The Hotels Association of Sri Lanka held it's 53rd Annual General Meeting on 17th October 2018 at the Shangri-la Hotel, Colombo. Mr. Sanath Ukwatte, the Chairman of the Mount Lavenia Group of hotels was unanimously elected for the 3rd consecutive year as it's President. Since taking over office 3 years ago, Mr. Ukwatte has played an aggressive role to address some of the challenges faced by the industry and which will impact it's future sustenance. He was the first to have a island wide program to recognise young talent within the industry and initiated the ' Rising Star' award to recognize the best of the best young talent in 09 identified disciplines in hotel operations. This was a resounding success. He also has recognized the need to create awareness amongst the youth on the opportunities available in the hospitality sector and has aggressively lobbyed with the Govt and donor agencies to get a nation wide campaign rolled out, has been a catalyst in lobbying with the Govt to change legislature and tax structures to be more tourism friendly and of course the push for a proper destination branding and an aggressive promotional campaign to be released immediately.
The Association also known as THASL, is the apex body of the entire hotel sector in the country and for the past 53 years has played a pivotal role in supporting the industry and it's development. It's membership investment exceeds over 90% of the hospitality sector in the country. Hotels is by far the single largest investor in the entire Tourism sector with an estimated investment of over USD 10 Billion.
The Prime Minister Hon. Ranil Wickramasinghe was the Chief Guest at the Dinner following the AGM.
In an emotional but bold speech supported by facts and figures, the President THASL did not hesitate to communicate what is threatening the sustainability of the Tourism industry. Whilst thanking The Prime Minister for getting the Destination Branding in place due to be rolled out at WTM in early November, Mr. Ukwatte said that Govt present and past identified Tourism as a thrust industry but was never treated that way when formulating policy. Hence, today the industry is facing many challenges including it's future existence. He was categorical is stating that the existence of the industry so far despite all the adversities is due to the passion and the commitment of the private sector and called on the Govt attention to take the industry forward.
Tourism is a highly sensitive industry. Factors such as wars, epidemics and natural disasters, currency fluctuations in our country or source markets have a negative impact on arrivals and the business. He stated that Tourism is one of the most competitive industries in the world and competing destinations are vying for the same dollar and have so far done far better than Sri Lanka. Hence, he called on the Govt to be smarter and faster in it's decision making and develop products that are suited for today's lifestyle. He gave examples of changes that has been made in Singapore, Dubai etc - destinations without extensive natural resources. These are popular tourist attractions today.
He stated that to attract the number of an eventual target of 4 million will not be an issue if, the Govt is ready to step in and to provide assistance which the industry desperately needs with a coherent and stable institutional support.
President THASL emphasized that Tourism is the 3rd largest foreign exchange earner and more importantly the 2nd highest net foreign exchange earner. The highlight of his speech was for a call to grant Tourism Export Status as the industry earns in foreign currency and the consumption of the product is done domestically using the goods and services in the country which has a larger benefit. In other industries the consumption happens abroad. There was a very strong call to grant the Tourism Industry export status and he argued that for national accounting purpose Tourism is considered as an export but the industry actually does not enjoy the status.
The call for a stable tax policy came with the above. Quoting Tourism friendly tax policies by competing destinations in the region, he called on the Govt to bring about a rational tax policy which will help the industry. Presently 20% on the top-line goes as taxes together with many other levy's whilst most competing destinations have a maximum tax structure of 5 - 10%. He continued to state that the hotel sector has been isolated within the industry as NBT is charged from hotels but the Inbound Travel Agents have been exempt from NBT. He pointed out that the much discussed additional 1% the municipalities and local governments are trying to charge is presently being challenged in court . So a a request for a fair and non discriminatory tax policy was just .
Such are some of the reasons for most hotels to incur losses including some of the public quoted hotel groups.
Time and again re emphasizing the importance of Tourism. Graphically demonstrating it's contribution of 11% to the GDP vs 7.3%% agriculture, 30.5% from all other industries etc with an employment base of over 350,00 people at present .
With an impactful visual presentation to stress his points , he further went on to emphasis that Tourism is the only foreign exchange earner which has the potential to reach every segment of the society, be it the fishmonger, farmer, entertainer, tuk tuk driver, thambilli seller etc. He stated that this trickle down effect makes Tourism industry the only industry that 90% of the foreign exchange earnings is retained in the country and asked if this is not a major boon to the country when the Govt is trying to increase it's foreign reserves?
The ask for the much talked about informal sector regularization came in next. The call again was to take an inclusive and non discriminatory approach to the industry where all contribute equally towards it's growth. He spoke of the large number of accommodation units coming up across the country unregulated and uncontrolled . This means none of these entities or players are making no contribution to the Govt revenues. This enables these operators to offer cheap prices thereby threatening the entire formal sector of hotels in the country who has invested a large capital from acquisition of land to construction, investment in training a large number of people etc. He called this totally unfair and stated that this is a huge threat to the industry and the country going forward.
Going beyond the Hotel Industry, the importance of planned development to promote a sustainable tourism environment was another point put forward . The Govt was requested to bring about proper planning guidelines and regulations for zoning areas with potential for sustainable tourism development and prevention of over utilization of National assets.. This meant the country's tourist assets. The need to focus on quality in terms of offerings and in terms of client profile was explained in detailed and warned on the negative environmental consequences when the focus is only to increase visitor numbers. Eg: over visitation in wildlife parks , beaches, cultural sites etc.
Mr. Ukwatte did not hesitate to mention that a lack of a proper long term development plan has created an over supply of hotel rooms in some of the areas including Colombo. This has lowered occupancy levels and pricing to below expected levels resulting hotels running at a loss, and will be a possible challenge to new investment in the industry!
He called again on the Govt to hold the minimum price mechanism in the Colombo City Hotels which has significantly helped the industry to survive and staffed earned a high service charge over and above their basic salary. The need of the hour he said is to bring a well drafted monitoring mechanism policy to control violators with high penalties. He mentioned that at a recent meeting of the Colombo City Hotels, 99% of hotel leadership voted to hold the Minimum Rate with a proper monitoring mechanism. He stated that since the Govt stopped monitoring the minimum rate the room rates and drastically declined however the corresponding increase in room occupancy did not happen. Colombo City caters to the business travelers primarily. Their bills are paid by corporate houses overseas and it does not make business sense to charge them less than what they pay at present. This as a result is having a negative impact on hotel operators and the employees and a decline in Govt revenues in terms of taxation.
He was optimistic that the PM under his leadership will roll out the much awaited Destination brand and the promotional campaign for the betterment of the industry.
In a very touching gesture, for the first time The Hotels Association recognized industry leaders who have who contributed immensely to developing the hospitality sector in the country. The Hon Prime Minister presented Posthumous awards to Mr. Herbert Cooray - the founder of Jetwing Travels and Hotels received by his son Mr. Hiran Cooray who continues the great work of his father and for Mr. Asker Moosajie - the founder of Serandib Hotel Group and one time Chairman of the then Ceylon Tourist Board.Lifetime Achievement Awards were presented by the Hon. Prime Minister to Deshamanya Ken Balendra, Deshamanya Prof. M.T.A Furkhan and to Deshabandu George Ondaatjie. This was indeed a gracious moment filled with pride and gratitude.