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Travel agency closures will lead to revenue loses – SLAITO President

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If the closing down of local travel agencies continues unabated, there is a tendency that foreign travel agencies would bring down their own staff to continue their Sri Lankan operations, stated an industry expert to Ceylon FT yesterday.

According to this expert this is because when the country re-opens for tourism there won’t be sufficient operators to manage the carrying capacity of tourists.

Hence, the country would lose considerable revenue and a large portion of the industry revenue will also be taken away from the country, which would affect the local economy negatively, added Sri Lanka Association of Inbound Tour Operators (SLAITO) newly elected President Thilak Weerasinghe.

Perhaps, Sri Lanka will also lose its own entrepreneurs, which would have a major impact on local SME businesses. “The number of registered travel agencies in Sri Lanka has reduced to less than 1,000 at present after the Easter Sunday attacks and also due to the COVID-19 pandemic, which means they either have to shut down their business or do not renew their licence as businesses are not flourishing as they used to,” he said.

In 2018 there were over 2,000 registered travel agencies in Sri Lanka, but as the numbers are reducing we see a 50 per cent decline in registered travel agencies today.

Sri Lanka Tourism expects to see 5 million tourist arrivals with a US$ 10 billion revenue target in the future. We need sufficient Destination Management Companies (DMCs) to manage this carrying capacity or this revenue target will just be a pipe dream with revenue flowing out of the country instead of in.

From whatever earnings in the tourism industry 80 per cent of the revenue remains in the country. So operating travel agencies in Sri Lanka with foreign staff would create a major income loss to the industry and also lessens the contribution to local GDP.

The Easter Sunday attacks and COVID-19 have had a major impact on DMCs in the country as they are the industry stakeholders who bring passengers into the country and due to border restrictions they are unable to continue their businesses.

“Small-scale travel agencies which operate with just 5-10 employees are more susceptible to the fallout from the pandemic than the big players,” insisted Weerasinghe.

Hence, it is necessary to support these small and medium-scale tourism service providers financially and encourage them to remain in the business.  The Government has already provided moratoriums for the loans obtained but as border restrictions were extended due to the second wave of COVID-19 in Sri Lanka, SLAITO said it needs to meet and discuss extend further assistance to industry stakeholders as well providing a credit line with two years grace period with the Central Bank, local banks the Treasury and other financial institutions.

In 2018, Sri Lanka earned revenue of around USD 4.4 billion from Tourism. Thus, as the third highest foreign income generation source in the country, the stakeholders need to be treated better than they are at present.

Weerasinghe says supporting the stakeholders in the tourism industry during this time of crisis should be the goal to avoid further disasters within the industry and in turn they would be in a position to benefit when the country re-opens for tourism in the future.


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