GRAVITY MODEL
Determinants of the trade
(In the context of USA and Srilanka)
Abstract
This paper tries to determine the determinants of the trade between Srilanka and USA in respect to 1985 to 2009 time period. Gravity model use to identify the trade determinants of USA and Srilanka. Particularly five variables checked whether they any relationship with trade, variables are; GDP (measured in PPP) of Srilanka, GDP (measured in PPP) of USA, Distance between Srilanka and USA, Population of Srilanka, Inflation rate of Srilanka (average consumer price index) and Unemployment rate of Srilanka.
Results gain by linear equation method suggest that all the variables are having relationship, but only the inflation of Srilanka having significant towards the trade of Srilanka and USA. GDP USA has negative relationship with trade between “USA and Srilanka”. When other variables are affects on trade positively.
Introduction
This research object to find the determinants of the trade between USA and Srilanka, According to the central bank annual report data (2009), USA is major trade partner of the Srilanka, USA is included in the top 10 trade partners with Srilanka (IMF, country database 2006), Srilanka exporting textile and garments and apparel, and agricultural goods like tea to USA and importing Consumer Goods, intermediate and investment goods.
The gravity model of trade has been widely used to estimate the impact of various policy issues, including preferential trade agreements, currency unions, and border effects. The model has a long tradition in social sciences where it has been used to model, for example, migration. In economics, the model has become very popular due to its success in explaining trade flows among countries.
After being introduced by Tinbergen (1962), the gravity model was considered to be a useful physical analogy with fortunate empirical validity. Subsequently, however, connections have been made to key elements of trade theory. The standard assumption of the Heckscher-Ohlin model that prices of traded goods are the same in each country has proved to be faulty due to the presence of what trade economists call “border effects.” Properly accounting for these border effects requires prices of traded goods to differ among the countries of the world.
Gravity models begin with Newton’s Law for the gravitational force (GFij) between two objects i and j. In equation form, this is expressed as:
GFij=(Mi.Mj)/Dij
(equation 01)
In this equation, the gravitational force is directly proportional to the masses of the objects (and ) and indirectly proportional to the distance between them (Dij).
Gravity models are estimated in terms of natural logarithms, denoted “ln”. In this form, what is multiplied in Equation 1 becomes added, and what is divided becomes subtracted, translating Equation 1 into a linear equation:
lnGFij=lnMi+lnMj-lnDij
(equation 2)
Mass in Equation 2 is associated with the gross domestic product (GDP) of the countries and distance. In this case, Equation 2 becomes
lnTRADEij=α+β1lnGDPi+β2lnGDPj+β3lnDij
Literature review
Research related to trade determinants using gravity model is available in the large amount, researches tried to find out the different trade determinant in the context of different country context.
Helpman and krugman (1985), conclude that countries GDP is always affects on the trade of that country in positive way, but leamer (1998)suggests that further research and clarification is in demand, because of the all the time results are not supporting to always GDP affect in positive manner. Regarding the GDP-related parameter estimates, the positive and significant coefficient estimates for overall economic size and the similarity of size index support the new trade theory MARIE STACK and ERIC PENTECOST
Most Researchers conclude that distance is affecting on the trade between two countries, commonly researches suggesting that when distance is low there is a high possibility of trade, but counter arguments for this is available in literatures, distance could bias estimation of the impact of distance over time because of the changing composition of trade (Jean-Franc¸ois Brun,et al), and technology reduced the effects of distance (celestino suarez burguet), This paradoxical result was initially investigated by Brun and others (1999) in a traditional gravity model framework. Earlier, Leamer and Levinsohn (1995,pp. 1387–88), reviewing the literature on international trade and distance, noted that ‘‘the effect of distance on trade patterns is not diminishing over time. Contrary to popular impression, the world is not getting dramatically smaller.’’ They conclude that ‘‘dispersion of economic mass is the answer, not a shrinking globe’’ for this result. In a recent examination of the paradox Coe and others (2002) review explanations in the literature.
A positive coefficient for total GDP is expected in line with the view that larger markets foster higher volumes of trade. The role of differential country size has been emphasised by Helpman and Krugman (1985)
According to MARIE STACK and ERIC PENTECOST research findings, The population coefficients of the exporting country are negative signed and remained rather constant, declining slightly in the 1990s. The population coefficients of the importing country are also negative signed but only until 1994. From 1995-1999 they are positive and significant in all years, with the time this values are changing this creates a demand for further researches.
In the context of Srilanka there is no researches are available or published to public uses, and contradictory ideas further increasing the need for demand.
Problem statement
Problem of this research is to find out which are the determinants of the trade between Srilanka and USA.
Objectives of the study
Find whether trade and GDP (measured in PPP) of Srilanka, GDP (measured in PPP) of USA, Distance between Srilanka and USA, Population of Srilanka, Inflation rate of Srilanka (average consumer price index) and Unemployment rate of Srilanka have any relationship between.
Find out what kind of relationship between the trade and variables is exists.
Methodology of the research
Research is prepared by using gravity model method, theoretical model have been changed as empirical model for research.
Theoretical model
GFij=(Mi.Mj)/Dij
(equation 01)
In this equation, the gravitational force is directly proportional to the masses of the objects (and ) and indirectly proportional to the distance between them (Dij).
Gravity models are estimated in terms of natural logarithms, denoted “ln”. In this form, what is multiplied in Equation 1 becomes added, and what is divided becomes subtracted, translating Equation 1 into a linear equation:
lnGFij=lnMi+lnMj-lnDij
(equation 2)
Mass in Equation 2 is associated with the gross domestic product (GDP) of the countries and distance. In this case, Equation 2 becomes
lnTRADEij=α+β1lnGDPi+β2lnGDPj+β3lnDij
Empirical model
With adding population, inflation and unemployment equation will be
"lnTRADEij=α+β1.lnGDPi+β2.lnGDPj+β3.lnDij+β4.lnPOPi+β5.lnINF+β6.lnUNEM"
"lnTRADEij" = total of imports and exports among country I and j, in the research Srilanka and USA
α= constant
"lnGDPi = " GDP (measured in PPP) of Srilanka
"lnGDPj = " GDP (measured in PPP) of USA
"lnDij = " Distance between Srilanka and USA
"lnPOPi = " Population of Srilanka
"lnINF = " Inflation rate of Srilanka (average consumer price index)
"lnUNEM = " Unemployment rate of Srilanka
Results of the research and conclusion
Coefficients of the research
Cons 9.556323
Population (SL) 0.0012204
Inflation (SL) 2.31
Unemployment (SL) 0.0000143
GDP (USA) (-0.0000144)
GDP (SL ) 0.0000297
Coefficient of the research is suggesting the following conclusions about the variables, population of the Srilanka is positively affecting to the trade, increasing in population will cause for increase in demand and production (by increasing the workforce), this will increase the trade in the direction of import and export.
Inflation of Srilanka is positively affecting on the trade, and it is the only value that affecting the trade significantly, inflation increment will be cause for reduction in the srilankan money value with compare to the USA dollars, which ultimately make the export prices reflect as low, by the inflation there will be a possibility to reflect USA import price as high for srilankan. This will increase the export and decrease the import. But Srilanka importing the industrial goods more from the USA which will make impossible to reduce the import even the prices are high. Situation will be enhancing the trade.
Unemployment of the Srilanka is positively affecting in the trade, direct causes for this cannot be predictable and it needed further researches to find out the real relationship between this two. This may be occur because of the incremental of the unemployment and trade values.
Gross domestic production of USA is negatively affecting the trade, this may be occur by recession period variations, when trade between USA and Srilanka slightly increased in the recession, the GDP amount of USA is sharply decreased in the recession period.
As expected Gross domestic production had positive relationship with the trade, possibly increment in the GDP will cause for export growth.
Results suggests that
R2 is 0.6995, which suggest that the overall model has ability to describe the variation of the trade, while it fail to describe the 31% of variation of the trade.
(in 99% confident level)p-values of variables)
Population (SL) 0.000
Inflation (SL) 0.898
Unemployment (SL) 0.10
GDP (USA) 0.123
GDP (SL ) 0.117
P-values of the variables suggest following
In 10% level population, unemployment GDP (USA), and GDP (SL) are significant (approximated percentages)
References
marie stack and eric pentecost, a gravity model approach to estimating prospective trade gains in the eu accession and associated countries.
Helpman, E. and Krugman, P. R. (1985), Market Structure and Foreign Trade:
Increasing Returns, Imperfect Competition, and the International Economy,
Cambridge: MIT Press.
INMACULADA MARTINEZ-ZARZOSO, Gravity Model: An Application to Trade Between Regional Blocs.
Jean-Franc¸ois Brun, Ce´line Carre`re, Patrick Guillaumont, and Jaime de Melo, Has Distance Died? Evidence from a Panel Gravity Model, the non linear specification of linear model.
celestino suarez burguet, Has Distance Died? Evidence from a Panel Gravity Model
Sunday, November 27, 2011
investment opportunity in sri lankan tourism
tourism related investment opportunities in sri lanka
Executive summary
Conflicts inside the country almost killed the tourism sector for 30 years, recent years in the post war situations, srilankan tourism industry had a promising growth even though the global tourism affected by the world economic crisis. Growth of the industry at peak present and expected results from the industry too high in the industry. In 2016 industry expects 2.5 million arrivals and 2.7 billion revenue from the industry. Tourism already becomes the number 1 revenue earner by send the garment industry to second after 20 years.
Thrice of the no of arrivals will create Some promising sectors that need investment some are Accommodation, Transportation, Telecommunication, Events and conference, Tourism Education, Financial, Health and Safety, Shopping Malls and Complex, Research and development, Informative, Ayurvedic facilities, tourism Services, and Entertainments.
Tourism and tourist
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people who "travel to and stay in places outside their usual environment for more than twenty-four (24) hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited (WTO)
State of tourism in global level
World tourism organization stating that the tourism & travel industry is the world's number-one industry which contributing to 10% of the world's economy, Tourism is not just one industry, it is many industries in one directly and indirectly tourism contributing to world economy largely. Worldwide travel and tourism create a new job every 10 seconds. Out of every nine persons, one person earns a living from tourism One out of every ten residents of this planet is a tourist, Travel is expected to grow 50 percent faster than any other sector of world employment.
Srilanka overview
Sri Lanka is an island nation in the Indian Ocean in close proximity to India and located on the East West international shipping route. The island has a diversity of tourist attractions such as pristine beaches, sports & adventure, culture, nature & wildlife (including rich biodiversity and rainforests), Ayurveda, meditation etc. thus and offers a range of activities for tourists. The country has a well literate population, wide transport network and offers a lot of potential for development of tourism.
New York Times has rated Sri Lanka as first out of 31 popular destinations for tourists. Srilanka ranked as 81 in the global economical forum tourism annual report, among 130 countries.
Booming tourism in Srilanka
We are gifted with one of the most beautiful beaches, rivers, wild life, climatic conditions and natural resources in addition to friendly educated and smiling nation coupled with great cultures and religions. So our country is ready to embrace the boom after the end of the cruel war of thirty five years. To be the wonder of Asia in few years we have to change our selves and the strategies drastically and on the right direction. We must now admit that no longer our nation can depend on traditional incomes such as plantations apparels and exports. We are blessed to be in the most beautiful country on the planet and it is sure no other member of the world family would register claims to be so. We have to think fresh and explore new ventures to be the “Wonder”. The best and readily available vehicle for us to achieve this target is tourist trade which we are conversant with.
FOREIGN TOURIST ARRIVALS TO SRI LANKA
The Tourism industry in Sri Lanka which struggled to survive for over two decades has been given a new lease of life with the termination of the civil war in mid-2009.With the removal of travel advisories which were imposed time and again with the terrorist activities, tourist arrivals to Sri Lanka which stagnated around 400,000 –500,000 picked up by 46% in 2010 to reach 654,000; one year after peace was establishment.
Arrivals for top ten source countries for 2009 & 2010
Traditionally the United Kingdom ranked as the number one destination for tourist arrival to Srilanka. However over the last few years higher number of tourists from India has been visiting Srilanka. In 2010 India accounted for nearly 20% of total arrivals and UK’s share was 60%.
Purpose of visit
Arrival data for 2010 indicates that there has been a remarkable increase in the number of business visitors to the country .while arrivals for leisure increased by 44% in 2010 arrivals for business has more than doubled.
Potential of tourism
The government has set a target of attract a 2.5mn tourist in 2016.To achieve this Srilanka needs to make substantial investments on accommodation and tourism related facilities. The hotel industry has voiced that the current hotel capacity will be sufficient to attract only about 750000 tourists. During the war many hotels w did not invest in upgrading their facilities and only concentrated on survival due to uncertainty in development of tourism associated with the security situation terrorism that prevailed until mid-2009. Since end of the war with improvement in prospects for tourism many hotels have commenced refurbishing and upgrading their products. Some hotels have started on expansion of room capacity and a few new hotel projects have also taken off the ground. The proposed rapid growth in tourist arrivals to Sri Lanka would also call for investment in other touristic activities such as restaurants, the various tourist products such as adventure tourism, Ayurveda, eco-tourism facilities, gaming and theme parks, shopping malls as well as services such as land transport, airlines, telecommunication services, human resource development etc. In addition there will also be greater scope for domestic industries such as gems &jewelry, handicrafts and suppliers of fruits and vegetables. Apart from leisure, Sri Lanka, due to its strategic location and pleasant climatic conditions has much potential to be promoted as a MICE (Meetings, Incentives, Conferences and Exhibitions) destination. Since the termination of the war, the country has already started attracting many international events. However, our facilities to host such events are very limited. Although some investment projects such as construction/expansion of conference facilities and sports pavilions are already underway there is further scope for prospective investors.
TOURISM DEVELOPMENT PROJECTS
The Youth Business Sri Lanka project focuses on development of 5 regions in Sri Lanka.
These are
Jaffna (Northern Province)
Trincomalee (Eastern Province)
Hambanthota (Southern Province)
Badulla(Uva Province) and
Kandy (Central Province)
There are three mega Tourism development initiatives that are currently underway;
The Kuchchaveli Resort Project
The Passikuda Resort project and
The Kalpitiya Integrated Tourism Resort Project
Potential for development of Tourism and Investment opportunities in Jaffna
As in the East, the North has very little tourist infrastructure facilities available atpresent. The sea, the proposed resumption of ferry services between South India and Northern Sri Lanka, the Jaffna lagoon are some of the key attractions that will draw tourists to the North. At present the Government is in the process of rebuilding the infrastructure facilities that were devastated by the war and for the 20 months since the end of the war focus was placed on construction of the highways, the railway and the connecting bridges as well as in the resettlement of people.
Only a few small hotels and guesthouses are available for accommodation in the Jaffna District but there are many local tourists who are travelling to the North, who were deprived of visiting the northern region in the last three decades. Jaffna is located about 400km from Colombo by road and commercial flights are also available between the two cities.
Potential for development of Tourism and Investment opportunities in Kandy
Kandy has been a major tourist attraction even during the war. Travelers moving from the South to the ancient cities in the Northern Central Province or to the higher elevations break their journey at Kandy. It has many star class hotels but with growth in tourism there is potential to draw more investments.
Potential for development of Tourism and Investment opportunities in Hambantota
Hambantota is a vast city located 240 km South East of Colombo. It is a strategic location in the country in close proximity to the international shipping route. Hambantota district covers 2,622 sq. km land area accounting for over six per cent of Sri Lanka's land mass. It is also very rich in biodiversity and the district has one of the largest wild life parks in the country and two bird sanctuaries. An area that has not received much development focus till recently, the Government has identified Hambanthota’s one of the main metro cities for development with the construction of an international harbor, an international airport, highways, conference centre, international stadium and many more.
With the development of the above infrastructure Hambanthota will be made into a key economic and tourist centre in Sri Lanka. The construction of the Port complex as an economic centre and the construction of an international convention centre it is expected to attract many business tourists to the region. In addition as highlighted above it is also an area for the leisure traveller with several nature parks located in the district, historical and religious destinations and the southern beaches. Currently Hambanthota only has two star class hotels, Hotel Oasis which specializes in Ayurveda & spa and the Peacock Beach
The Shangrila hotel chain has conveyed interest in investing in a 300 room resort hotel in Hambanthota and Sri Lanka Insurance Corporation has also indicated plans of constructing a hotel there.
Potential for development of Tourism and Investment opportunities in Badulla
Badulla is not a very developed town and although it is a very picturesque area with many tourist attractions it is yet to be explored in this respect. Only a few hotels are available and most of them are small. Thus there is much opportunity for investors. The Uva Provincial Council has no masterplan for development of tourism but has identified many lands for construction of hotels and will be the focal point of contact to get more information.
TOURISM DEVELOPMENT PROJECTS
There are lots of projects are going in Srilanka to identify the investment potential. There are three mega Tourism development initiatives that are currently underway; the Kuchchaveli Resort Project, the Passikuda Resort project and the Kalpitiya Integrated Tourism Resort Project.
• Kuchchaveli Resort Project
Kuchchaveli is located in the North Eastern Coast of Sri Lanka further north to Trincomalee. A plot of 500 acres have been identified for development and about half of the land area will be allocated for hotel development and the remainder will be used to develop other facilities such as theme parks, shopping malls etc.
The minimum area that will be given for a hotel will be 10 acres and the standards of hotels expected to be constructed will have to be 3 stars and above. The land will be given on 99 year lease. The main access roads and electricity supplies are already available but other infrastructure facilities have to be developed. Any prospective investor interested in constructing a hotel is required to send a letter of interest. Investment 23 opportunities also exist for construction of other facilities such as Restaurants, Shopping arcades, Car parks etc for which the development plans are yet to be finalized.
• Kalpitiya Integrated Tourism Resort Project (KITRP)
Kalpitiya, a stretch of land 150 kilometres North of Colombo and is skirted by sea on one side and lagoon on the other. The proposed Kalpitiya project will be centred around the several small islands that are located in the area. The islands are located within the lagoon as well as in the sea.
Following Investment will be available at the Proposed Tourism Area in Kalpitiya
Luxury accommodation units to attract up-market Tourists
Hotels, Chalets, Water Bungalows, Aurvedic Hotels, Beach Cabanas, Sun Huts, Out Door
Barbeque pits, Open Air Performance Areas
Low Cost accommodation units for Budget Travelers
Domestic Airport and Travels
Theme / Amusement Parks
Underwater Amusement Park
Cable Car Tours
High Speed Boat Safaris
Water Sports
Golf Course
Observation Towers
Camping Sites
Training Schools- Tourism and Hotel Management
Diving
Water Sports
Botanical Gardens
Agro and Livestock Farms
Hot Air Balloon Transports
Hospital
Race Course
Cricket Playground
Travel and Tour Operators
Handicrafts and Souvenir Shops
Gem and Jeweler Shops
Information and Interpretation Centers
Museum
Cultural, Art, Entertainment Center
• Passikudah Resort Project
Passikudah is located in the Eastern Coast of Sri Lanka and will be developed as a resort complex. The Sri Lanka Tourism Development Authority has already finalized the conceptual design plan for the resort and the Environmental Impact Assessment has been made.13 plots of land have been already leased out to investors for the hotels and according to SLTDA most investors have commenced construction. Infrastructure facilities will be established by the SLTDA. Tenders are expected to be called shortly for other developments within in the resort.
Investment Opportunities available at the Passikudah Resort Project:
• Shopping arcades (2) – schematic designs made, final designs to be done with investor
• Restaurants (2) – designs ready. To be built and operated. Tenders will be called within next 3 weeks
• Central car park - schematic designs made, final designs to be done with investor
• Central sewage treatment plant to be designed built and operated. Tenders called for.
• Open air theatre & Performance art gallery – to be designed SLTDA would prefer to have one investor for the first three components
Investment opportunities in hotel sector
According to Srilanka tourism development board, total hotel rooms available in Srilanka is approximately 22000 and the star level rooms are 15000 approximately. Estimated rooms demand will be thrice in the 2016, currently 14 hotel projects are under process with the investment around 2.7 billion but these investments can only add some 1000 rooms to the total rooms in Srilanka. In these 500 rooms with 1 billion investment building under the Shangri-La Hotels Lanka, a subsidiary of Hong Kong-listed hotel operator Shangri-La Asia will be only available at 2014 or later. There is a great demand for the all level rooms, the occupancy ratios of the 2009 calculated by the SLTDA is suggest all the star(5star, 4 star, 3star, 2 star, and 1star) hotel rooms have occupancy ratio between 40% to 50% (refer appendix 1). And overall Room Occupancy Rate of graded accommodation increased to 48.4 per cent in 2009
Asia continued to be the largest source market region to Sri Lanka with 38.9 per cent of the total arrivals for the third consecutive year. Indians are playing an important role in this figures, India remained as the major producer of tourist traffic to Sri Lanka with 83,634 arrivals, accounting for 18.7 per cent market share (refer appendix 3). This scenario suggest for ordinary rooms too need develop to cater low spending high quantity Asian travelers like Indians along with star class rooms.
There is a great opportunity for small scale hotel projects which can be finish in short terms, also the alternative sources like boat houses too have a great demand. Countries like Maldives and India using this forms of resorts for tourists attractions.
Areas like north and east have only 230 rooms especially north have no any star class rooms (appendix 4). Tourism destinations in north and east are becoming crowded after the post war. Hotel projects in these areas will be beneficial to Srilanka tourism as well as investors.
Investment opportunities in Transportation
Transport plays a vital role in the tourism sector, at same time transport gain much benefit by the tourism too, transports is top 4th foreign exchange gaining industry of Srilanka, with 7.9% FE earnings (SLTDA).
Increase of the no of people visiting to Srilanka will increase the demand for the transport in the same ratio. Tourism related transport can be dividing as two main areas international and local transport, in the international transport air transport is accounts for 99% of tourist carrying and 1% by the seaway. Land and air ways are major transport sources in local transport.
Appendix 07 and 08 showing the ranking of transport modes in Srilanka by world economical forum, air travel modes in international and local are not in a satisfactory level. Especially local air travels are requiring a major development.
Ground transport is developed to a satisfactory level still need to be developed with the increment of the tourist, but the air transport need a high growth and investment to cope with the tourism boom in Srilanka.
Srilanka small in size with the diversified tourist attractions, a tourist can enjoy the beach in Colombo and fly to upcountry in 30 minutes and enjoy the cup of tea in the cold. This kind of effective transport facility will increase the value of tourist getting as well as the income Srilanka getting.
When the no of tourist boom by thrice in 2016, transport industry should be prepared to serve them, this requires thrice investment in the tourism transports, international companies already tapped the opportunity and reacting well in this, spice airline’s launched daily flight to Srilanka by identifying this great opportunity.
Sea way transports are not popular in the industry but by constructing good strategies, sea way too is a great investment opportunity where the competition is very low, there is a good niche market who likes to travel by sea ways, potential is there to invest in such opportunities. Air travel inside the country will be boom in coming years, investing in this particular opportunity will return high in the future.
Ayurvedic centers
Local entrepreneurs of main tourist areas will be encouraged to construct Ayurvedic centers which could accommodate around 200 patients. Currently alternative medicine is popular worldwide. Ayurvedha, Siddha and Unani are systems of medicine established in Sri Lanka which is practiced for generations successfully. It has become extremely popular among tourists being a treatment with nature and no side effects.
Ayurvedic practitioners believe that illness arises when these dosha are out of balance, and work to restore harmony. Comprehensive treatment not only includes massage, herbal baths, oil treatment and a special diet, but also involves meditation, yoga and music to help the mind and soul.
One of the world’s oldest forms of healing, Ayurveda — derived from the Sanskrit words for life (ayuh) and knowledge or science (veda) — originated in India more than 3,000 years ago and soon spread to Sri Lanka, where Sinhalese kings established Ayurveda treatment centers in the ancient cities of Anuradhapura and Polonnaruwa.
In Ayurveda, a combination of herbs, diet, massage, hydrotherapy and oil treatment is used to treat everything from stress to diabetes, migraine, asthma, arthritis and high blood pressure. Ayurveda specialists will tell you that this form of treatment also helps boost the immune system, promotes a general sense of well-being and even helps delay the ageing process.
With many in the West turning from medicine which treats only the body, towards a more holistic approach, Sri Lanka has become destination for those seeking solace in the Ayurvedic principle of body, mind and soul.
Eco Friendly” tourism
The Government has pledged to support “Eco Friendly” tourism and agriculture based tourism and will use of government and private owned farms for this purpose.
“Eco-friendly tourism has a good demand throughout the world. Srilankan can aim is to attract rich tourists and earn foreign currency. Villages are being benefited. New employment is being generated while recreational facilities are helping the economy. We have opened the market for tourism while protecting the country’s bio-diversity. The resort utilized local materials and local engineering skills. Organic fertilizers, locally made pesticides, weedicides are used.
The Government is helping to develop projects like these to help the common villager giving them an opportunity to earn a living while safeguarding our cultural values.
“Farm Tourism”
“Farm Tourism” is extremely popular in other parts of the world where tourists enjoy the life of a farm and live and enjoy farm life. Yala, Walawa, Kumana, Bandula,Wasgamuwa,Wilpattue, Minnariya and Hortain Plans are few national parks with wild life elephants and thick jungle with water full of streams run through ending with beautiful water falls.
“Religious Tourism”
is also encouraged by developing Buddhist places of worship in order to increase tourists from countries such as Thailand and Buddhist countries. There are plans to establish a tourist center with special cultural importance to Asia.
Investment opportunities in education of Tourism in Srilanka
Currently we have only the Sri Lanka Institute of Tourism and Hotel Management (SLITHM) as the only national level tourism educational institute in Sri Lanka. That, too, is currently in a state of decline where the quality of education needs substantial improvement.
The SLITHM Colombo School and its 5 satellite schools together, has been producing only around 1,500 students bi-annually, but this year the intake has risen to 2,150 due to higher demand. There are also several mushroom private entities strewn around Colombo and other major cities, which offer so-called "courses" in tourism. They are not regulated, and like most of the other private tuitions, are of very mediocre standard, except for a very few.
There are also national universities such as Uva Wellassa and Sabaragamuwa, which conduct degree courses in tourism. In each batch, of this 4 year-duration courses, there would not be more than 30–40 students, which means that the output from this channel will also be negligible. In any event, most of these graduates will have to fill higher-level positions such as in strategic planning.
Hence, it is obvious that these few establishments, and the SLITHM, will be unable to produce the required numbers, let alone the quality required.
This is indeed a very serious, sad, and alarming situation. It does not take too much arithmetic to realize the enormity of the problem. Given the current maximum intake (and eventual output) of about 4,300 students per year from the SLITHM, it will take more than 100 years to produce the extra staff required for the industry! Even if we were to add another 1,500 per year from the mushroom private tutorials, it will still take several years to well organized education on tourism, if the situation continues.
The Tourism Industry as a Career
During the past few decades, Sri Lanka tourism was unable to attract good quality young people in to the industry because it was perceived that the tourism industry did not have any future.
However, with the meteoric rise of tourism immediately after the war, there is tremendous interest and enthusiasm for the tourism industry. Suddenly, almost overnight, the tourism industry has been transformed into a vibrant and exiting industry, perceived as being able to provide lucrative career opportunities for young people.
Therefore, the tourism education sector opens its door for potential investment in Srilanka.
Human resources training towards tourism
In collaboration with the SLTDA SLITHM conduct Tourist Guide Training Programs training programs. The Sri Lankan Institute of Tourism and Hotel Management is the premier training institution established by the Government in 1966 by an Act of parliament to train young men in the complex field of Hospitality and Travel Industry.
Standard of education
Training and development of staff for the tourism trade are a complex task, particularly in a Sri Lankan context. It is not only job skills that need to be developed, but professionalism also has to be "taught." For example, in more developed countries, basic on-the-job skills training is the only input required, where, very often one finds students working as temporary hands in the professional areas of the tourism industry during rush periods (as in banquets). However, there is a large cultural divide in what is perceived as service quality in an affluent western culture, compared with what the average Sri Lankan suburban and village population thinks. This means that one has to often provide not only on-the-job skills training but also training in fundamental grooming and cleanliness skills as well.
So, therefore, grooming, training, and developing proper tourism service professionals will take time.
It is a booming sector in Srilanka and it will be a huge potential investment opportunity towards tourism.
Shopping Malls
Sri Lanka is an excellent shopping destination that offers a range of items for visitors to the country. Located in various parts of the country are numerous shopping malls that provide an ideal destination in which to shop for a range of different goods in a single place.
In the commercial heart of the country Colombo, two main shopping malls exist, Liberty Plaza and Majestic City. Both present visitors to the country with an array of items from which to choose from. Find everything from clothes, shoes, electronics, handicrafts and a whole lot more in these prominent shopping malls.
While the most famous are located in the heart of Colombo various others can be found around the country, such as the Nugegoda Supermarket in Nugegoda. While not as upscale it still provides a good offering of goods.
In accordance with the tourists arrival to Srilanka will provide the huge potential investment in shopping malls. Nowadays the arrivals of the tourist is increasing so the shopping level of them also going to be increase. It will lead to increase the potential investment in shopping malls.
Events and conferences
Countries like Srilanka using the events and conferences to attract the tourists and increase the tourism income, Srilanka still lacking on this part, srilanka still conducting events like cricket world cup, wind surfing competition, cultural events and etc, but the international economical forum ranked Srilanka’s sport stadium facility as 105 out of 130 countries and trade shows as 77 out of 130, which demand for more events and events related infrastructure supply. (refer appendix 09)
Telecommunication
Telecommunication sector of srilanka became more affordable in near past, and the services are developed to be self sufficient but, the quality of the telecommunication towards the tourism is comparatively low.
Low speed internet connection, very lower penetration level in the internet (approximately 9 %), higher prices to foreign calls, are making tourism communication sector as more investment potential sector. Building up high speed internet facilities and surfing places, launching lower rate call packages to foreigners, IT related equipment investments are more promising areas of investment.
Health and safety
Overall health industry need a structural change to serve for the tourist medical demands, ratios such physician for patients, beds per patients, number of class hospitals are not in a satisfactory level to serve specially the tourists, investment in medical education, health and care equipments, new standard hospital facilities will be needed with the increasing level of tourists.
Finance sector
Srilanka have a well developed efficient financial sector overall, with the tourism boom there is still huge potentials, investment in ATM facilities, insurance facilities related tourism sector and tourists, credit card and visa card facility investments, money transfer facilities are some immediately needed sections. Banking and other lenders sector too have potentials, because of the huge investments in tourism will demand for more loans.
Research and development agencies and consultants
In Srilanka finding the research institutes orienting the tourism field is seldom, when a industry booming and invest opportunities abandoned, market need reliable information to find the right needs and invest on it. This particular field will gain profit as well as make sure the industry going in right path. Currently most of the researches are conducted by the government or government founded parties these are general not focused specific opportunities. Invest on this infrastructure will be beneficial for investors.
Conclusion
Tourism will increase the demand for direct and indirect opportunities in future, it’s important to identify and trap the opportunities in the right time. Both public and private integrated effort will be make the process easier and effective, long term oriented strategic should be implement to make use of this opportunities in effective way, without harming the environment, culture of the country.
Rather than compete inside the industry it is better to support each others for better results, tourism sector is unable to supply for the demand, when there is a over demand it is better to go for a better alliance strategies rather than competitive.
Because of the high sensibility of tourism to global conditions, so while considering the tourism sector it is more important to diversified sources like agriculture, industrial and other services parallel to ensure the long term growth and sustainability of the country.
Executive summary
Conflicts inside the country almost killed the tourism sector for 30 years, recent years in the post war situations, srilankan tourism industry had a promising growth even though the global tourism affected by the world economic crisis. Growth of the industry at peak present and expected results from the industry too high in the industry. In 2016 industry expects 2.5 million arrivals and 2.7 billion revenue from the industry. Tourism already becomes the number 1 revenue earner by send the garment industry to second after 20 years.
Thrice of the no of arrivals will create Some promising sectors that need investment some are Accommodation, Transportation, Telecommunication, Events and conference, Tourism Education, Financial, Health and Safety, Shopping Malls and Complex, Research and development, Informative, Ayurvedic facilities, tourism Services, and Entertainments.
Tourism and tourist
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people who "travel to and stay in places outside their usual environment for more than twenty-four (24) hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited (WTO)
State of tourism in global level
World tourism organization stating that the tourism & travel industry is the world's number-one industry which contributing to 10% of the world's economy, Tourism is not just one industry, it is many industries in one directly and indirectly tourism contributing to world economy largely. Worldwide travel and tourism create a new job every 10 seconds. Out of every nine persons, one person earns a living from tourism One out of every ten residents of this planet is a tourist, Travel is expected to grow 50 percent faster than any other sector of world employment.
Srilanka overview
Sri Lanka is an island nation in the Indian Ocean in close proximity to India and located on the East West international shipping route. The island has a diversity of tourist attractions such as pristine beaches, sports & adventure, culture, nature & wildlife (including rich biodiversity and rainforests), Ayurveda, meditation etc. thus and offers a range of activities for tourists. The country has a well literate population, wide transport network and offers a lot of potential for development of tourism.
New York Times has rated Sri Lanka as first out of 31 popular destinations for tourists. Srilanka ranked as 81 in the global economical forum tourism annual report, among 130 countries.
Booming tourism in Srilanka
We are gifted with one of the most beautiful beaches, rivers, wild life, climatic conditions and natural resources in addition to friendly educated and smiling nation coupled with great cultures and religions. So our country is ready to embrace the boom after the end of the cruel war of thirty five years. To be the wonder of Asia in few years we have to change our selves and the strategies drastically and on the right direction. We must now admit that no longer our nation can depend on traditional incomes such as plantations apparels and exports. We are blessed to be in the most beautiful country on the planet and it is sure no other member of the world family would register claims to be so. We have to think fresh and explore new ventures to be the “Wonder”. The best and readily available vehicle for us to achieve this target is tourist trade which we are conversant with.
FOREIGN TOURIST ARRIVALS TO SRI LANKA
The Tourism industry in Sri Lanka which struggled to survive for over two decades has been given a new lease of life with the termination of the civil war in mid-2009.With the removal of travel advisories which were imposed time and again with the terrorist activities, tourist arrivals to Sri Lanka which stagnated around 400,000 –500,000 picked up by 46% in 2010 to reach 654,000; one year after peace was establishment.
Arrivals for top ten source countries for 2009 & 2010
Traditionally the United Kingdom ranked as the number one destination for tourist arrival to Srilanka. However over the last few years higher number of tourists from India has been visiting Srilanka. In 2010 India accounted for nearly 20% of total arrivals and UK’s share was 60%.
Purpose of visit
Arrival data for 2010 indicates that there has been a remarkable increase in the number of business visitors to the country .while arrivals for leisure increased by 44% in 2010 arrivals for business has more than doubled.
Potential of tourism
The government has set a target of attract a 2.5mn tourist in 2016.To achieve this Srilanka needs to make substantial investments on accommodation and tourism related facilities. The hotel industry has voiced that the current hotel capacity will be sufficient to attract only about 750000 tourists. During the war many hotels w did not invest in upgrading their facilities and only concentrated on survival due to uncertainty in development of tourism associated with the security situation terrorism that prevailed until mid-2009. Since end of the war with improvement in prospects for tourism many hotels have commenced refurbishing and upgrading their products. Some hotels have started on expansion of room capacity and a few new hotel projects have also taken off the ground. The proposed rapid growth in tourist arrivals to Sri Lanka would also call for investment in other touristic activities such as restaurants, the various tourist products such as adventure tourism, Ayurveda, eco-tourism facilities, gaming and theme parks, shopping malls as well as services such as land transport, airlines, telecommunication services, human resource development etc. In addition there will also be greater scope for domestic industries such as gems &jewelry, handicrafts and suppliers of fruits and vegetables. Apart from leisure, Sri Lanka, due to its strategic location and pleasant climatic conditions has much potential to be promoted as a MICE (Meetings, Incentives, Conferences and Exhibitions) destination. Since the termination of the war, the country has already started attracting many international events. However, our facilities to host such events are very limited. Although some investment projects such as construction/expansion of conference facilities and sports pavilions are already underway there is further scope for prospective investors.
TOURISM DEVELOPMENT PROJECTS
The Youth Business Sri Lanka project focuses on development of 5 regions in Sri Lanka.
These are
Jaffna (Northern Province)
Trincomalee (Eastern Province)
Hambanthota (Southern Province)
Badulla(Uva Province) and
Kandy (Central Province)
There are three mega Tourism development initiatives that are currently underway;
The Kuchchaveli Resort Project
The Passikuda Resort project and
The Kalpitiya Integrated Tourism Resort Project
Potential for development of Tourism and Investment opportunities in Jaffna
As in the East, the North has very little tourist infrastructure facilities available atpresent. The sea, the proposed resumption of ferry services between South India and Northern Sri Lanka, the Jaffna lagoon are some of the key attractions that will draw tourists to the North. At present the Government is in the process of rebuilding the infrastructure facilities that were devastated by the war and for the 20 months since the end of the war focus was placed on construction of the highways, the railway and the connecting bridges as well as in the resettlement of people.
Only a few small hotels and guesthouses are available for accommodation in the Jaffna District but there are many local tourists who are travelling to the North, who were deprived of visiting the northern region in the last three decades. Jaffna is located about 400km from Colombo by road and commercial flights are also available between the two cities.
Potential for development of Tourism and Investment opportunities in Kandy
Kandy has been a major tourist attraction even during the war. Travelers moving from the South to the ancient cities in the Northern Central Province or to the higher elevations break their journey at Kandy. It has many star class hotels but with growth in tourism there is potential to draw more investments.
Potential for development of Tourism and Investment opportunities in Hambantota
Hambantota is a vast city located 240 km South East of Colombo. It is a strategic location in the country in close proximity to the international shipping route. Hambantota district covers 2,622 sq. km land area accounting for over six per cent of Sri Lanka's land mass. It is also very rich in biodiversity and the district has one of the largest wild life parks in the country and two bird sanctuaries. An area that has not received much development focus till recently, the Government has identified Hambanthota’s one of the main metro cities for development with the construction of an international harbor, an international airport, highways, conference centre, international stadium and many more.
With the development of the above infrastructure Hambanthota will be made into a key economic and tourist centre in Sri Lanka. The construction of the Port complex as an economic centre and the construction of an international convention centre it is expected to attract many business tourists to the region. In addition as highlighted above it is also an area for the leisure traveller with several nature parks located in the district, historical and religious destinations and the southern beaches. Currently Hambanthota only has two star class hotels, Hotel Oasis which specializes in Ayurveda & spa and the Peacock Beach
The Shangrila hotel chain has conveyed interest in investing in a 300 room resort hotel in Hambanthota and Sri Lanka Insurance Corporation has also indicated plans of constructing a hotel there.
Potential for development of Tourism and Investment opportunities in Badulla
Badulla is not a very developed town and although it is a very picturesque area with many tourist attractions it is yet to be explored in this respect. Only a few hotels are available and most of them are small. Thus there is much opportunity for investors. The Uva Provincial Council has no masterplan for development of tourism but has identified many lands for construction of hotels and will be the focal point of contact to get more information.
TOURISM DEVELOPMENT PROJECTS
There are lots of projects are going in Srilanka to identify the investment potential. There are three mega Tourism development initiatives that are currently underway; the Kuchchaveli Resort Project, the Passikuda Resort project and the Kalpitiya Integrated Tourism Resort Project.
• Kuchchaveli Resort Project
Kuchchaveli is located in the North Eastern Coast of Sri Lanka further north to Trincomalee. A plot of 500 acres have been identified for development and about half of the land area will be allocated for hotel development and the remainder will be used to develop other facilities such as theme parks, shopping malls etc.
The minimum area that will be given for a hotel will be 10 acres and the standards of hotels expected to be constructed will have to be 3 stars and above. The land will be given on 99 year lease. The main access roads and electricity supplies are already available but other infrastructure facilities have to be developed. Any prospective investor interested in constructing a hotel is required to send a letter of interest. Investment 23 opportunities also exist for construction of other facilities such as Restaurants, Shopping arcades, Car parks etc for which the development plans are yet to be finalized.
• Kalpitiya Integrated Tourism Resort Project (KITRP)
Kalpitiya, a stretch of land 150 kilometres North of Colombo and is skirted by sea on one side and lagoon on the other. The proposed Kalpitiya project will be centred around the several small islands that are located in the area. The islands are located within the lagoon as well as in the sea.
Following Investment will be available at the Proposed Tourism Area in Kalpitiya
Luxury accommodation units to attract up-market Tourists
Hotels, Chalets, Water Bungalows, Aurvedic Hotels, Beach Cabanas, Sun Huts, Out Door
Barbeque pits, Open Air Performance Areas
Low Cost accommodation units for Budget Travelers
Domestic Airport and Travels
Theme / Amusement Parks
Underwater Amusement Park
Cable Car Tours
High Speed Boat Safaris
Water Sports
Golf Course
Observation Towers
Camping Sites
Training Schools- Tourism and Hotel Management
Diving
Water Sports
Botanical Gardens
Agro and Livestock Farms
Hot Air Balloon Transports
Hospital
Race Course
Cricket Playground
Travel and Tour Operators
Handicrafts and Souvenir Shops
Gem and Jeweler Shops
Information and Interpretation Centers
Museum
Cultural, Art, Entertainment Center
• Passikudah Resort Project
Passikudah is located in the Eastern Coast of Sri Lanka and will be developed as a resort complex. The Sri Lanka Tourism Development Authority has already finalized the conceptual design plan for the resort and the Environmental Impact Assessment has been made.13 plots of land have been already leased out to investors for the hotels and according to SLTDA most investors have commenced construction. Infrastructure facilities will be established by the SLTDA. Tenders are expected to be called shortly for other developments within in the resort.
Investment Opportunities available at the Passikudah Resort Project:
• Shopping arcades (2) – schematic designs made, final designs to be done with investor
• Restaurants (2) – designs ready. To be built and operated. Tenders will be called within next 3 weeks
• Central car park - schematic designs made, final designs to be done with investor
• Central sewage treatment plant to be designed built and operated. Tenders called for.
• Open air theatre & Performance art gallery – to be designed SLTDA would prefer to have one investor for the first three components
Investment opportunities in hotel sector
According to Srilanka tourism development board, total hotel rooms available in Srilanka is approximately 22000 and the star level rooms are 15000 approximately. Estimated rooms demand will be thrice in the 2016, currently 14 hotel projects are under process with the investment around 2.7 billion but these investments can only add some 1000 rooms to the total rooms in Srilanka. In these 500 rooms with 1 billion investment building under the Shangri-La Hotels Lanka, a subsidiary of Hong Kong-listed hotel operator Shangri-La Asia will be only available at 2014 or later. There is a great demand for the all level rooms, the occupancy ratios of the 2009 calculated by the SLTDA is suggest all the star(5star, 4 star, 3star, 2 star, and 1star) hotel rooms have occupancy ratio between 40% to 50% (refer appendix 1). And overall Room Occupancy Rate of graded accommodation increased to 48.4 per cent in 2009
Asia continued to be the largest source market region to Sri Lanka with 38.9 per cent of the total arrivals for the third consecutive year. Indians are playing an important role in this figures, India remained as the major producer of tourist traffic to Sri Lanka with 83,634 arrivals, accounting for 18.7 per cent market share (refer appendix 3). This scenario suggest for ordinary rooms too need develop to cater low spending high quantity Asian travelers like Indians along with star class rooms.
There is a great opportunity for small scale hotel projects which can be finish in short terms, also the alternative sources like boat houses too have a great demand. Countries like Maldives and India using this forms of resorts for tourists attractions.
Areas like north and east have only 230 rooms especially north have no any star class rooms (appendix 4). Tourism destinations in north and east are becoming crowded after the post war. Hotel projects in these areas will be beneficial to Srilanka tourism as well as investors.
Investment opportunities in Transportation
Transport plays a vital role in the tourism sector, at same time transport gain much benefit by the tourism too, transports is top 4th foreign exchange gaining industry of Srilanka, with 7.9% FE earnings (SLTDA).
Increase of the no of people visiting to Srilanka will increase the demand for the transport in the same ratio. Tourism related transport can be dividing as two main areas international and local transport, in the international transport air transport is accounts for 99% of tourist carrying and 1% by the seaway. Land and air ways are major transport sources in local transport.
Appendix 07 and 08 showing the ranking of transport modes in Srilanka by world economical forum, air travel modes in international and local are not in a satisfactory level. Especially local air travels are requiring a major development.
Ground transport is developed to a satisfactory level still need to be developed with the increment of the tourist, but the air transport need a high growth and investment to cope with the tourism boom in Srilanka.
Srilanka small in size with the diversified tourist attractions, a tourist can enjoy the beach in Colombo and fly to upcountry in 30 minutes and enjoy the cup of tea in the cold. This kind of effective transport facility will increase the value of tourist getting as well as the income Srilanka getting.
When the no of tourist boom by thrice in 2016, transport industry should be prepared to serve them, this requires thrice investment in the tourism transports, international companies already tapped the opportunity and reacting well in this, spice airline’s launched daily flight to Srilanka by identifying this great opportunity.
Sea way transports are not popular in the industry but by constructing good strategies, sea way too is a great investment opportunity where the competition is very low, there is a good niche market who likes to travel by sea ways, potential is there to invest in such opportunities. Air travel inside the country will be boom in coming years, investing in this particular opportunity will return high in the future.
Ayurvedic centers
Local entrepreneurs of main tourist areas will be encouraged to construct Ayurvedic centers which could accommodate around 200 patients. Currently alternative medicine is popular worldwide. Ayurvedha, Siddha and Unani are systems of medicine established in Sri Lanka which is practiced for generations successfully. It has become extremely popular among tourists being a treatment with nature and no side effects.
Ayurvedic practitioners believe that illness arises when these dosha are out of balance, and work to restore harmony. Comprehensive treatment not only includes massage, herbal baths, oil treatment and a special diet, but also involves meditation, yoga and music to help the mind and soul.
One of the world’s oldest forms of healing, Ayurveda — derived from the Sanskrit words for life (ayuh) and knowledge or science (veda) — originated in India more than 3,000 years ago and soon spread to Sri Lanka, where Sinhalese kings established Ayurveda treatment centers in the ancient cities of Anuradhapura and Polonnaruwa.
In Ayurveda, a combination of herbs, diet, massage, hydrotherapy and oil treatment is used to treat everything from stress to diabetes, migraine, asthma, arthritis and high blood pressure. Ayurveda specialists will tell you that this form of treatment also helps boost the immune system, promotes a general sense of well-being and even helps delay the ageing process.
With many in the West turning from medicine which treats only the body, towards a more holistic approach, Sri Lanka has become destination for those seeking solace in the Ayurvedic principle of body, mind and soul.
Eco Friendly” tourism
The Government has pledged to support “Eco Friendly” tourism and agriculture based tourism and will use of government and private owned farms for this purpose.
“Eco-friendly tourism has a good demand throughout the world. Srilankan can aim is to attract rich tourists and earn foreign currency. Villages are being benefited. New employment is being generated while recreational facilities are helping the economy. We have opened the market for tourism while protecting the country’s bio-diversity. The resort utilized local materials and local engineering skills. Organic fertilizers, locally made pesticides, weedicides are used.
The Government is helping to develop projects like these to help the common villager giving them an opportunity to earn a living while safeguarding our cultural values.
“Farm Tourism”
“Farm Tourism” is extremely popular in other parts of the world where tourists enjoy the life of a farm and live and enjoy farm life. Yala, Walawa, Kumana, Bandula,Wasgamuwa,Wilpattue, Minnariya and Hortain Plans are few national parks with wild life elephants and thick jungle with water full of streams run through ending with beautiful water falls.
“Religious Tourism”
is also encouraged by developing Buddhist places of worship in order to increase tourists from countries such as Thailand and Buddhist countries. There are plans to establish a tourist center with special cultural importance to Asia.
Investment opportunities in education of Tourism in Srilanka
Currently we have only the Sri Lanka Institute of Tourism and Hotel Management (SLITHM) as the only national level tourism educational institute in Sri Lanka. That, too, is currently in a state of decline where the quality of education needs substantial improvement.
The SLITHM Colombo School and its 5 satellite schools together, has been producing only around 1,500 students bi-annually, but this year the intake has risen to 2,150 due to higher demand. There are also several mushroom private entities strewn around Colombo and other major cities, which offer so-called "courses" in tourism. They are not regulated, and like most of the other private tuitions, are of very mediocre standard, except for a very few.
There are also national universities such as Uva Wellassa and Sabaragamuwa, which conduct degree courses in tourism. In each batch, of this 4 year-duration courses, there would not be more than 30–40 students, which means that the output from this channel will also be negligible. In any event, most of these graduates will have to fill higher-level positions such as in strategic planning.
Hence, it is obvious that these few establishments, and the SLITHM, will be unable to produce the required numbers, let alone the quality required.
This is indeed a very serious, sad, and alarming situation. It does not take too much arithmetic to realize the enormity of the problem. Given the current maximum intake (and eventual output) of about 4,300 students per year from the SLITHM, it will take more than 100 years to produce the extra staff required for the industry! Even if we were to add another 1,500 per year from the mushroom private tutorials, it will still take several years to well organized education on tourism, if the situation continues.
The Tourism Industry as a Career
During the past few decades, Sri Lanka tourism was unable to attract good quality young people in to the industry because it was perceived that the tourism industry did not have any future.
However, with the meteoric rise of tourism immediately after the war, there is tremendous interest and enthusiasm for the tourism industry. Suddenly, almost overnight, the tourism industry has been transformed into a vibrant and exiting industry, perceived as being able to provide lucrative career opportunities for young people.
Therefore, the tourism education sector opens its door for potential investment in Srilanka.
Human resources training towards tourism
In collaboration with the SLTDA SLITHM conduct Tourist Guide Training Programs training programs. The Sri Lankan Institute of Tourism and Hotel Management is the premier training institution established by the Government in 1966 by an Act of parliament to train young men in the complex field of Hospitality and Travel Industry.
Standard of education
Training and development of staff for the tourism trade are a complex task, particularly in a Sri Lankan context. It is not only job skills that need to be developed, but professionalism also has to be "taught." For example, in more developed countries, basic on-the-job skills training is the only input required, where, very often one finds students working as temporary hands in the professional areas of the tourism industry during rush periods (as in banquets). However, there is a large cultural divide in what is perceived as service quality in an affluent western culture, compared with what the average Sri Lankan suburban and village population thinks. This means that one has to often provide not only on-the-job skills training but also training in fundamental grooming and cleanliness skills as well.
So, therefore, grooming, training, and developing proper tourism service professionals will take time.
It is a booming sector in Srilanka and it will be a huge potential investment opportunity towards tourism.
Shopping Malls
Sri Lanka is an excellent shopping destination that offers a range of items for visitors to the country. Located in various parts of the country are numerous shopping malls that provide an ideal destination in which to shop for a range of different goods in a single place.
In the commercial heart of the country Colombo, two main shopping malls exist, Liberty Plaza and Majestic City. Both present visitors to the country with an array of items from which to choose from. Find everything from clothes, shoes, electronics, handicrafts and a whole lot more in these prominent shopping malls.
While the most famous are located in the heart of Colombo various others can be found around the country, such as the Nugegoda Supermarket in Nugegoda. While not as upscale it still provides a good offering of goods.
In accordance with the tourists arrival to Srilanka will provide the huge potential investment in shopping malls. Nowadays the arrivals of the tourist is increasing so the shopping level of them also going to be increase. It will lead to increase the potential investment in shopping malls.
Events and conferences
Countries like Srilanka using the events and conferences to attract the tourists and increase the tourism income, Srilanka still lacking on this part, srilanka still conducting events like cricket world cup, wind surfing competition, cultural events and etc, but the international economical forum ranked Srilanka’s sport stadium facility as 105 out of 130 countries and trade shows as 77 out of 130, which demand for more events and events related infrastructure supply. (refer appendix 09)
Telecommunication
Telecommunication sector of srilanka became more affordable in near past, and the services are developed to be self sufficient but, the quality of the telecommunication towards the tourism is comparatively low.
Low speed internet connection, very lower penetration level in the internet (approximately 9 %), higher prices to foreign calls, are making tourism communication sector as more investment potential sector. Building up high speed internet facilities and surfing places, launching lower rate call packages to foreigners, IT related equipment investments are more promising areas of investment.
Health and safety
Overall health industry need a structural change to serve for the tourist medical demands, ratios such physician for patients, beds per patients, number of class hospitals are not in a satisfactory level to serve specially the tourists, investment in medical education, health and care equipments, new standard hospital facilities will be needed with the increasing level of tourists.
Finance sector
Srilanka have a well developed efficient financial sector overall, with the tourism boom there is still huge potentials, investment in ATM facilities, insurance facilities related tourism sector and tourists, credit card and visa card facility investments, money transfer facilities are some immediately needed sections. Banking and other lenders sector too have potentials, because of the huge investments in tourism will demand for more loans.
Research and development agencies and consultants
In Srilanka finding the research institutes orienting the tourism field is seldom, when a industry booming and invest opportunities abandoned, market need reliable information to find the right needs and invest on it. This particular field will gain profit as well as make sure the industry going in right path. Currently most of the researches are conducted by the government or government founded parties these are general not focused specific opportunities. Invest on this infrastructure will be beneficial for investors.
Conclusion
Tourism will increase the demand for direct and indirect opportunities in future, it’s important to identify and trap the opportunities in the right time. Both public and private integrated effort will be make the process easier and effective, long term oriented strategic should be implement to make use of this opportunities in effective way, without harming the environment, culture of the country.
Rather than compete inside the industry it is better to support each others for better results, tourism sector is unable to supply for the demand, when there is a over demand it is better to go for a better alliance strategies rather than competitive.
Because of the high sensibility of tourism to global conditions, so while considering the tourism sector it is more important to diversified sources like agriculture, industrial and other services parallel to ensure the long term growth and sustainability of the country.
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