The economic revival potential of tourism underestimated: Hotels Chief Shanthikumar

  • Industry insists there are other issues to be addressed and further support is needed if the country is to benefit from a faster revival in tourism

THASL President M. Shanthikumar

Sri Lanka Hotel Association (THASL) President Shanthikumar yesterday regretted that tourism’s potential for economic recovery was underestimated by the government, adding that the sector needed attention and immediate support to avoid a more serious crisis.

“The tourism industry is confident in its ability to help revive the country’s economy. Its true potential is still greatly underestimated, ”Shanthikumar said, adding that every dollar earned by the industry is kept in the country. He said that as an industry, tourism is the country’s primary source of net currency.

While expressing its gratitude to the government and the regulator for the support given in the aftermath of the Easter Sunday attacks and the pandemic, through a relief plan including a moratorium on principal and interest repayments, the THASL chief said there was much more to do. “The initial support after the Easter Sunday setback and COVID kept the industry afloat for the worst time in its history. However, there are still other issues to be resolved and additional support is needed, ”he added.

The THASL chief called on the government to think about “out of the box” models to ease the financial burden on the industry, for example by restructuring the industry’s growing debt in this unprecedented situation. “This is necessary for our survival and our awakening,” Shanthikumar said.

He said the introduction of a 2.5% social security contribution tax on total revenue would have a direct impact on the growth of tourism in an already struggling sector. A two-year delay until near normalcy returns would help the industry get through the first months of the tourism recovery, he added.

“We are also asking the government to make the necessary changes to tariffs, levies, charges, etc. tourism, in order to align with all other industries in the country. Currently, the demand to pay 1% of the total turnover as a local government tax, and the electricity tariff for hoteliers, is totally discriminatory. Struggling hoteliers will never be able to settle delinquencies demanded by local authorities, as the industry is currently trying to make every dollar to pay employees’ monthly salaries and run their day-to-day operations. We need the country’s leaders to understand the state of hoteliers and waive all overdue contributions demanded by local authorities, ”he said.

“We are already paying a 1% tax on first digit revenue as TDL to be used for tourism development and promotion,” he said, adding that 80% of the supplies for the hotel sector are d local origin in addition to paying taxes for all imported items. such as alcohol, meat and other supplies. “These generate income for the country. Hotels are subject to many other license fees and levies, such as liquor permits, garbage collection, etc. Too many taxes etc. will not help the industry and it will lose its competitive edge in the market which will eventually slow down. the growth of tourism. Compared to other export industries, taxes on the tourism sector are relatively high.

According to the head of THASL, private sector investment is estimated at $ 20 billion with hotels alone at $ 15 billion. It generates more than 600,000 direct and indirect jobs, 80% of which are employed in the hotel sector, he added, noting that more than 12% of the population depends on tourism.

“Colombo has 3,000 new luxury rooms open for operation by the end of 2023. Investment in tourism projects continued to flow even during the pandemic. Already approval had been given over the past two years for another 1,500 rooms across the country. Such is the potential of tourism in Sri Lanka.

“In addition, the indirect income from tourism is quite large, but there is no data available in the country to assess the same. This means that indirect business opportunity income from a tourist traveling across the country is not available. for example, the handicraft seller in the street, the thambili seller, the sellers of fruits, gems and jewelry, etc. which benefit the lower middle class and the poor.

“We are also seeing a large number of homestay units currently available in the country and have attracted a new segment of travelers to Sri Lanka. There is no data available on the revenues earned by most of these providers as they are not registered entities. These are the indirect benefits of tourism due to the consumption that occurs in the country. The benefits outweigh all other export sectors.

Shanthikumar also said that the industry offers excellent opportunities for career growth. The training provided by hoteliers created an opportunity for employees to seek careers abroad in hospitality and other tourism-related fields, thus contributing strongly to foreign exchange income through remittances. On the other hand, contributions to government revenues also include billions of rupees earned in the form of entrance fees, boarding taxes, etc.

“If the industry is run well, these revenues are bound to increase in the future, regardless of anything we have said so far.

“The government’s focused approach to introduce strict health and safety guidelines for the industry, run a very successful vaccination program and be ahead of most other countries, then fully open the borders to tourism travel, has created a favorable climate for tourism. It has also certainly helped the private sector to convey to the world that Sri Lanka is fully open, safe and ready to welcome foreign visitors. “

Shanthikumar also praised the efforts of Tourism Minister Prasanna Ranatunga to support the industry and tell all of the country’s leaders the importance of tourism, as well as the challenges and concerns of the industry, during his speech in Parliament a few days ago. .

However, Shanthikumar reiterated that the industry is currently in distress and needs help. “The SME sector is practically at a standstill and needs government support. We are therefore asking the government for help to restart and survive.


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