaging • X Rez highly customizable internet booking agent. • X Rez Agent: A sales and servicing platform for call center agents. • X Location: A location data and hierarchy management application. • X Hotel: A content mapping and inventory management accommodation. • X Event: A content and inventory management system for events and destination accretions.Euro star systemWhen people travelling, they can search for all the airlines by going through their web sitesbefore they finally make a choice. Also for 1000 miles a way they can locate the destinationwhen they are still at the door step. Page 34 of 96
  35. 35. Natural environmentalSri Lanka Tourism having embarked on International Tourism industry since the mid 60s hastreaded a path with a vision of becoming the foremost tourist destination in Asia. The tourismindustry possesses the experience in tourism and had the strength to be resilient throughoutthe last few decades, not only to resurrect whenever uncontrollable factors intervene but alsoto develop the industry.The impact of tourism ahead the environment and vice versa is mutual. Negative influencesfrom tourism can arise when the level of visitor use exceeds the environments ability to cope,within the acceptable limitations of change. Unrestrained conventional tourism createspotential threats too many natural areas. This can put pressure on an area and result in soilerosion, increased pollution, discharges into the sea, natural habitat loss, increased pressureon endangered species and heightened vulnerability to forest fires. Moreover, it could incur astrain on water resources and force local populations to compete for the use of vital resources.Tourism developers constitute a large segment of all users of coastal resources. Theiractivities are of primary concern to coastal managers. Economic success in the tourism sectordepends heavily on the health of the natural resources upon which tourism is built. If coastalwaters become polluted by hotel waste water discharge, tourists will go elsewhere. Sincecoastal tourism is widespread throughout the Asian region, it is important to maintain andwhere possible enhance the environment to remain competitive.Sri Lanka has a long-standing reputation as a popular “sun, sand, and sea” holidaydestination. Tourism development activities in the coastal areas, such as Hikkaduwa,Negombo and Rekawa Lagoon, have contributed to increasing degradation of valuablecoastal habitats and natural settings. The arrival of visitors and uncontrolled growthaccompanied by mass tourism development has also generated a number of negativeeconomic, social and environmental effects on the host communities. From an economicperspective, mass tourism tends to grow at the expense of, or the total replacement of,traditional economic activities such as fishing and farming. Development of mass tourismand luxury tourism also have common outcomes such as social division, inflation of propertyprices, increased cost of living, Furthermore, increasing tourism activities causes congestedtraffic, increased environmental pollution, and unsightly development. Sri Lanka is in need ofalternative development options to foster a sustainable tourism industry. Page 35 of 96
  36. 36. Natural Environmental factors which affects the tourism industry in Sri Lanka. The natural attractions of Sri Lanka are a valuable resource for tourism. They include the following: Wild life sanctuaries and reserves and marine sanctuaries containing coral reefs rich in exotic fish and other marine life. Numerous beaches and lagoons for the development of hotel facilities and for water-sports. The hill country, with scenic land-scales, major natural attractions, and forests providing trekking and panoramic views, water falls and caves. Scenery, with large ancient reservoirs. Reserves of gem-stones, tropical hardwoods, tropical fish, and National Parks and Bird Sanctuaries. Water for drinking, electricity, vegetables and flowers. Natural disaster. Weather changes. Wild life sanctuaries and reserves and marine sanctuaries containing coral reefs rich in exotic fish and other marine life. Coral reefs are a valuable tourism asset. Reef tourism produces millions of dollars of foreign currency annually and is a popular attraction to many when choosing a vacation destination. Therefore, healthy reefs are important not only ecologically, but also economically. Ecologically coral reefs provide habitat and feeding areas for many finfish and shellfish species. They are one of the most biologically productive ecosystems on Earth, provide protection against wave action and storms and supply nutrients to nearby economically important fish stocks. Coral reefs are belonging to the group of Cnidaria. It is an animal such as jellyfish, bluebottle, an anemones and hydroids. They are soft-bodied animals but reside in a hard cuplike skeleton made up of calcium carbonate and also they can call limestone. They usually live in Colonies made up of polyps. These kind of animal called Coral polyps. They made up with limestone skeleton. They are classified as either hard coral. Page 36 of 96
  37. 37. The scientists found these corals can live 5000 and 10000 years.In Sri Lanka, fisheries supply over 50 percent of the total animal protein consumed and the success of these fisheries is partially dependent upon healthy reefs. Coral reefs occur along exposed coasts, away from rivers, estuaries and salty, sediment rich shores. Fringing reefs are connected to the shore and generally occur below the low tide level however, parts of the reef may be exposed at low tide. This near shore distribution makes them more susceptible to human activities. Coral reefs need clean and clear water with low sedimentation to sustain their growth and thereby support the greater reef community. Increased water temperature, influx of fresh water, and excess nutrient and sediment loading all cause coral destruction and can increase with tourism development. Numerous beaches and lagoons for the development of hotel facilities and for water- sports. Sand beaches, which occur along about 70 percent of the shoreline, are the focal point of coastal tourism in Sri Lanka. Sunbathing, swimming, Frisbee tossing, and walking are just a few of the recreational activities common on beaches. Also, sandy beaches provide soft, even footing for entry to the sea. Therefore, the tourism industry is responsible for creating water shortages, degradation of water supplies and generating high quantities of waste water. Given Sri Lanka’s hot climate and the tendency of tourists to consume more water when on vacation, the amount of water consumed per day could average 440 liters. Maintenance of golf courses (Sri Lanka has 3 main golf courses; Victoria Golf Course, Nuwara Eliya Golf Course and Colombo Golf Course) is another contributor to the reduction of fresh water resources. Golf tourism has increased in the last few years and the number of golf courses has grown. In order to upkeep the course, large volumes of water are required. If the water is supplied from wells, over-pumping could result in saline intrusion into groundwater. Sri Lanka offers several natural beaches, dive sites, and surfing destinations. A list of these destinations is provided below.a) Arugam Bay Located to the southeast of the country, Arugam Bay is known for surfing. It houses several lodges and boutique hotels and receives the maximum number of tourists from May to December. Page 37 of 96
  38. 38. b) Bentota A popular beach destination, it is about an hour to 1-1.5 hours drive from Colombo. The adjoining town of Beruwala is also a beach destination.c) Hikkaduwa Located along the south coast of Sri Lanka, Hikkaduwa is known for its scuba diving.d) Kosgoda Located between Bentota to its north and Ahungalla to its south, this small beach destination is known for its turtle hatcheries.e) Mirissa Located in the south of Sri Lanka, this beach destination is famous for viewing whales and dolphins. The close-by region of Unawatuna is also known for scuba diving.f) Negombo Located about 40 km north of Colombo, Negombo offers a beach and views of the expansive Negombo lagoon. Negombo’s proximity to the airport acts as an advantage for visitors who want to enjoy a short stay near the beach.g) Passikuda and Kalkuda Located in the east of Sri Lanka, these destinatios offer virgin beaches.h) Tangalle Located almost at the southern tip of the island, Tangalle is being promoted as a diving destination. The southernmost point of Sri Lanka, known as Dondra Head, is close to Tangalle.i) Trincomalee Located to the northeast of Sri Lanka, Trincomalee is known for its natural harbour and has two relatively unexplored beaches, Nilaveli and Uppuveli.j) Wadduwa Located approximately 38 km south of Colombo, Wadduwa is a small beach destination in the south-west of the country Page 38 of 96
  39. 39.  The hill country, with scenic landscapes, major natural attractions, forests providing trekking and panoramic views, water falls and caves. Fertile soil, forests, wetlands and wildlife are vital resources of Sri Lanka. However, the increased construction of tourism facilities has increased the pressure on these resources and scenic landscapes. The direct impact on natural resources in the provision of tourist facilities could be a consequence of land usage for accommodation purposes and other infrastructure provision. Kandy, known as Sri Lanka’s hill capital, is the second most visited place in Sri Lanka (next to Colombo). The important point of the town is the golden roofed Dalada Maligawa (Temple of the Tooth), a temple which houses Sri Lanka’s most important religious remains. The Esala Perahera celebrations are a yearly highlight when a model of the place of pilgrimage is carried in a procession accompanied by dancers, drummers, and over 100 splendidly clothed and decorated elephants. Another popular tourist destination is Nuwara Eliya, a small town set in the heart of the tea country. Known as “Little England” Reserves of gem-stones, tropical hardwoods and National Parks and Bird Sanctuaries Gem-stones The tropical island of Sri Lanka was once known as the "island of gems (Ratnadeepa) because of the spectacular range of jewels found in its gravelly soil. It is most famous for its lovely sapphires now branded & marketed by the name "Ceylon Sapphires", but it also produces ruby, garnet, alexandrite, spinel, zircon, perodot, topaz, tourmaline, moonstone & a highly-prized chrysoberyl cats eye. Gems are found throughout central & southern Sri Lanka. But large scale mining is concentrated in the Ratnapura (city of gems, Ratna meaning gem & Pura meaning city in Sinhalese) & Elahera areas. Sri Lankan gems are found in the crown jewels of Europe & in artefacts from Chinas Min Dynasty tombs. Historians trace Sri Lankas international gem trade back to 500 BC. Tropical hardwoods At Property Frontiers we have a continued commitment to source excellent investments projects across the world’s property markets. That said, now is also a great time to take advantage of alternative opportunities to create a balanced collection. With this premise in mind we have sourced a low cost, long term, stable investment package for sustainable- forest tropical hardwood. The global demand for tropical hardwood has multiplied nearly twenty five times in the last four decades while supply shortages continue to expand. There are two similar projects one in Sri Lanka, both of which gives the investor the opportunity to buy tropical hardwood trees and harvest them to generate magnificent returns Page 39 of 96
  40. 40. National Parks and Bird Sanctuaries Sri Lanka has nine national parks and seven bird sanctuaries, which house several endangered species. The famous national parks include Kamana National Park, Yala National Park, Uda Walawe National Park, Wilpattu National Park, Horton Plains National Park, Minneria National Park and Wasgamuwa National Park. Most of these parks are located in the central and southeastern parts of the country Threats for Sri Lanka Tourism Natural disaster Natural disasters – floods, rains, etc. impact hugely the tourism industry of the affected destinations. Sri Lanka was affected by Tsunami in December 2004. Approximately 40,000 lives were lost and much damage was done to properties along the coastal area. Sri Lanka took nearly two years to recover fully from this disaster. The country has a Tsunami warning system in place and has revised its crisis management plan. During the time of Tsunami two- third of districts in east and south coast were hardly affected. The mangrove forests and coral reefs were reduced and damage by this Tsunami. The large of coral sections were broke down and destroyed the balance of ecological system. And some coral have been moved from the reef. Many coral colonies were totally buried in sand. Some soft corals reefs were entirely destroyed by this natural disaster. Therefore our natural resources are destroyed by the disaster. And this may affect the tourism industry. Weather changes The climate changes and global warming have become increasing over the last twenty years. The scientists, environmentalists, and public makers researching the cause and impact of climate change, they found that environment is most affected by those negative climate changes. Scientists say climate changes are effect from an increasing sea temperature, increasing sea level, and harsh storms. Those environments mostly threaten the coral reefs life. These negatively impact trying to turn down biodiversity, coastal protection and income from tourist. Climate, the natural environment, and personal safety are three primary factors in destination choice, and global climate change is anticipated to have significant impacts on all three of these factors. Climate is also a principal driver of seasonality in demand, which has been described as one of the most problematic features of the tourism industry. Page 40 of 96

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