Sri Lanka Tourism Looks to Boom After War's End

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Eranga Jayawardena / AP

Tourists watch wild elephants at a national park in Uda-Walawa, Sri Lanka, in June 2008

Hoteliers big and small in Sri Lanka are getting ready to cash in on what they say is the inevitable boom around the corner after last month's end to the nation's bloody quarter-century-old civil conflict. Tourism in this tropical-island nation was one of the industries hit hardest by the war between government forces and the Liberation Tigers of Tamil Eelam (LTTE). From the white-sand beaches of Hikkaduwa to the verdant mountains of Kandy, the tourism industry has endured a 25-year-old yo-yo ride with profits fluctuating from year to year with the state of the conflict.

The latest phase of the war between government forces and the Tigers commenced in August 2006, bringing on a drastic slide in tourist visits. Now, with the war having effectively ended on May 18, when government forces announced the death of Tiger leader Velupillai Prabhakaran, the $400 million industry is padding up for arrivals to spike sharply with the onset of the 2009-10 winter season. "The word has definitely got across that the war has ended," says Vipula Wanigasekera, chairman of Sri Lanka Conventions' Bureau, a government body promoting the island's conference facilities. "The numbers may not show an increase just yet, but the number of inquiries has jumped, and we will see the upward swing by November."

Not all operators are so optimistic. "The business trend will go up, but it will take time for some substantial variants in the current trends to take place," says Rohan Karr, general manager at the Cinnamon Grand, voted the best five-star city hotel in Sri Lanka by the government's tourism awards. He says there has been no change thus far in arrival figures to suggest that tourists are flocking here but acknowledges that the trend could pick up with winter arrivals. The key for Sri Lankan businesses to take advantage of the opportunity will be their marketing tactics, says Karr. During the war, tour operators and government promotion efforts marketed the island's diversity through packages like archaeological tours, tours to Buddhist holy sites, whale-watching, elephant safaris and even cricket tours. Those were all limited to areas well outside any potential conflict zone. "What we have now is essentially a new destination," says Karr. "We can market the north, south, east and west. It is nothing like what we had before."

Tourist arrivals and earnings had begun increasing in 2002, when the Sri Lankan government signed a truce with the Tigers in February. The upward trend also helped cushion the aftereffects of the 2004 tsunami, which left the coastal hotels in tatters. Between 2004 and 2005, tourist arrivals declined by less than 5%, according to government statistics. The revival lasted until 2006, when arrivals peaked at just above half a million and earnings climbed to $410 million for the year. But the war returned with a vengeance in late July 2006, when the Tigers closed down an important irrigation canal and the government forces attacked. The truce was eventually scrapped by the government in January 2008, at which point the war was once again in full force. Tourist visits dropped in 2007 and 2008. The downhill slide continued into this year as well; monthly arrivals fell by double-digit margins in the first five months of 2009.

Sri Lanka's tourist outfits are split on how the global economic crisis will play out in their market. "Because of the global economic downturn, there is still not much interest on long-haul travel," says Wanigasekera of the Conventions' Bureau. Karr of Cinnamon Grand fears that the effects of the global credit crunch could turn out to be a real dampener: "The credit crisis has come at a really unfortunate time for us." Still, others argue that good p.r. can revive the local industry. "We have to launch an aggressive marketing campaign to make this opportunity work for us; we have to tap into new markets," says Dayal Fernando, general manager at Amaya Reef, a beachfront hotel in Hikkaduwa, south of Colombo.

K.D. Leelaratne, who has earned a living for over three decades by selling wood carvings to tourists who visit Hikkaduwa, says, "When confrontations between the army and the Tigers started making news, business began to slide, and it has not picked up." During the war, he closed his shop and stayed at home. "Keeping the shop open to make a sale of Rs 1,000 ($10) is not worth it, and even for that you have to bargain and cajole."

Now Leelaratne and some 120,000 others who make a living out of tourism are betting that their fortunes will change for the better permanently. With the war over, he plans to reopen his shop, and has high hopes for the next winter season. "We make our money between November and April, when the season is on, and this time is going to be a good one," he says. Still, Leelaratne has been in the business for too long to get carried away with the kind of optimism coming from the bigger hoteliers. He knows that the slightest bad press, even speculation, can be a damper. "Even if a loud sneeze at the airport is reported as an explosion, tourists will turn away," he says. But even so, now that the guns and bombs have fallen silent, this 30-year veteran is dreaming of better days.