Earnings from tourism:

SL below regional competitors

by Kanchana Wickramasinghe

This article on the theme 'World Tourism - One Billion Tourists, One Billion Opportunities' was written to mark the World Tourism Day 2015 (which fell on September 27).

This year´s World Tourism Day highlighted the global potential of tourism for socio-economic development.

"With more than one billion international tourists now travelling around the world each year, tourism has become a powerful and transformative force which is making a genuine difference in the lives of millions of people," said UN Secretary General Ban Ki-moon in a message to mark World Tourism Day.

With the tourism sector booming, the number of tourist arrivals to Sri Lanka is expected to increase by 1.6 fold by 2016 to reach 2.5 million. While the South Asian region recorded a seven percent growth in 2014, Sri Lanka recorded a 20 percent growth in the number of arrivals.

The growth rates for India and the Maldives, two important destinations in the region, were 11 and 7 percent, according to the UNWTO 2015 Tourism Highlights. The growth rates in the number of tourist arrivals in Sri Lanka shows that millions of tourist arrivals can create 'millions' of economic opportunities for the country.

Opportunities

Tourism can bring in economic opportunities, which can primarily or secondarily contribute towards development. The real impact of tourism on national output is hard to measure, given the complexity. Direct economic opportunities come in the form of tourist spending. An array of indirect opportunities is generated through the purchase of goods and services from other sectors of the economy. Wage income in the industry generates induced impact on the overall economy.

To increase the economic contribution of tourism, it is important to pay attention to the indirect and induced impact in addition to direct economic benefits. In Sri Lanka, the revenue generated through tourism has been increasing following the revival of the tourism industry after the end of the war in 2009. However, the country's earnings from tourism are comparatively low when compared with regional competitors.

In addition to foreign exchange earnings, tourism generated 129,790 direct and 170,100 indirect employment opportunities in 2014 according SLTDA statistics. Employment in the industry accounted for 3.4 percent of country's labour force in 2013.

Around 80.4 percent of direct employment opportunities are in hotels and restaurants. As highlighted in a recent ILO report and pointed out by tourism experts, Sri Lanka's tourism industry is characterized by significant skill gaps. A majority of those who join the sector either possess relatively low quality technical and vocational education or are trainees.

Soft skills

It is estimated that only 10 percent of the total employed in the industry have undergone formal or informal technical and vocational education and training. Significant soft skills improvement is necessary in terms of English language, leadership, commitment, positive work habits, creative and critical thinking.

Changes in the profiles of tourists at global and regional level can also bring in numerous opportunities. China has now become one of thee top ten source markets for Sri Lanka, according to the 2013 arrival statistics of SLTDA. China contributes 4.3 percent of total tourist arrivals in Sri Lanka. Rising disposable income, currency appreciation and improved air connectivity have led to a significant increase in Chinese outbound travel.

Spending by Chinese travellers has increased by 27 percent in 2013 when compared to 2012 and many destinations in Asia and Pacific are benefitting from this development. To reap the benefits through the China source market, Sri Lanka should strengthen strategies to attract Chinese tourists.

Things to ponder

The macro level statistics do not often reveal the true picture of tourism's role in promoting pro-poor development. It is acknowledged that mass tourism does not generate major gains to local communities and is characterized with high rates of outflows - termed as leaks. In contrast, small scale community-based forms of tourism, where community participation is considered as an integral element, can be more beneficial for local communities. Sri Lanka, a destination rich with natural and cultural endowments, has significant potential for development of eco-tourism, agro-tourism and community tourism.

Such forms of tourism use local resources, whereby the level of leakages is comparatively low. While a spectrum of tourism products are required from small scale to mass scale, Sri Lanka should pay more attention to developing the small scale tourism - which can perhaps be niche markets - providing ample opportunities for local communities.

Sustainability

A number of opportunities can also be created through effective promotion of business tourism and Meetings, Incentives, Conferences and Exhibition (MICE) tourism in Sri Lanka. The sustainability of the tourism industry is strongly linked with environmental and socio-cultural aspects of a destination. Tourism can be used as a tool to raise awareness and contribute towards preservation of natural and cultural assets.

For instance, eco-tourism can be used as a sustainable tool in natural forest management, as highlighted in an IPS study.

Tourism development in the identified regions also call for careful consideration. Infrastructure development in regard to tourism should not only consider the direct economic gains, rather, special attention should be paid to socio-economic and environmental implications of the respective areas.

Given the opportunities stemming from tourism, there have been transformations from existing livelihoods to tourism related livelihoods. "People here find tourism a more lucrative business than engaging in fisheries," said a villager from Kandakuliya, Kudawa - a village under transformation from fisheries to tourism in the Kalpitiya tourism area.

"However, there are significant threats to mangroves due to ongoing tourism development", he said.

Assurance of environmental and social sustainability should be an integral part of tourism development, from the initial stages, for a healthy growth in the industry.

Sri Lanka has a strong positive outlook if tourism development is undertaken carefully. There is much to be done in harnessing Sri Lanka's full range of opportunities in tourism, and the country should not miss or postpone making use of these opportunities.

The writer is a Research Economist at the Institute of Policy Studies.