TOURISM INDUSTRY
TRAVEL OUTLOOK
Compiled by Yamini Sequeira
TOURISM AT THE CROSSROADS
Pankaj Sampat pins the survival of tourism on balancing lives and livelihoods
The latest edition of the UN World Tourism Organization (UNWTO) World Tourism Barometer indicates that the near complete lockdown imposed in response to the pandemic led to a 98 percent drop in international tourist numbers in May compared to 2019.
It also reveals a 56 percent year on year decline in tourist arrivals between January and May this year.
This represents a fall of 300 million tourists and US$ 320 billion lost in international tourism receipts – more than three times the loss during the global financial crisis of 2007/08. Unlike in the past when international tourism sustained a modicum of growth despite challenges, the odds seem insurmountable this time around.
Pankaj Sampat notes: “Globally, the pandemic affected tourism the most as countries went through a lockdown in March and airlines completely grounded flights. Much confusion ensued and the lifting of travel bans in some countries saw an increase in both tourists crossing borders and the repatriation of local residents.”
“In countries where this was managed, it worked well; however, there were instances where this migration triggered a second wave of new cases,” he adds.
DOMESTIC SECTOR UNWTO further noted that international tourism could decline by between 60 and 80 percent this year due to the COVID-19 pandemic, resulting in a revenue loss in the range of US$ 910 billion-1.2 trillion, putting millions of livelihoods at risk.
Against this backdrop, domestic tourism is expected to witness a faster recovery, which was evident in July, August and September in resorts across Sri Lanka – people who were confined to their homes during the extended curfew booked resort getaways to spend their long weekends.
“Domestic tourists have helped ease the pain for resorts; however, occupancy in city hotels remains low, and will recover only when the airports open up for leisure and business travellers. In Sri Lanka, many city properties were transformed into quarantine hotels to cover a part of their costs,” Sampat explains.
He continues: “However, on a positive note – under the strict guidelines laid down by the Ministry of Health and the local Public Health Inspectors (PHIs) – city hotels revisited their processes, and began hosting weddings and banquets. But this may not be adequate to sustain these properties.”
“While food and beverage has been a contributor to the top line, it is not a long-term solution for hospitality as the margins are much lower than from the accommodation business,” Sampat notes.
REGIONAL EXAMPLE In addition, Sampat points out that “India is seeing a surge in resort tourism, which indicates that there is a huge pent-up demand for tourism. Plantation bungalows, wildlife safaris and homestays are proving very popular for those who want to travel or work, and yet be safe.
“Many CEOs have used these private facilities to conduct their board and other important team meetings without the fear of encountering a larger audience, and they’re effective in maintaining physical distancing,” he reveals.
Sampat says that “the ‘4D’ (Dream, Drive, Discover and Delight) initiative was pioneered recently for those craving safe holidays sans the risk of travelling through populated airports. This initiative has been doing extremely well across different parts of India.”
TRAVEL BUBBLES And he notes that like many other countries, Sri Lanka is likely to evaluate the possibility of establishing travel bubbles with other countries that have fewer cases.
He mentions that Maldives is a good example where a balance has been maintained to preserve both lives and livelihoods with proper processes put in place over a period of time – and they’re constantly revisited and refined to get it right. In June, the World Bank noted that COVID-19 has the potential to cause a loss of nearly US$ 2 billion to GDP (that’s 2.3% of GDP) whilst placing 200,000 jobs in the tourism accommodation sector at risk in Sri Lanka.
Like other industry players, Sampat is worried about how long tourism would stay suspended; and how long it would take for the industry to revive and reach pre-COVID levels.
“With many large hotel chains finding it difficult to manage, the smaller hotels – as well as service providers such as tour guides, travel agents, transport companies and those with smaller related businesses – will find it difficult to survive in the present circumstances. Even finding an alternate livelihood currently isn’t easy either,” Sampat muses.
However, he is confident that the government is monitoring the situation closely and will take appropriate action at the right time.
INFRASTRUCTURE Before the coronavirus struck, the construction of new hotels was on the rise in Colombo with some large hotel chains poised to enter the market.
“Ongoing projects will certainly be delayed, and this would lead to an escalation of costs and importantly, opportunities lost. Cash flows will also be significantly impacted,” Sampath cautions.
He remarks that the opportunity to reset the tourism product and how business is conducted is the silver lining. Much like Kuala Lumpur and Singapore, Colombo too can plan for new attractions for tourists to ensure they can spend more time within the city. Even a large convention centre would ensure that the city hotels remain busy throughout the year.
COMPETITION It is expected that competition in 2021/22 will be fierce as city hotels would be eyeing the same piece of the pie, which would be limited initially. This will benefit corporates and guests, as tariffs would be extremely attractive and offer great value.
Sampat elaborates: “As a country, Sri Lanka has managed the pandemic well and in a disciplined manner, which will help the country recover faster in the months ahead. The opening of Mattala airport as another international airport for tourist traffic is a great move by the government.”
The rate of recovery of the tourism industry will also depend on how the government supports SMEs and tourism businesses in the months ahead. And Sampat concludes that “over the next three years, Colombo will have additional inventory of approximately 3,000 rooms so the industry will need to plan and create a sufficient pool of resources.”
