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Viewing cable 09COLOMBO969, THE SRI LANKAN TOURISM SECTOR: A BRIGHT FUTURE

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Reference ID Created Released Classification Origin
09COLOMBO969 2009-10-21 08:47 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Colombo
VZCZCXRO5553
PP RUEHBI RUEHCI
DE RUEHLM #0969/01 2940847
ZNR UUUUU ZZH
P 210847Z OCT 09
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC PRIORITY 0649
INFO RUEHKA/AMEMBASSY DHAKA PRIORITY 1959
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 8995
RUEHKT/AMEMBASSY KATHMANDU PRIORITY 7233
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 3378
RUEHCG/AMCONSUL CHENNAI PRIORITY 9556
RUEHKP/AMCONSUL KARACHI PRIORITY 2545
RUEHCI/AMCONSUL KOLKATA PRIORITY 0435
RUEHBI/AMCONSUL MUMBAI PRIORITY 6856
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 COLOMBO 000969 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR SCA/INSB 
 
E.O. 12958: N/A 
TAGS: CE ECON EIND ETRD
SUBJECT: THE SRI LANKAN TOURISM SECTOR:  A BRIGHT FUTURE 
WITH CHALLENGES 
 
1. (U) SUMMARY:  With the end of Sri Lanka's long running 
war with the Liberation Tigers of Tamil Eelam (LTTE) in May 
2009, the Sri Lankan tourism industry has every reason to be 
quite 
optimistic.  Tourist travel is at its highest levels since 
2004.  The country boasts beautiful beaches, seven UNESCO 
World Heritage Sites, 14 wild-life parks, and diverse flora 
and fauna. Challenges do remain, with red-tape, stressed or 
non-existent 
infrastructure in some areas, and brain drain all daunting 
impediments to hotel and tourism development. 
 
THE STATE OF TOURISM 
 
2. (U) Sri Lanka had a strong tourism industry prior to the 
beginning of the 
conflict in 1983, and now they hope to make tourism a major 
employer and 
source of foreign exchange revenue.  Since the LTTE's defeat 
in May 2009, 
and with the relaxation of some travel advisories for Sri 
Lanka, the 
country has seen a significant increase in tourism. Overall, 
travel to 
Sri Lanka has seen a 34.3% increase year on year.  European 
travelers comprise slightly more than 50% of the total 
number of tourists visiting the country.  India accounts 
for about 20% of tourist arrivals, while the Middle East 
and East Asia comprise another 25%.  The remaining 5% of 
visitors are generally from North America and Africa.  The 
Sri Lankan Hotel Association, which tracks arrivals by 
nationality, recently told Econoff that tourists from the 
United States make up a very small percentage of Sri 
Lankan tourism market.  Visitors from Russia are also a 
growing niche, with increases in visitors each year since 
2006.  Sri Lanka currently has 14,800 registered hotel 
rooms nationwide and aims to have more than 50,000 
registered hotel rooms by 2016.  The Government of Sri Lanka 
(GSL) has set a target of 2.5 million visitors per year by 
2016, with an 
average stay of 8.5 nights per visitor. 
 
PROSPECTS IN THE EAST 
 
3. (SBU) The Eastern Province of Sri Lanka represents a 
significant untapped region for tourism development.  Over 
the next 2-3 years, the Sri Lankan Ministry of Tourism 
plans to focus on significant expansion in the mid-range 
and high end hotel market along the eastern coast.  The 
 GSL will need to invest heavily in infrastructure (roads, 
water, sewage) if hotel and tourist expansion is to be 
adequately supported.  The GSL plans to also invest heavily 
in extensive refurbishment of regional airports, to 
facilitate 
ease of tourist movement from western Sri Lanka to southern 
and eastern destinations.  In 2010, the GSL hopes to lure 
Thailand-basedMinor Group, which owns/operates several 
Four Seasons Hotels and Resorts in Southeast Asia, to the 
country with an ultimate aim of obtaining long-term luxury 
investment in the Eastern Province. 
 
THE WEST AND SOUTH 
 
4. (U) Despite stressed infrastructure and lack of an 
existing plan for expansion, the Western and Southern 
Provinces also factor into tourism development plans. 
Plans are underway by Jetwing Hotel's to build several high 
end hotels along the western and southern coasts over the 
next 3-5 years.  Other hoteliers such as Aiken Spense and 
John Keells have existing plans to construct high end hotel 
properties over the next several years.  Current expansion 
plans have the support of both the Sri Lankan Tourism 
Development Authority and the Ministry of Tourism.  Both 
entities see a dearth of high-end properties in the Western 
and Southern Provinces and want to see an increase in room 
rates through a higher class of hotel. 
 
COLOMBO 00000969  002 OF 002 
 
 
 
CHALLENGES REMAIN TO BUILD A WORLD CLASS INDUSTRY 
 
5. (SBU) While the GSL desires to transition the country 
into a tourist hub which rivals that of Thailand and 
Malaysia, significant hurdles must be overcome.  In order 
to secure an international class of hotelier, the GSL will 
need to develop a 'fast track' procedure to deal with 
development approvals and existing bureaucracy.  According 
to the Tourist Hotels Association, efforts to lure foreign 
hotel operators to Sri Lanka will stall if approvals are 
not fast-tracked to keep up with the speed of business. 
Stressed infrastructure in some areas and lack of 
infrastructure in others is another significant 
impediment.  Water, sewage, roads, and in some cases 
electricity are areas which will need to be addressed in 
the west, south, and east if the GSL hopes to support 
significant expansion of its tourism sector.  Brain drain 
is yet another issue.  For nearly 30 years, the best and 
brightest of the indigenous hotel industry moved on to the 
Middle East or Southeast Asia in search of work.  The GSL 
would like to tap into this resource (more than 206,000 Sri 
Lankans work in the hotel sector outside the country); 
however, no plan is in place to lure this pool of talent 
back to the country. 
 
6. (SBU) Comment:  Sri Lankans often characterize the 
country as a five star island with three star hotels. 
While the GSL has ambitious plans to become a tourist hub, 
unless there is careful planning to avoid the mistakes made 
with past hotel and tourism expansion along the west coast, 
the country will struggle to maintain the momentum of its 
post-war tourism boom.  The GSL will need to address the 
issue of infrastructure improvement along with hotel 
expansion.  Should infrastructure improvement not 
materialize, 
foreign interest and investment in the hotel and tourism 
sector 
may fail to materialize as well.  Sri Lanka, 'the small 
miracle,' 
has tremendous potential if it goes about expansion in a 
methodical and judicious manner.  The GSL has precious 
little time to achieve demonstrable results, with its self 
declared 'Visit Sri Lanka 2011' just around the corner. 
End comment. 
 
BUTENIS