Founder and CEO of Santani Wellness Kandy, Vickum Nawagamuwage shares insights into what it would take to unlock tourism’s potential, and quickly. Sri Lanka expects tourism earnings to reach $2 billion this year, but Nawagamuwage believes earnings could escalate to $15 billion – or even $40 billion – if the groundwork is laid to attract the required investments.
How well-positioned is Sri Lanka to capitalize on the increasing interest in travel to the country, especially considering the expected surge in tourism in 2024?
Sri Lanka’s post-pandemic period saw missed tourism opportunities due to financial struggles, necessitating double the effort to catch up with competitors. Despite aiming for $2 billion in revenue this year, the current strategy’s lack of intensity and coherence, particularly the unrealistic expectation of a 285-fold return on a mere $7 million government budget with budgeted revenue of $4 billion, reveals a fundamental misunderstanding of strategic tourism development.
A successful revival hinges on a coherent plan that clearly outlines objectives, investment needs, and a path to success. Relying on chance for positive outcomes is impractical; learning from past mistakes and developing a comprehensive strategy is crucial.
Recognizing travel as a discretionary spend, especially with the rising global middle class, is key to unlocking Sri Lanka’s tourism potential. The country’s diverse offerings, from beaches and wildlife to cultural richness, uniquely position it to tap into various travel trends. For example, combining Ayurveda, Buddhism, and serene landscapes has positioned us well in wellness tourism. Emulating successful models from countries like Dubai and Singapore, which attract millions through events, shopping, and other activities, can be replicated in Sri Lanka, especially considering the growing Indian middle class as a target market for shopping and events tourism.
Diversifying hotel offerings and adjusting price points to appeal to a wider range of travellers is essential. This necessitates a shift in product development and marketing strategies, maximizing Sri Lanka’s unique assets to establish it as a premier global tourism destination.
What would a strategic roadmap to guide potential private sector investors look like?
Enhancing tourism earnings requires the government to enable strategic development and diversify the sector, rather than just investing or showcasing at trade shows. Sri Lanka needs to recalibrate its accommodation offerings: less than 1% of rooms are over $500, while most are under $150. If we add another 40,000-50,000 rooms to this mix to attract 10 million tourists a year, it could potentially boost revenue to $15 billion. However, if we adjust the mix to include more high-end options by increasing just to 3% of rooms available and mid-level to be about 10%, without eliminating budget-friendly ones, we could increase revenue to $40 billion, which is possible.
To accommodate 10 million tourists, we require 40,000 to 50,000 more rooms from the current inventory of 75,000, which will require an investment of about $10-15 billion. This could be realized within 5-6 years, provided the government creates the right incentives and zoning, and allows diverse product offerings, and the groundwork can be laid out in six months.
Crucial to this strategy is effective zoning. For example, while Yala National Park is overcrowded, Wilpattu could be positioned as a high-end destination with controlled access. Similarly, encouraging investment in lesser-known regions like East, Uva or the Northern provinces through tax incentives can diversify tourist attractions. This approach marks a departure from short-term solutions like tax hikes for revenue generation. Creating conditions conducive to investment in varied and sustainable tourism is essential to fully realize Sri Lanka’s tourism potential.
Also, adjusting the duty structure to make branded goods more affordable could attract a significant market, especially from nearby countries like India. Removing duties and incentivizing brands to open stores could lead to an influx of shoppers who currently visit competing destinations such as Dubai and Singapore for shopping. These visitors won’t just buy products; they’ll also engage in other activities like dining, visiting casinos, and staying at places like Santani. This approach creates a comprehensive ecosystem boosting tourism. However, the current focus on increasing taxes for revenue generation overlooks these simple yet effective strategies that can be implemented immediately.
We don’t have a cohesive strategic roadmap, but is there anything that we can do right now until we do?
Sri Lanka remains a sought-after destination, especially after being inaccessible for years. To leverage this, innovative promotion is key, not just relying on government efforts but also active industry engagement. Leaders like Resplendent and Peko Trail are making strides in promoting Sri Lanka, yet wider industry involvement is essential. This includes investing in influencer and journalist engagement and moving beyond traditional methods like mega shows and standard pavilion displays.
Events like the Galle Literary Festival and the emerging Matara Art Festival illustrate promising avenues for diversification in tourism promotion. Furthermore, Business-to-Consumer (B2C) marketing has proven effective, as seen with Santani’s 60% direct bookings, significantly reducing commission costs and benefiting the local economy. More industry players must adopt similar approaches. Despite some progress, there’s substantial room for growth in enhancing Sri Lanka’s tourism sector through these strategies. We need to also diversify our source markets. Top source markets for Thailand such as Singapore, South Korea, Japan, Malaysia and Indonesia are not reflected in our top 10 source markets. These countries combined send over 10 million visitors to Thailand. The close historical and cultural connections and direct flights we have with these markets should be leveraged to attract a diverse mix and also eliminate the seasonality of the industry.
As one of the few successful ventures in this space, Santani is more than a property, but a concept or idea. Can you share your thoughts on this?
As the founder of Santani, I’ve seen it grow beyond a mere resort into a future legacy. A striking 60% of our bookings are direct, with half of our guests visiting Sri Lanka exclusively for Santani, often staying for 7 to 14 days. This not only underscores our influence on Sri Lanka’s tourism but also challenges conventional heritage views. We advocate creating a new, relevant legacy, moving away from traditional focuses like colonial-era buildings. Our success, evident in our 60% off-season occupancy rate, validates this approach. As an industry and a country, we should focus on creating properties, events, and architecture that will be our heritage and legacy in the future and not harp on the past generations that created our world heritage sites or the British or Dutch who created our celebrated attractions such as the Kandy to Ella railway or the Galle fort.
Santani has also innovated beyond typical tourism, entering real estate with Santani residences. These serve as both an expansion of our accommodation and a unique investment opportunity. Internationally, our model has garnered attention, with invitations by both governments and the private sector to replicate it in their countries, a testament to our globally recognized, sustainable tourism model.