Post-Tsunami Struggles for Sri Lankan and

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SUBJECT: Post-Tsunami Struggles for Sri Lankan and
Maldives Tourism Sectors


1. Summary: Six months after the December 26 tsunami,
Sri Lanka's tourist industry is lagging. According to
major tour operators, tourist arrivals have fallen
sharply in 2005. While the government has reported an
8% increase in arrivals in the first 5 months of 2005,
tour operators say that most of these arrivals were aid
workers. Meanwhile, Maldives experienced a 50% drop in
arrivals in the first 5 months of 2005. End Summary.


2. According to major tour operators, tourist arrivals to
Sri Lanka have dropped by as about 50% to 60% following
the December 26 tsunami. Gehan Perera, Managing Director
of Aitken Spence Travels, one of the largest inbound tour
operators to Sri Lanka, said that their company has faced
a marked decrease in arrivals this year. For example, the
company handled 1,700 tourists in May 2005 compared with
3,200 tourists in May 2004. June arrivals have been lower.
The downturn in arrivals has badly affected their affiliate
company, Aitken Spence Hotels Ltd, which operates several
hotels throughout the country including on the tsunami-
affected southern coast. The first quarter of 2005 has
been particularly bad with occupancy rates dipping to
10-12% compared with 90% last year. Occupancy levels
have improved slightly in May-June to about 30% from
about 50% in 2004. John Keells Holdings (JKH),another
leading player in tourism, has reported a 50% drop in
average annual occupancy levels in their resort hotels
in the post tsunami period. Amith Sumanapala, Director
of Walkers Tours, the largest inbound tour operator,
said his company has also seen a 50% dip in arrivals
compared to last year.


3. Data given by operators and reports from people
visiting the southern coast contradict government
statistics. The government owned Ceylon Tourist Board,
the main tourism promotion agency, says arrivals are up
8% to 208,000 in the first 5 months of 2005. According
to their statistics, arrivals in May have increased by
36%. Tour operators say that most of these arrivals
were aid workers. Most of them choose not to stay in
resort hotels and spend less than tourists on meals and
other services.


4. Tour and hotel operators are concerned about the
upcoming winter tourist season (the peak season),which
begins in October, but hope that a USAID-assisted
promotional program for the tourist industry (to do
promotions in key markets such as UK, Germany, France
and India) will help to reverse the situation. Tourism
sources attribute Sri Lanka's failure to re-capture
markets to a lack of effective promotions. Private
companies such as John Keells have also invested
heavily in market promotions. For instance, John
Keells Group has hosted several groups of foreign
journalists and top agents in Sri Lanka since January.
They have also traveled to key markets for market
promotions. They believe that a mass scale "customer
awareness" program is still needed to really create
awareness of the market. Tourism sources also say it
is too early to comment on winter bookings given a
recent trend to book holidays at the last minute.
However, several charter operators have already reduced
their airline seat allocations.


5. Maldives: According to the Maldives Association of
Tourism Industry (MATI),tourism shows a sign of
recovery although arrivals and occupancy rates are
still much lower than in 2004. Tourist arrivals to
Maldives dipped by 50% in the first five months of 2005
to 139,000 from 283,000 in 2004. Consequently, the
average occupancy rate in resorts has dipped to 57%
from 94% in 2004. Indications are, however, that the
industry is picking up, as the drop in arrivals
decreased to 40% in May compared with drops by 70% in
January and 50% in February. In a bid to attract
tourists again, the Government of Maldives and private
sector operators are focusing on promoting the safety
of tourists. A plan now under preparation focuses on
safeguarding the international airport, improving
telecommunications, enhancing early warnings and
upgrading resort safety plans.

LUNSTEAD