SRI LANKA: Terror, Recession Put Tourism in the Doldrums

• by Amantha Perera (hikkaduwa)
• Thursday, December 18, 2008
• Inter Press Service

Arrivals have been poor and the first ten months of the year recorded a nine percent drop as compared to 2007.

Hotel owners and managers mainly blame the country’s tense security situation for the poor showing by an industry that brought in 300 million US dollars in 2007 and was the fourth largest foreign income generator.

The global financial meltdown and the late November terror attacks on two luxury hotels in Mumbai, India, have made an already bad situation worse.

At his beachfront small hotel along the Hikkaduwa beach Ajith Fernando stares at the empty dining tables and the deck chairs and braces himself for a really bad four months ahead.

'This is the start of the season and I have only three rooms occupied. Last year by this time we had enough guests to at least break even,' the owner of the ten-room hotel told IPS.

He has already begun cutting overheads. Several of his deluxe rooms are closed, the air-conditioners covered with dust jackets. 'Can’t maintain them, the only tourists who come are low spenders, they don’t want rooms at 25 dollars a day, they go for the 10 dollar or 15 dollar rooms,’’ he said. He has reduced his staff from 10 to six and expects to lay off more.

Further down the same beach D. Leelaratne, who sells traditional wood carvings, has hung up his tools and has not had a customer in days. 'Look at the road and the beach... at this time the area should be teeming with tourists, but there is no one, no one.'

It is not only the small timers that are feeling the pinch, even larger deluxe hotels are trying to cope with plummeting guest arrivals. 'The problems created by the global financial crisis have been aggravated by the Mumbai attacks,' Dayal Fernando, general manager of the luxury Amaya Resort at Hikkaduwa, said.

Economists calculate that there has been a drop of at least ten percent in income generated by tourism this year and the effects will be felt acutely by the daily wage earners who rely on the trade.

According to the World Travel and Tourism Council’s estimates for 2008, travel and tourism together were expected to contribute 2.9 billion dollars to the economy and account for one in every 15 jobs (or 567,000 jobs). This is considered vital at a time when the country is diverting a major chunk of its resources to the civil war in the north.

This month, the government announced plans to spend a sixth of the budget for 2009 on defence in a bid to crush the Liberation Tigers of Tamil Eelam (LTTE) which has been waging a war to secure the secession of the Tamil dominated north and east of the island.

After militarily defeated the LTTE in the eastern province, the government has been seeking a 1.8 billion dollar aid package aimed at bringing investment to the area and reviving tourism. But the country suffers from a lowered international credit rating and rising external debts arising from the adverse security situation and lowered global demands for its main exports -- tea, rubber and textiles.

'The global financial crisis is taking a toll on the balance of payments of Sri Lanka,' economist Muttukrishna Sarvananthan at the E. Elliott School of International Affairs at George Washington University told IPS.

‘’Because tourism provides livelihoods to hundreds of thousands of people in the interior parts of Sri Lanka (particularly along the southern coast) especially in terms of providing employment in the hotels and resorts, and provides markets for locally produced vegetables, fruits and handicrafts, and an array of services such as local transport, the impact on ordinary people will be considerable,’’ Sarvananthan said.

On the southern beaches the effects are palpable. At Unawatunna, the cove famous for its calm waters and its UNESCO heritage site status, Nishan Suranga stares hopefully from behind red-framed dark glasses for ptoential custom. He works as a guide, boat hirer and guest house operator, but there seems to be little demand for any of these services.

'The locals fill the beach,' he told IPS. 'But, they are not our clients; they don’t buy food or rent rooms, they never want guides... we are fast going under.'

At a scuba diving school in Unawatunna, two youth are lazing about on the sand, staring at the sea. The tourist season coincides with the winter in Europe, the bumper months being the quarter between December and April. Most businesses run at a loss for the rest of the year.

'That is the way it works. For four months we have more than we can handle, then there is a very little,' Chaminda Ekenayake, one of the youths who works at Barracuda Diving, said.

'Last season (December 2007 - April 2008) we had some guests and we could run for the rest of the year. If this season does not pick up we will have to close our operations,’’ Ekenayake said. Where he was making at least 50 dollars per day, this season he has to look around for people who may be interested in scuba diving.

The few tourists around seem to be on budgets. 'We had the Japanese here sometime back, but after the financial crisis began they stopped coming. Then the Russians came but they don’t spend much,’’ Ekenayake said. ‘’The Israelis are the same... you can’t blame them if they have tight situations back home.'

Though no large scale layoffs are reported yet, the smaller establishments have closed shop. The guesthouse next to Fernando’s, on the main surf area in Hikkaduwa, is padlocked. 'The guy who was running this could not deal with the rent and the utility bills, he closed up and the owner of the property says he does not want to risk his own money, trying to run it,' Ekenayake said.

Unfortunately for Fernando, and many others like him, there is no such thing as a bailout package. 'I invested at least 40,000 dollars on this operation after the tsunami, and if the season tanks, I will automatically close shop.'

His wife and two kids look at him intently as he speaks. The wife is at the hotel to help out following the staff cuts. The kids are there because of school holidays and are the only ones eating at the tables.

'This is an industry that can cave in on its own overheads if there are no guests,' Fernando said. 'It is not easy to run a hotel.'

© Inter Press Service (2008) — All Rights ReservedOriginal source: Inter Press Service

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