Sri Lankan Tourism Industry

4/11/2011

Sri Lankan Tourism industry

BSc. In Business Management (Special) – UGC

Marketing

Group No 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

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Table of Content
1. Introduction…………………………………………………………………………04-06
2. Political Environment.................................................................................................07-13
2.1.1 Opportunity of Sri Lankan Tourism
2.1.2 Threats of Sri Lankan Tourism
2.1.3 Recommendations
3. Economic Environment..............................................................................................14-22
231.3 Recommendations
4. Socio Culture Environment........................................................................................23-30
5. Technology Environment...........................................................................................31-35
6. Natural Environment.................................................................................................36-44
7. Legal Environment.....................................................................................................45-51
8. Marketing Environment.............................................................................................52-68

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Introduction
From early historical times, Sri Lanka has attracted foreign visitors. Many books,
particularly by British administrators, have been written based on the different attractions of
the Island. The first attempt to develop tourism in Sri Lanka was made by the colonial
government prior to the Second World War. The Government Tourist Bureau was set up in
1937. Although international tourism in the modern sense was unknown at the time, the
objective in setting up the Bureau was to provide facilities and services to the large volume
of passengers who sailed between the West and the East through the port of Colombo on
passenger ships.

Sri Lanka’s primary location on the world sea lanes attracted many cruise ships, freighters
and other vessels. Passengers that entered the port of Colombo disembarked and enjoyed
sightseeing in Colombo, Kandy and their surroundings. The Tourist Bureau’s primary
responsibility was to service these passengers when they came ashore by greeting them and
providing sight seeing tours. Although accurate records are unavailable, it is estimate that
approximately one hundred thousand to two hundred thousand passengers visited the
country per annum. The Tourist Bureau ceased its operations in 1940 due to the
commencement 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 tourist
activities by setting up the second Tourist Bureau which came to be known as the
Government Tourist Bureau. The Government Tourist Bureau which was set up in 1948
functioned under the Ministry of Commerce for some time and was brought under the
Ministry of Defenses. The functions that were assigned to the revived Tourist Bureau were
much wider than its earlier responsibilities. In addition to providing meeting and greeting
facilities it was entrusted with the functions of undertaking tourist promotional work
overseas and to develop tourist accommodation facilities. An officer designated as Director
was placed in-charge of the Bureau and separate divisions were entrusted with the tasks of
handling the new functions assigned to it.

During the 1950s there was a rapid growth of international tourism and it extended to all
parts 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 a
period of four and a half decades. During this period, the average yearly growth rate has
been 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 War
II. Consequently it became necessary for the countries to build new airports with wider and
longer runways and parking bays, larger spaces, and terminal buildings with modern
facilities.

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However, when most countries in the world were preparing themselves to accommodate the
new jet aircraft by investing on the expansion of their airports, Sri Lanka unfortunately did
not prepare itself and lost out on the opportunity to get it established as the main gateway
between the West and the East. Singapore instead gained that advantage. Improvements to
country’s airport, Katunayake, were carried out only in 1965 and the new terminal building
was opened in March 1968.

As the development of accommodation facilities is a primary requirement of the promotion of
tourism this task was also entrusted to the Government Tourist Bureau. The Bureau took
advantage of a network of accommodation establishments constructed during the British rule
not particularly for promotion of tourism but for the use of planters, the business community
and government officials whilst on duty. These accommodation establishments included the
residences of some of the colonial governors, which were later converted into hotels. These
included 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 Nuwara
Eliya, Bandarawela Hotel and New Oriental Hotel in Galle. These hotels were renovated and
were used as prime accommodation facilities for foreign visitors. In addition facilities
developed during the British rule, were turned into Tourist Rest-houses. These
accommodation 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 to
construct accommodation facilities for foreign for tourists. It should be noted that the private
sector 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. Despite
the fact that during the 1950's hotels with international brand names were constructed the
world over, particularly in East Asian countries, neither the government nor the private sector
made any attempt to attract and construct, hotels of international fame in Sri Lanka.

One of the significant developments in the early 1960's was the realization of the need to
develop skilled manpower in the hotel and the catering sector. In 1964, the Prime Minister
Mrs. Sirimavo Bandaranaike set up Sri Lanka’s first Hotel School, which was created to
develop skilled manpower for existing accommodation establishments. Set up at the Colombo
Club at Galle Face Colombo, the Principal and the Lecturing Staff were expatriates and the
three year Degree programme covered all aspects of the Hotel and Catering Services. The
curriculum was subsequently changed to a modular scheme, with basic level course leading
to Intermediate and Higher Levels of Management.

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The Private Sector played an important role from the very early days, by providing services
to passengers who arrived in ships and came ashore for day trips and also for foreign visitors
who stayed in the country for a minimum of one night. They were providing a range of
Travel Agency facilities such as meeting on arrival, transfers to hotels, reservation of
accommodation, arranging tours, guiding etc. The four main companies which were
providing these services at the time were, Ceylon Carriers, Ceylon Tours, Quick haws, and
Bobby Arnold a Tours. There was also a limited fleet of Cars (Jetty Hiring Cars) at the
Colombo Harbour to provide transport facilities to foreign visitors. However, for the first
time an organized taxi service was provided to both foreign visitors and local residents by
Quick haws.

It was the function of the Government Tourist Bureau to handle promotion of tourism
overseas. However, local travel agents and some of the hotels also undertook their own
promotional activities to attract the tourists. Consequently, tourists arrived in the form of
individuals and small tour groups on passenger liners as well as by air. The tourists who
arrived 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 to
carry out their promotional activities through Sri Lanka's Missions overseas. The Bureau
produced a variety of promotional material such as tourist literature to highlight the multitude
of tourist attractions and facilities available in Sri Lanka. Travel brochures, travel guides,
folders, posters and films were used as promotional material. Distribution was done by
overseas travel trade and local travel trade through Sri Lanka's Missions overseas and the
Bureau's information offices and outlets. In addition, there was also limited participation in
overseas Travel Fairs.

This is how the tourism has been grown gradually and this report provides the latest changes
in the macro environment (basically the report was prepared according to the PESTLE
analyses) of the tourism and their implications in tourism sector, Sri Lanka.

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Political Environment
Tourism is the second largest growing business area after information technology in the
global economy. Many of the economies are successful in marketing their country and
destinations 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 to
invest money in their country for tourism promotion.

Tourism marketing is a very complex phenomenon because the number of uncontrollable
factors is more than the number of marketing mix variables. Though the conventional
marketing wisdom says that the larger political factors affect the marketing offer in product
marketing 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 the
prospects of a destination. Sri Lanka is also facing a down turn in the tourism business due to
the above reasons. The factors of low per capita tourist investment sustained effort for
tourism marketing by the developing countries have become secondary today.

The tourism business is largely governed by the non-marketing factors than pure business
propositions in South Asia. The geo political developments and the kind of social background
have largely affected the perception of the foreign tourists negatively for which the inbound
traffic is in a down turn. The decision to establish or maintain a direct investment position
abroad necessitates addressing the issue of risk that confronts multinational firms. In the
examination of any foreign direct or indirect investment opportunity, the environment
encompasses numerous areas of concern for the investing firm. One of the main functions of
risk analysis is to determine when and how economic and non- economic factors can affect
the foreign investment climate in a particular country, given that risk is a direct outcome of
the political and non-political realities faced by international business. Furthermore, this
activity is even more crucial in the current global marketplace, given the increasingly
complex and uncertain environmental conditions faced by international tourism promoters,
particularly to developing countries.

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As illustrated in the above picture in comparison to the world situation as well as the South
Asian Regional situation the share of government expenditure for travel and tourism sector in
Sri Lanka is very high which reflects the government’s view of its promising economic
performance in the years to come.

Opportunities for Tourism Industry

Sri 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 growing
sectors in the Economy, growing by39.8% in 2010 over 2009. The data provides the tourist
arrivals from 2000to 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 of2011; a trend that is expected to continue for
the remainder of the year.

The Board of Investments (BOI) in Sri Lanka is offering incentives for development of hotels
and other tourism facilities. According to the BOI website, the government currently offers a
five-year tax holiday on any project with a minimum investment of US$500,000. To
encourage projects in the northern and eastern provinces, the government offers additional
incentives, depending on the nature and scale of the project. It is interesting to note that all
countries 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 nationalities
are allowed the option of obtaining a visa on arrival for tourism purposes, which is valid for a
period 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 attraction
and festival. Sri Lanka received the massive opportunity to organize the common wealth
games in Hambantota. The Commonwealth Games will provide an opportunity for the
country to showcase its tourist attractions and build a better infrastructure.

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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.

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 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

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 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.

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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.

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 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.

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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.

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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 these
industries will provide new direct and indirect employment opportunities to about 350,000
people.

The end of a three-decade long civil war in 2009, Sri Lanka has witnessed unprecedented
growth and with a real GDP growth rate of 8% in 2010, a jump of 125.2% in the stock
market in 2009, and 32% year-on-year growth in tourist arrivals in 2010, and also The
country with a per capita income of USD 2400 in 2010 enjoyed 8% economic growth. Sri
Lanka 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 has
been globally acclaimed as one of the finest destinations for the discerning traveler searching
for peace, tranquility and multi faceted attractions. And also, according to official
information, March 2011 arrivals were the highest ever for a single month since December
2010. Its 84000 visitors came.

Statistical data of tourist arrivals in 2009- 2010

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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 bank's 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

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Arrivals
4

3

2

1

0
2010 2015 2020

8000
7000
6000
5000
Earnings
4000
3000 Column1
2000 Column2
1000
0
2010 2015 2020

A Conducive taxation strategy for tourism

And also today government is conductive a friendly taxation strategy for tourism industry. To
compete in the international arena, the service Taxes have been simplified for the benefit of
tourism standards must match the global expectations. Industry the profit / income are subject
to a 12% “It must also be ensured that the maximum benefit of tourism is passed on to the
community and economic growth is supported through domestic value creation.” tax.

The upfront cost of investment in leisure and tourism related activities and plant and
machinery as well as branded consumer products are subject to low taxes. Duties on vehicles
have been reduced to promote tourism related services. Taxes imposed at various levels of
government are being consolidated to make an industry friendly tax regime.

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Developing Industry Professionalism

The government will improve productivity of the tourism industry, through building
professionalism in the travel and hotel industries. The private sector will be encouraged to set
up world renowned human resource development centers to meet the emerging needs of the
tourism industry locally and abroad. Hotel management and tourism promotion subjects will
be provided in the curriculum of university academic programmers.

Simultaneously, the government will extend maximum support to the private sector training
institutions with a view to maintaining the standards of services. Licensing of tour guides in
order to standardize their service (through a competency test) and accreditation of travel
agents will be undertaken.

Improving Service Standards

Safety standards and security aspects of tourism will be given a high priority. Regulatory
bodies will be strengthened to ensure the quality standards of products and security aspects of
tourists. Rules, regulations and institutional mechanisms relating to the protection of tourists
and the environment will be strengthened. Strict policy vigilance and monitoring will be
conducted to minimize tourism related crimes and abuses.

INFRASTRUCTURE

To a greater degree than most activities, Travel & Tourism depends on a wide range
of infrastructure services - airports, air navigation, roads, railheads and ports, as well as basic
infrastructure services required by hotels, restaurants, shops, and recreation facilities. It is the
combination of tourism and good infrastructure that underpins the economic, environmental
and social benefits. It is important to balance any decision to develop an area for tourism
against the need to preserve fragile or threatened environments and cultures. However, once a
decision has been taken where an area is appropriate for new tourism development, or that an
existing tourist site should be developed further, then good infrastructure will be essential to
sustain the quality, economic viability and growth of Travel & Tourism. Good infrastructure
will also be a key factor in the industry’s ability to manage visitor flows in ways that do not
affect the natural or built heritage, nor counteract against local interests.

Latest Implications

Government is estimated that 2.5 Mn tourist arrivals by 2016 will require around 45,000 hotel
rooms catering to the tourism industry. However as per end 2010 statistics, the country has
only 22,735 SLTDA approved hotel rooms. This means the industry has a task of adding
around 22,500 rooms to the current capacity, during the next five years. At the same time
most of the current facilities also need to be refurbished. In order to facilitate the process of
building room capacity SLTDA has taken the following initiatives:

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 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.

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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.

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 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.

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 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.

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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

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popular global leisure activity. Tourism is vital for country like Sri Lanka due to the large
intake of money for businesses with their goods and services and the opportunity for
employment in the service industries associated with tourism. These service industries
include transportation services such as cruise ships and taxes, accommodation such as hotels
and entertainment venues, and other hospitality industry services such as resorts.

Demographics

Religions in Sri Lanka

Sri Lanka is the 53rd most populated nation in the world, with an annual population growth
rate of 0.73%. Sri Lanka has a birth rate of 17.6 births per 1,000 people and a death rate of
6.2 deaths per 1,000 people. Population density is highest in western Sri Lanka, especially in
and around the capital. Sri Lanka's culture also revolves around religion. Sri Lankans are very
religious 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 and
churches all across the island. The religious preference of an area could be determined by the
number of religious institutions in the area. The North and the East of the island has many
Hindu temples and mosques because a large Tamil and Muslim population resides in those
areas. The interior of the island is mostly the Buddhist population and there are many
Buddhists residing in all parts of the island because they are the largest religious group in Sri
Lanka.

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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 most
religious country in the world by a 2008 Gallup poll, with 99% of Sri Lankans saying religion
is an important part of their daily life.

Country like Sri Lanka has an opportunity of attracting more religious tourists or the people
who are willing to tour for pilgrimage purpose. Because in Sri Lanka there are four different
religions therefore both religious tourists can visit special temples situated in Sri Lanka such
as Dhalatha Maligawa, thirukketheeswaram, Madu Maatha church and Mosques.

Culture

Sri Lanka was ranked the 3rd most religious country in the world by a 2008 Gallup poll, with
99% of Sri Lankans saying religion is an important part of their daily life. Throughout the
past centuries. Sri Lanka has been going through a dramatic make over. A vast majority of
the Sri Lankan community were only influenced by their own traditional food and nothing
more. 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 their
native 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 Lankan
dish. Dutch and Portuguese sweets also continue to be popular. British influences include
roast beef and roast chicken. Also, the influences of the Indian cooking methods and food
have played a major role in what Sri Lankans food culture.

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Even though Sri Lanka is a traditional country tourist can have most of different varieties of
foods belongs to different countries. This strategy is used to attract more tourists by hotel
industry.

Festivals in Sri Lanka
Every year in mid April, Sri Lankans celebrate the Sinhalese and Hindu new year festival. In
addition, Esala Perahera, a symbolic Buddhist festival consisting of dances and richly
decorated 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. Tamils
celebrate Thai Pongal, Maha Shivaratri and Deepavali. Muslims celebrate Hajj, Ramazan in
their respective days of the year and Christians celebrate Christmas.

Arts and crafts of Sri Lanka
Sri Lankan art originates from religious beliefs, and are represented in many forms such as
painting, sculpture and architecture. One of the most notable aspects of Sri Lankan Art are
cave and temple painting such as the frescoes found in Sigiriya and religious paintings found
in temples in Dambulla and Temple of the Tooth Relic in Kandy. Other popular forms of art
have been influenced by both natives as well as outside settlers. For example, traditional
wooden handicrafts and clay pottery are found around the hill country while Portuguese-
inspired lacework and Indonesian inspired Batik has become notable.

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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 Lanka's 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.

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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.

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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.

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• 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.

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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)

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 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.

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 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.

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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 system

When people travelling, they can search for all the airlines by going through their web sites
before they finally make a choice. Also for 1000 miles a way they can locate the destination
when they are still at the door step.

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Natural environmental

Sri Lanka Tourism having embarked on International Tourism industry since the mid 60s has
treaded a path with a vision of becoming the foremost tourist destination in Asia. The tourism
industry possesses the experience in tourism and had the strength to be resilient throughout
the last few decades, not only to resurrect whenever uncontrollable factors intervene but also
to develop the industry.

The impact of tourism ahead the environment and vice versa is mutual. Negative influences
from tourism can arise when the level of visitor use exceeds the environment's ability to cope,
within the acceptable limitations of change. Unrestrained conventional tourism creates
potential threats too many natural areas. This can put pressure on an area and result in soil
erosion, increased pollution, discharges into the sea, natural habitat loss, increased pressure
on endangered species and heightened vulnerability to forest fires. Moreover, it could incur a
strain 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. Their
activities are of primary concern to coastal managers. Economic success in the tourism sector
depends heavily on the health of the natural resources upon which tourism is built. If coastal
waters become polluted by hotel waste water discharge, tourists will go elsewhere. Since
coastal tourism is widespread throughout the Asian region, it is important to maintain and
where possible enhance the environment to remain competitive.

Sri Lanka has a long-standing reputation as a popular “sun, sand, and sea” holiday
destination. Tourism development activities in the coastal areas, such as Hikkaduwa,
Negombo and Rekawa Lagoon, have contributed to increasing degradation of valuable
coastal habitats and natural settings. The arrival of visitors and uncontrolled growth
accompanied by mass tourism development has also generated a number of negative
economic, social and environmental effects on the host communities. From an economic
perspective, 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 tourism
and luxury tourism also have common outcomes such as social division, inflation of property
prices, increased cost of living, Furthermore, increasing tourism activities causes congested
traffic, increased environmental pollution, and unsightly development. Sri Lanka is in need of
alternative development options to foster a sustainable tourism industry.

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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.

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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

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

 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 cat's 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 China's Min Dynasty tombs.
Historians trace Sri Lanka's 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

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

Sri Lanka’s Environmental Challenges (Threats) for Sri Lanka Tourism

In comparison with other South Asian countries, Sri Lanka probably makes a greater effort to
conserve its environment. Nevertheless, limited commitment and dedication from both public
and state have created serious environmental threats in recent years. Sri Lanka is an island
which has been identified as one of the top biodiversity areas in the Asian region. Sri Lanka's
natural forest resources are amongst the most floristically prosperous in Asia and it has the
highest density of species diversity. However, recently anthropogenic threats to its forest and
other natural resources. The lack of effective environmental laws and weak policies together
has compounded the situation. We need to take urgent action to protect the nation’s
environmental resources for the sake of current and future generations.

 Unauthorized construction and bill boards, in places of scenic beauty.
 Construction of telecommunication and television towers on mountain tops.
 Water pollution in both marine and inland water-ways due to discharge of effluence
into the sea and inland bodies of water and destruction caused to coral and other
marine attractions due to excessive use of glass-bottomed boats for tourists.

 Garbage and Pollution

Increased garbage and environmental pollution are major issues in Sri Lankan municipal
environments. Moratuwa, Kandy, Colombo, Matale, Gampaha, Negombo are some of the
municipalities which are suffering from increased garbage pollution owing to lack of proper
dumping or recycling methods. As of today, infrastructure for garbage collection are lacking
in most municipal areas. This has increased uncontrolled scattering and dumping of garbage
everywhere in the country including town and uptown areas. It has increased problem of stray
animals including wild elephants and monkeys in some areas feeding on garbage.

The increased garbage quantity also causes slower water-flow in many drainage channels and
provides breeding places for disease vectors such as rats and mosquitoes. Kandy Meda-Ela is
one of best examples for this problem. Open dumping sites (e.g., Gohagoda in Kandy) cause
pollution of ground and surface-water sources. Open burning of waste without any
government regulation is widespread in the country and cause bad smell and air pollution in
neighborhoods. It contributes to atmospheric pollution and may cause serious health
problems.

Page 41 of 96

Sri Lankan Tourism Industry

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