TOURISM PATHWAY

Compiled by Yamini Sequeira

HARNESS THE HUB POTENTIAL

Yuthachai Charanachitta views infrastructure and marketing as game changers

Sri Lanka’s tourism industry has taken impressive strides in 2024, signalling a wealth of untapped potential for both local and international investors. With the government offering several incentives for foreign investment in tourism related projects, the landscape is ripe for growth although challenges remain.

Commenting on the evolving investment climate, industry expert Yuthachai Charanachitta says: “The Tourism Development Act offers compelling tax incentives such as exemptions from income tax for up to seven years for hotel projects in designated zones. This is complemented by accelerated depreciation on tourism assets and more relaxed visa regulations for foreign workers.”

Charanachitta acknowledges the moderate effectiveness of these measures, noting an increasing influx of international hotel brands and investors into the market. However, he cautions that political instability and infrastructure challenges still pose hurdles.

“Permits are particularly advantageous for sectors such as hospitality where foreign expertise is crucial in certain areas – including food and beverage, engineering and room operations. Sri Lanka’s strategic location along with its rich history, stunning landscapes and vibrant culture enhances its appeal to international players,” he adds.

Despite the steady flow of foreign investment into infrastructure projects such as highways and seaports over the past decade, he points out that the next phase of growth is focussed on expanding investments in tourism – particularly in real estate and hotel developments.

BALANCING ACT For foreign investors seeking to enter Sri Lanka’s tourism market, he urges partnering with local legal and business experts to navigate the country’s regulatory framework, including land use, tourism licensing and environmental laws.

“In Sri Lanka, the key is balancing local and foreign talent as there is no one-size-fits-all approach. As we expand, the demand for skilled foreign professionals grows, ensuring that the diversity of cultures and experiences contributes to a world-class standard of service.”

He adds: “Fortunately, Sri Lanka’s hospitality sector continues to benefit from a strong pool of local talent.”

Charanachitta also emphasises a preference for mid-size standalone brands.

He explains: “These brands facilitate more personalised service and stronger relationships with owners, which is difficult to achieve with large global chains. As an Asia based operator with over five decades of experience, we have the advantage of understanding local Asian culture and responding with greater agility to challenges.”

TOURISM HUB For Sri Lanka to truly shine as a global tourism hub, he underscores the importance of improving infrastructure connectivity.

“It’s not only about improving road networks; we also need to enhance domestic flight connections and modernise the railway system, to better link the north, south and central regions,” Charanachitta avers.

Drawing comparisons between Sri Lanka and Thailand, he highlights their shared cultural and geographical similarities, which could be leveraged for growth.

“Both Thailand and Sri Lanka have a Buddhist majority, and both cultures have a natural inclination toward service industries,” he says, envisioning Sri Lanka as a regional tourist hub – one that targets European markets in particular.

He asserts that “Sri Lanka’s location is ideal for European tourists especially with its convenient flight paths and affordable pri­cing. Compared to destinations such as Thailand and Vietnam, Sri Lanka still offers exceptional value.”

However, Charanachitta notes that Sri Lanka’s full potential has yet to be realised: “Despite a wealth of natural resources and unique attractions – such as the only safari in Asia and some of the best beaches in the Indian Ocean – many tourists still opt for the Maldives over Sri Lanka.”

“What’s missing is a strong and cohesive marketing campaign that positions Sri Lanka as a must-visit destination,” he opines.

When it comes to investment risks, he points to political instability, natural disasters and economic volatility as major concerns: “Sri Lanka is vulnerable to environmental risks, including climate change and natural disasters such as the 2004 [Indian Ocean] tsunami.”

He continues: “Given these challenges, investors should conduct thorough market research, diversify their portfolios and plan for the long term. Foreign investors can improve their prospects by partnering with local businesses, fostering goodwill, gaining valuable market insights, and ensuring that projects align with cultural and local nuances.”

Another challenge for the local market is “the dominance of certain nationalities, particularly Chinese and Indian investors,” he observes.

“While Chinese investments have been dominant in the past, Indian investments are on the rise. However, we haven’t seen much interest from other nationalities as yet. As Sri Lanka reopens and repositions itself for business, we can expect more international players to enter the market,” Charanachitta adds.

Foreign investors can play a vital role in strengthening the resilience of Sri Lanka’s tourism industry.

BEST PRACTICES “By introducing global best practices in sustainability and crisis management, and investing in disaster resistant infrastructure, foreign investors can help build long-term resilience. They bring new knowledge, resources and brand recognition, which can boost Sri Lanka’s appeal as a tourism destination,” he declares.

Sri Lanka is well positioned to be a major player in the regional tourism market, yet Charanachitta notes that this is still work in progress.

“The country is geographically well positioned and the infrastructure is improving but it needs to pull everything together to attract more foreign brands. Currently, Colombo has one large shopping mall and a few international hotels, which is a far cry from cities such as Bangkok,” he adds.

Despite these early stage challenges, he remains optimistic about Sri Lanka’s long-term prospects.

Charanachitta believes the next few years hold tremendous promise for Sri Lanka. “There’s significant potential for growth but it will take time,” he muses.

“With the right investments, a focus on sustainability and greater international collaboration, Sri Lanka can become a regional tourism hub. The key will be to ensure stability, and foster strong relationships between foreign investors and local partners,” he explains.

Investors are closely observing key global tourism trends including the rise of experiential travel, wellness tourism, ecotourism and sustainable hospitality, and Sri Lanka is uniquely positioned to cater to these growing demands.

Charanachitta concludes: “The potential for growth in Sri Lanka is undeniable. The country’s strengths, geographical location, cultural heritage and natural beauty are major assets for the tourism industry. However, there is still much work to be done in terms of infrastructure and marketing.”

The interviewee is the CEO of ONYX Hospitality Group.