Few countries with so much potential exist relatively undiscovered. Most undiscovered places are either in conflict or extremely poverty wracked that few tourists would venture there. Popular destinations are overcrowded and expensive. Sri Lanka is at a sweet spot because its world-class attractions are relatively undiscovered. Its circumstances deserve focused effort than the current one under the ‘Visit Sri Lanka’ theme and accompanying drum beating at Chinese shopping malls.
Sri Lanka’s share of the the island’s recent promotions have been amateurish, highlighting a staid image of sun, wildlife, a bit of history and smiles. Not all tourists are equal, and attracting discerning and modern travelers is a promotional challenge.
Shaun Mann, a tourism development expert from the his views about the tourism challenges facing Sri Lanka.
The debate around quick wins for the tourism sector is focused around a sharp destination marketing strategy. What else are low-hanging fruit for the industry?
Tourism visitor numbers to Sri Lanka have grown in double-digits each year for the past six to seven years. Not many destinations in the world can boast this. I think this the first thing to acknowledge; the industry, at least based on pure numbers, is getting healthier. It’s difficult to say how much of that is down to sharp destination marketing or simply the fact that there is pent up demand out there to “see what Sri Lanka is like” after so many years of conflict.
However, I would argue that Sri Lanka’s tourism sector should probably start thinking longer term and not simply for the next quick win. Now is the time to consolidate and structure the sector and its management, and plan so that the future is looked after. Sri Lanka’s tourism players need to think about the kind of international partners and brands they want to bring in; partners who can reach deeper markets and make new ones; and, most importantly, improve service quality and diversify products. If there is low-hanging fruit, it is to get more value from the tourists already coming into Sri Lanka. This means deepening and diversifying what is available in terms of goods and services, and packaging and marketing these homegrown offerings to hotels and tour operators. This is a huge area of potential growth for the tourism sector, and it is currently really underserved.
While targeted destination marketing is an effective tool to grow numbers, a more important dimension is the quality of those numbers: how long do they stay? How
much do they spend? Do they leave satisfied? Did they get value for money? Will they come again? Will they tell their friends to come? It isn’t enough to simply do destination marketing; that’s just the very first and fundamental step. It’s more important to build on basic destination marketing in partnership with the private sector (i.e. the suppliers of goods and services to potential consumers) and get them fully onboard with tailored offers for those specific destinations. This requires a deeper understanding of the segmentation in respective markets. In the case of India and China especially, it requires a deep knowledge of what basic requirements travelers from those markets need.
Sri Lanka has highlighted beautiful scenery, history and wildlife as reasons for choosing to holiday here. But many other countries also highlight these attributes. How can Sri Lanka differentiate its product?
Overall, the biggest issue is that Sri Lanka has not yet developed a “nation branding” strategy. Apart from scenery, history and wildlife, Sri Lanka has so much more to pack into a holiday experience; gemstones, food, culture, religion, tea, cinnamon, rice, coconuts, sport and dimensions of all of these and more need to be built into a nation branding process that effectively projects Sri Lanka’s uniqueness.
If that is not done, then products such as holidays are in danger of just being commodified and trading only on price. Once that happens (and it already is, to some extent), the process of differentiation becomes an uphill one. More specifically, there are few key differentiators: first, very few countries offer the quality and diversity of potential experiences (natural, historic, cultural and social, etc.) as easily accessible as they are in Sri Lanka. Sri Lanka is all of South and East Asia and more in one small island.
Second, there are some USPs: for example, whales and elephants in one holiday, “the gathering” and “superpods” of whales off Trincomalee, etc. These are world-class raw materials to work with and will go a long way to being a foundation for differentiation.
What Sri Lanka needs to do is to add quality and value to these experiences. Wildlife experiences like watching whales or leopards have no effective quality control with the service providers in Sri Lanka. Whale watching is whale chasing now, and the same for leopards, particularly in Yala. This isn’t sustainable neither for consumers nor the animals themselves.
Every tourist is different – European empty-nesters, family-oriented Indians or gambling Chinese. Can Sri Lanka cater to all these segments?
Sri Lanka doesn’t have to be everything to everyone; to my mind, that thinking needs to change because it’s driving the same, short-term, what’s-the-next-quick-win mindset that may ultimately undermine the sector’s potential as a sustainable economic driver.
As an island with limited resources (human and natural) and space, it has inherent constraint capacities. The key for Sri Lankan tourism stakeholders and decision makers going forward is to figure out what its basic comparative advantages are, invest in them to make them stronger, preserve them better and present them better, and then match those qualities with the markets that want them. As I said earlier, this basically means building value from the bottom up, but having that supported by policies from the top down.
Where should private sector firms looking to benefit from tourism invest? (Geographically, where and in what type of tourism-related businesses)
I think the biggest opportunities in tourism in Sri Lanka are companies willing to consolidate services and offer them to specific consumer markets. For instance, Sri Lanka has huge potential as a MICE destination, but there are very few specific event management companies proactively mining this market segment.
In terms of geographic locations, obviously Eastern Sri Lanka has huge potential. Luxury rail is possibly another opportunity for investment, and traditional luxury tented camp-type operations perhaps in areas like Wilpattu. Big game sport fishing is another completely underinvested opportunity.
Tourists are increasingly discerning and preferring experiential travel. What can Sri Lanka offer these high spenders?
First, not all experiential travelers are necessarily high spenders. Backpackers are also generally experiential travelers and they are not normally associated with high spending. Sri Lanka has plenty to offer the experiential traveler, but as I’ve said earlier, better-quality packaging and experiences need to be created.
In your view, what are the mistakes investors are making?
New investors are not focusing enough on the quality of service delivery. Despite overwhelming demand to visit here, many hotels don’t have attractive returns on investments. What can they do better to improve returns?
Generally, four variables affect ROI for hotels – how much they cost to build,operating costs, occupancy rates and room rates. That said, hotels globally are a long-term investment, and Sri Lanka is no different. Specific to Sri Lanka though, the cost of capital is high and the cost of that debt takes a big chunk of potential profits. Occupancy rates are generally high in three and five star hotels, and achieving consistently higher room rates has been a challenge. There are a couple of points worth mentioning that might be affecting room rates. A majority of Sri Lanka’s inbound tourism comes through tour operators in international source markets. These large companies have huge buying power in small markets like Sri Lanka and they tend to buy low but deliver volume. Hotels are beaten down in price with the assurance that certain volumes will be met. One strategy is to wean off traditional large tour operators by expanding into ecommerce, with a strong web presence and product. Another strategy would be to partner with an international brand; international brands tend to set higher base prices and have access to bigger markets through global distribution channels, but investors have to weigh this against the upfront management fee that an international brand may charge.
In addition to providing employment, what other benefits can a booming tourism sector provide rural areas?
A booming tourism sector brings a huge influx of cash into the host economy. This cash creates and generates demand for goods and services across a range of activities. The extra cash also finds its way to government coffers, and that, in turn, spurs and finances the development of infrastructure and basic services. Rural areas benefit because cash in the pockets of tourists comes to them; they just need to find ways to tap this potential by providing goods and services that tourists want to consume or experience. A constant flow of tourists also “opens” sometimes “closed” rural societies and mindsets a little more, and this exposure to the outside world can have huge developmental benefits.
How does Sri Lanka fare in terms of domestic tourism?
Sri Lankan could do better.
Sri Lanka climbed 11 notches to 63rd out of 141 countries in the Travel and Tourism Competitiveness Report of the World Economic Forum in 2015. What was the main reason for this? Of the four ranking dimensions of this report – an enabling environ – Agenda Tourism ment, policy and enabling conditions, natural and cultural resources, and infrastructure – what are areas that Sri Lanka needs to address to score better in the future?
I’m afraid I don’t put too much store in these kinds of secondary data collection sources. That said, the lack of a clear government policy and vision for tourism, weak regulation of the sector, weak regional development of tourism, and poor air connectivity (internationally and domestically) are all aspects that would inhibit better scores.
What should be Sri Lanka’s tourism objectives? What factors have affected our tourism sector negatively?
I think I’ve answered these in part through the argument that there is too much short-term thinking and not enough long-term planning.
What should the pillars of a long-term strategy for the industry?
• Higher yields per tourist (move away from measuring success only by the number of tourists)
• Sustainability as a guiding principle for the sector
• HR development
• Product and market diversification
What strategies should Sri Lanka adopt in destination marketing?
Partner more with the private sector, do more market research and focus more on themes (like eco tourism, cultural tourism, MICE, etc.)