The Covid-19 pandemic is now estimated to put 50 million jobs in the global travel and tourism industry at a risk, with travel set to go down by 25% this year and Asia being the most affected continent, according to the World Travel and Tourism Council, which represents the international tourism industry. Statistics from the council site show that the global tourism industry currently accounts for 10% of global GDP, having contributed $ 8.8 trillion to the global economy in 2018, and is responsible for over 319 million jobs worldwide. Similar to this, Sri Lanka’s tourism industry is a major contributor to the country’s GDP, with its direct contribution being 4.9% in 2018 according to the Sri Lanka Tourism Development Authority (SLTDA) annual report. Last year, the country saw the arrival of 1.9 million tourists, a drop from 2018’s 2.3 million, due to the Easter Sunday attack. However, now the entire industry and its different sectors have screeched to a halt due to Covid-19, with both local and international tourists being forced to stay indoors, curbing any non-essential travel. The Advocata Institute hosted an online discussion, in partnership with The Sunday Morning Business, in which top tourism industry stakeholders detailed the impact of Covid-19 on Sri Lanka’s tourism industry, its survival strategy, as well as the prospects for revival. Predicament Sri Lanka Association of Inbound Tour Operators (SLAITO) President Mahen Kariyawasam stated that at this moment, business had hit “ground zero”. SLAITO currently has a membership of 200 tour agencies, with a combined total of around 4,000 employees. The organisation’s members are responsible for 50-55% of tourists that come into Sri Lanka, who spend an average of 10-14 days in the country. 90% of the business they bring into the country goes towards the formal sector, where the members pay taxes such VAT (Value Addition Tax). Kariyawasam explained that currently, they are financially hit due to the VAT concession granted to the tourism industry last year, which is not applicable to destination management companies (DMCs). He went on to state they have appealed to the Government as most of their members were affected by the current situation and might not be able to pay the VAT instalment due at the end of the month. However, he stated that there have not been any job cuts as yet, and members have been given the option of cutting pay, giving unpaid leave, and other reduction slabs that they can adopt to survive. “Due to this situation, we have asked the Government for soft loans without interest which can be payable in the next three years. And we are happy with the current financial packages the Government has offered us. However, there some issues that need to be tailormade, because most of our members are SMEs (small and medium-sized enterprises) with no collateral.” Giving the overview of the hotel industry in the current situation, The Hotels Association of Sri Lanka (THASL) President Sanath Ukwatte shared that their industry was on the road to recovery from the Easter attack last year, when hotel prices fell by 60% and occupancy fell by 40%. The industry began to recover in the latter part of 2019 and continued to recover until 10 March, when the coronavirus outbreak was at its initial stages. The hotel sector is the largest investor and employer in the local tourism industry, and is also a capital-intensive industry with many fixed costs including payroll, insurance, maintenance, energy, and high debt financing, which require a regular revenue stream. The association has a membership of 240 hotels from around the country, comprising some of the biggest and also smaller hotels. Currently, there is a serious supply and demand imbalance; 40,000 rooms, amounting to 70% of the country’s hotel inventory, with another 6,500 additional rooms in the pipeline, has led to a glut in the market which will only worsen as the crisis goes on and margins erode further, explained Ukwatte. “Hotels are currently closed due to curfew and social distancing; local events are also shut for the near future. So we are in an environment of zero revenue, which is unprecedented, since hotels have always been open.” The next challenge for the sector lies in managing their human resources during this period, as currently only small teams of essential staff are kept by hotels to maintain plants and machinery, with the rest being sent home. “Most of the senior management in hotels have taken pay cuts, while the others are being paid their basic salaries. As an industry, we have taken hits over the past few years, so the companies have no reserves, and due to zero revenue coming in, the sector is in a financial crisis.” However, having faced war, terrorism, and a tsunami, Ukwatte is confident in the resilience of the sector. The Government has introduced moratoriums and working capital loans for the industry. “It might take six months to a year, but a vaccine will be developed. So at this point in time, it’s a battle for survival and we are grateful for the Government’s aid to the industry.” He also shared that the biggest fixed cost of the hotel sector is payroll, which takes up 50% or more of their spending; it accounts for salaries, free meals for all staff, uniforms, and other incentive schemes. Their second highest cost is energy, which takes up 20-30% of their spending. The hotel industry is also known for having one of the highest electricity rates in the country. “Our sector has to consider all of this, and we are also one of the most highly taxed industries in Sri Lanka, so it is difficult to survive in a situation where there is a glut in the number of rooms, when our margins are eroding and we have to pay all these additional costs.” In addition, Ukwatte stated that once this situation has surpassed and hotels were ready to reopen, the properties would need to be refurbished in order to get them back to their former standards. Speaking from a regulator’s perspective, SLTDA and Sri Lanka Tourism Promotion Bureau (SLTPB) Chairperson Kimarli Fernando stated that the SLTDA currently has roughly 12,000 registered institutions and individuals – from hotels to home stays and tour guides to drivers – currently affected by the pandemic. The SLTDA is currently working with the United Nations Development Programme (UNDP) to compile a three-stage strategy. The first stage is set to understand the situation by conducting a situation assessment, impact assessment, and roadmap. Fernando shared that they have discussed this with all industry stakeholders in both the regulated and unregulated sectors. Fernando stated that they also conducted a study which they used to reach out to the International Monetary Fund (IMF), co-ordinated by Bank of Ceylon (BOC) and the Treasury, to support those earning salaries of Rs. 40,000 or less in the tourism industry registered with the SLTDA. She went on to state that she also prepared a proposal to provide one-off payments for tour guides and drivers. Recovery Moving forward, all 34 associations in the industry, including THASL, SLIATO, drivers’ associations, and regional associations, will have to decide amongst themselves on whether the current fragmented method of representation and lobbying is effective or if they would like to speak in one voice, shared Fernando. With regards to SMEs, which are important to the industry and often go underrepresented on the current boards, Fernando explained that there has to be mechanisms in place to ensure their voices are heard, and to create opportunities for the younger generations moving into tourism to bring their views forward. “Yes, it is very bad right now, but we need to find a way out, because eventually people will travel and then it becomes a question about whether the traveller feels comfortable with the country and the accommodation available to them, the airlines they are travelling in, and finally, the country’s healthcare system.” Sri Lanka will be looked at in a positive light when people want to travel again, she shared, due to the proactive way the Government has handled the issue. Airlines were already working towards making themselves more appealing to travellers while accommodation providers were currently creating guidelines, taking Singapore as an example, and also the health guidelines provided to them. The healthcare system has already proved itself to the world, she said. “I think we need to look internally, and work on areas such as automation, streamlining processes, refraining from using the current procurement processes and implementing new procurement processes guidelines to do things. So internally, we have to make a lot of changes and we will continue making a lot of changes.” She stated that this was a good opportunity to look at sustainable tourism; to advice and work with players demonstrating the need to have a more resilient system in place due to the industry being susceptible to manmade disasters, natural disasters, and health crises. Ukwatte stressed on the need to revive the industry as soon as it is safe, in order to help maintain the livelihoods of the thousands of workers employed. He went on to state that they also need to engage with the Government and health services on how to bring tourists to the country without endangering the lives of the people. “If we can have proper screening and testing systems which adhere to strict social distancing protocols, we can restart our normal lives until a vaccine is developed.” Promotion Kariyawasam stated that in terms of promoting Sri Lanka as a destination, gaining Cabinet approval for the global advertising campaign was a good start, so that the industry can be ready when Covid-19 is at its final stages. He explained that right now, it is a bit too early for the country to engage in promotions since most countries are on lockdown and other tourism-driven countries like Singapore and New Zealand are yet to launch their plans as well. “At this moment, most of the overseas tour operators, mainly European tour operators, are on lockdown, and are working from home, limiting our capacity to work with them. I do not think the industry will revive in the next eight to 12 months because of the crisis in Europe, and the new way of travelling will have to include health certificates, so all this will take time.” Going forward, the industry will have to look at a new business model to promote Sri Lanka, such as in markets like China and Korea, which can be positive markets in the coming months, he shared. The world already knows how well Sri Lanka is handling the pandemic and how effective the country’s preventative measures are. Therefore, the skills of the healthcare staff and the entire sector would instil confidence in future travellers. While recovery is likely to take six months to a year, Ukwatte shared that they are receiving tentative bookings from January 2021 onwards and the industry has adopted a very flexible booking policy where a visitor can cancel a booking without a penalty any time before the intended arrival. He stated that the sector plans on working with Fernando and the SLTPB to introduce attractive early bird offers, and suggested that the Bureau and airlines match with similar discounts. “We believe that we need to plan for at least the next five years in order to position Sri Lanka as the best island in the world and I think we have the ingredients to do that.” Fernando cited this as a good opportunity for Sri Lanka to look at increasing its connectivity. She explained that there have been discussions at the senior levels of government to make the country a transit hub for the region, by increasing six-hour transits to 10 to 12 hours, and giving the needed facilities. “I think we should learn from Singapore and Dubai, where they were initially not promoting their tourism, but their airports for transit passengers and then subsequently, used the airport to promote their country for tourism.” Global promotion is not a way to fix all the industry’s problems, Fernando opined, and instead suggested that the stakeholders look at their products and services, balance sheets, how they operate, and how they can promote themselves. Thanks to technology, stakeholders can now promote themselves, and don’t have to wait on the SLTPB or the SLTDA to solve all their problems. However, she stated that they were in fact looking to promote the country and are grateful to the Government for approving the global advertising campaign with no amendments. She shared that they are currently looking at public relations (PR) agencies and DMCs to help with the campaign, and have an international organisation assisting them with research-based marketing, on not just what countries to target, but also what types of travellers they want to attract from those markets. Fernando also suggested restructuring the country’s single entry visa to a five-year visa in order to encourage people to revisit Sri Lanka. She also appealed to the rest of the industry to aid in this when making itineraries for tourists, by not covering all of Sri Lanka in just seven days and thereby eliminating the need to revisit. Instead, she asked them to encourage people to go less-visited tourists attractions such as Polonnaruwa, Anuradhapura, and Jaffna. “We need to encourage tourists to revisit the country, instead of making it a country they can label as done.”