Develop Tourism in Sri Lanka Essay

IntroductionIn countries like Maldives, Malaysia, Singapore and Spain, holidaymakerry and related recreation activities play a solid authority in the coevals of income / foreign exchange and preparation of employment opportunities. In fact, in the global context this assiduity is determine as the single largest economic contributor. Moreover, touristry plays a crucial employment in the attainment of macroeconomic stability. Besides, the policy-making stability of a soil has a study repair on its touristry industry. concord to the antedate view, this study aims at evaluating empirically the substance of touristry in Sri Lanka after re movementing culturedian war. The kindred impart be analyzed ground on a time series approach. The muse volition end eavour to estimate the relationship betwixt economic execution of instrument and touristry revenue, sheath to important macroeconomic vari fits and governmental stability of the country. With respect to fo rm _or_ system of government implications, the interpret recommends that The role of touristry could be highly emphasized in the sustainable economic education with a stable political environment. Sri Lanka entered the inter field touristry market in the 1960s.Since then, this industry has been growing steadily as a promising firmament for the economic emergence, subject to decimal pointical setbacks especially the civil war prevailed in Sri Lanka, world terrorist attacks and natural disasters. For example, global tourist arrivals to Sri Lanka increase from 18,969 in 1966 to 438,475 in 2008 consequently the taxation from tourism (Sri Lanka Tourist gameboard 2008). In fussy, the part of fit & touristry to Gross Domestic product was 7.5% (LKR407.5bn or US$3,388.1mn) in 2009 in Sri Lankan providence. The contribution of the Travel & tourism economy toemployment wasb503,000 jobs in 2009, 6.2% of amount employment or 1 in every 16.2 jobs it also is anticipate to grow up to 579,000 jobs, 6.7% of gist employment or 1 in every 14.8 jobs by 2020. Similarly, the contribution for real gross domestic product exploitation for Travel & tourism sphere of influence was 5.9% and the dis channelise & Tourism driftment funds was at LKR131.9bn, US$1,096.8mn or 10.1% of total investment in 2009. Out of 186 registered countries of WTTC the Sri Lankan Travel & Tourism economy is ranked numerate 87 in absolute size worldwide and 110 in relative contribution to national economies.Tourism remains the fastest growing service industry in the economies of most of developing countries hence more than question has gone into the operations of the sector in identify to take apart its economic signifi atomic number 50ce and potential difference. (Amstrong, 1974) It is known that the industry provides an essential impetus to growth in separate sectors such as floriculture, transportation, retailing and manufacturing and is t here(predicate)fore seen as a prim ordial component of economic development. It plays a major role for the generation of foreign exchange which estimately facilitates the improvement of foreign militia of utter economies. (Stynes, Daniel J 1999) Similarly, the sector has shown greater improvements in employment generation (direct and indirect), revenue accruing to tourist sites, and increase in number of hotels and standardized establishments and separate tourism supply establishments.Main Body disposed its natural advantages, the tourism sector is viewed as one of the most important engines of growth and development in the Sri Lankan economy and as such, is a key focus in the political relations industrial strategy. Tourism main supporting sectors bill for more than 8.0 per centime of GDP. In relation to employment, agriculture transport, storage & communication, construction, and dispersion ar the primary beneficiaries from a dollar fagged within the tourism industry. pass on, these sectors account for over 7.0 per cent of the employed undertaking force. even, the descriptive compend points to the continued low and declining impact of the industry on the overall economy in particular in the context of opposite countries like Thailand, Malaysia and Kenya. until now the investment share for tourism sector existence high the explosive political website could be the closestreason for this little performance in the case of comparison. With the end of war, the expected boom in the industry over the years to come will suck up a detectable impact. The second empirical modal shows a strong relationship between the political stability and macroeconomic performance in particular with wing to the tourism sector. It is highly recommended to maintain a stable political speckle of the country in order for industries like tourism to flourish. The paper has, in the main, addressed two of the important elements of an economic significance of the tourism industry. Further work to be und ertaken includes the computation and comparison of cyclical movements of tourism sector performance in response to the global economic and political changes. contribution of Capital investment in pop off and tourism sector in Sri Lanka, S step uph Asia and in the innovation 2009In comparison to the 7.7 of South Asia and 9.4 in the world the capital investment percentage of Sri Lankan economy for make a motion and tourism sector is 10.6. This also highlights the significance of this sector in Sri Lankan economy. beginning World travel and tourism Council Economic impact spread abroad 2009Percentage of direct industry GDP in travel and tourism sector in Sri Lanka, South Asia and in the World 2009In 2009 the direct contribution to the GDP from travel and tourism sector is 2.7 in Sri Lanka. The World situation is 3.2 for the said(prenominal) and South Asiatic Regions contribution to its GDP from the said sector is 2.2.Source World travel and tourism Council Economic impact report 2009Percentage of Travel & Tourism Employment in total Employment -2009, selected EconomiesThe above figure compares the contribution of employment generation from travel and Tourism sector and Sri Lanka is in the 9th place just 0.1 aboveIndia. India cosmos a giant in its resources for tourism product this is the significant place irrespective of Sri Lankas internal issues. However Seychelles, Maldives and Maturities are islands who offer similar product.Source World travel and tourism Council Economic impact report 2009Percentage of Travel & Tourism sector contribution to the total GDP-2009, selectedEconomiesThe undermentioned graph highlights the contribution to the total GDP from Travel and Tourism sector. Sri Lanka enjoys here too a fracture place in comparison to India which illustrates the significance of this sector in Sri Lankan economy. Here too Seychelles, Maldives and Maturities are islands are out of the general comparison since their product is totally different f rom the rest of the countries.Source World travel and tourism Council Economic impact report 2009When we move to the second objective of this research we moderate to check whether thither is a war influence on Sri Lankan tourism industry or not. subsequently running an OLS regression The following results have been obtained.As we know receipts from tourism depend on many factors, but in this study factors such as exchange rate, word GDP has been considered. To measure the civil war influence in tourism sector, dummy variable has been included. According to the results changes in exchange rate causes to change in receipts from tourism averagely by 395.78 one thousand thousand while world GDP causes to approximately 930 million. However coefficient of exchange rate issignificant at 1 % direct by showing the importance of exchange rate behavior in the tourism industry in Sri Lanka. As the theory implies increase in exchange rate motivate the tourists arrivals, because then they ar e able to exchange more rupees for ICBI 2010 their dollars. World GDP also a better proxy for world life sentence condition and it is positively related with the Sri Lankan tourism industry.When we are evaluating the war influence, the coefficient of dummy variable should be taken in to account. According to this coefficient the average receipts from tourism in non war effect is higher than averagely by 3919.75 million compared to the war period. This implies that there is a significant war influence on the Sri Lanka tourism industry. In fact tourists arrivals have been limited during the war period, because several international media have also warned Sri Lanka as an unsafe place to visit. Especially, after terrorist attacks on Katunayake internationalist Airport and Central Bank of Sri Lanka, tourism arrivals have dropped down dramatically.The amaze which has been used to evaluate the above situation is statistically significant at 1 % level and according to the value of R2, e xplanatory variables jointly explained approximately 93 % of total variation of receipts from tourism. According to both descriptive and econometric approaches of analysis in this study, the significance of tourism sector in Sri Lankan economy has implied to be a major portion for key macroeconomic measurements. Similarly the adverse effects of war on tourism sector have showed a massive loss for Sri Lankan economy over the pass away decades.The policies of the government in promoting tourism can be summarized as comprising septet main points. * The Government, recognising the significant contribution that tourism makes to social and economic * development of Sri Lanka, has accorded high precession for tourism in its overall platformme of national development. * Apart from the obvious economic advantages of tourism, the Government also recognizes the socio-cultural and political benefits that can accrue. * The Ten-year Tourism passkey Plan (1992-2001), prepared by the World Tou rism Organization (WTO) with funding assistance from UNDP, will serve as the blue-print for tourism development up to the end of this century, with appropriate modifications to suit changing circumstances.The Government also recognisesthe importance of promoting domestic tourism, not only as a means to enhance the quality of life of the people, but also as a vital necessity for national integration of people living in isolation payable to geographic and ethnic barriers. However, the Government is witting and mindful of the potential adverse effects that uncontrolled and unplanned tourism development can have on Sri Lankan society and the physical environment. Accordingly, the corner-stone of the Tourism Development Policy will be planned, coordinated and sustainable development. The dance step of tourism development over the five-year period 1995-1999 will be moderate, neither too high nor too low, as recommended in the Tourism Master Plan, by taking into consideration the socio-c ultural and environmental absorptive capacity. This will dish up to optimize the economic benefits of tourism, while at the same time minimizing potential adverse impacts on Sri Lankan society and the environment. Policy of mobilizing the private sector to invest in tourism projects and operate tourism enterprises will be act with greater vigor in line with the free-market economic policies of the Government.The Government will follow the main recommendations of the Ten-year Tourism Development Plan for development of tourism, with modifications as deemed necessary. The Plan has set definite targets for development. * to increase tourist arrivals from the 1992 level of 394,000 to 874,000 by the year 2001, with an average annual growth rate of 9 per cent * to increase foreign exchange earnings from the 1992 level of US$ 201 million to US$ 706 million by 2001, an average annual growth rate of 15 per cent * to increase hotel accommodation capacity from the 1992 level of 10,200 retin ue to 17,600 rooms by 2001, an average annual growth rate of 6 per cent and 95 * to increase total employment, both direct and indirect, from the 1992 level of 69,000 jobs to 137,000 by2001, an average annual growth rate of 8 per cent. The Government believes that the targets are realistic and attainable and is working towards their attainment.However, with the improvement in the security situation with the restoration of peace and stability, a boom in tourism is expected and hence a re-adjustment of the targets will be required. The tourism product program is designed to encourage the private sector by providing fiscal and other incentives to undertake activities such as refurbish existing hotels, start vernal hotel development projects and establish tourist restaurants and develop touristrecreational facilities. The immature hotel projects already approved has resulted inexceeding the room requirement for the year 2001. The objectives of tourism merchandise and promotional acti vities are* To consolidate market growth in the precedence* Tourist-generating markets of Europe and Asia by servicing the travel trade and by bring forward raising consumer cognisance and* To create consumer awareness and the desire to travel to Sri Lanka in the secondary and opportunity tourist markets. The selected priority markets for promotional activities have been set as* The primary markets of Germany, the get together Kingdom, France, Japan and India * The secondary markets of Italy, the Netherlands, Belgium, Denmark, Sweden, Austria, Switzerland, Russia, Singapore, Hong Kong, Thailand, Republic of Korea, china and South Africa and * The opportunity markets of Spain, Eastern Europe, the United States of America, Canada and Australia. Each of these markets will have different degrees of emphasis in terms of required marketing activities, Depending on the degree to which Sri Lanka is already an established destination. There is a need for awareness of Sri Lanka to be ra ised particularly at the consumer level and point-of-sales. The Board is stand for through its offices in Frankfurt, Paris, London, Japan, Thailand and India. It is proposed to appoint Marketing Services Agents in Singapore, Hong Kong, Australia, the United States and South Africa.There are a number of promotional activities being carried out by Sri Lanka. Servicing of tourist information is a go along activity which includes distribution of literature to the travel trade and to the consumers and servicing send for and mail inquiries on a inveterate basis. The Board participates in a number of major tourism fairs held annually, along with Air Lanka (the National Carrier) and the Sri Lanka Travel Trade. This is considered an effective means to promote the travel trade as s salubrious up as to attract consumers. Among the major trade fairs where Sri Lanka participates are ITB -Berlin, WTM -London, BIT -Milan, BTF -Brussels, be active -Singapore, JATA -Japan, FITUR -Madrid, HOLID AY TRAVEL SHOW -Sydney, GIFT -Guangzhou, TOP RESA -Dauvilli, SMTV -Paris, LTE -Hong Kong, SATTE - vernal Delhi, KOFFA- Seoul and VAKANTIE -Utrecht. repair presentations on Sri Lanka are made to major tour operators and travel agents in the form of seminars and workshops to educateand inform them about tourism in Sri Lanka and to wee-wee them to sell Sri Lanka by offering tour programs.With the help of the national holder (Air Lanka) and other airlines, educational and familiarization tours to Sri Lanka are organized as a continuing activity to enable trade and media personnel to obtain first-hand knowledge and association of Sri Lankas tourism product. These programs are conducted for the travel trade as well as for the travel media. Travel journalists, writers, television, broadcasting and film producers will be given high priority in order to obtain maximum promotional material for Sri Lankas tourism in the key media in major tourist generating markets. Special promotions in the form of cultural and food festivals, Sri Lanka Evenings, etc., are undertaken in the major generating markets, in association with Air Lanka and the travel trade.New trends in tourism marketing policies and strategies in Sri LankaOn the basis of research undertaken by the Ceylon Tourist Board and the World Tourism Organization (WTO), it has been revealed that there is a tremendous potential in developing tourist markets in the Asian region. This has resulted in a change of the tourism marketing policy to consider Asia as a major generating market for Sri Lanka, in concomitant to Europe. To pursue the change in marketing policy, the Ceylon Tourist Board has demonstrable an Asian Marketing Strategy for Sri Lanka with the assistance of WTO and UNDP. Several markets in the Asian region have been identified with three priority groupings. The first priority is Japan and India. Between them, it is estimated that by 2004 they will be producing over fractional of all the Asian visitor s to Sri Lanka. The second priority is the Republic of Korea, Malaysia, Singapore, Taiwan land of China and Thailand. Travel from these markets to Sri Lanka can grow strongly but on a lower scale. The third priority is China and Hong Kong. The marketing architectural plan of the Asian Marketing Strategy has been divided into two phases. Phase 1 is the period until the end of hostilities in Sri Lanka.It is assumed that this will be in December 1997. Phase 2 is a peacetime marketing program that will be introduced by a marketing campaign. It has been shown that the prevailing situation of tourism in Sri Lanka is partly due to the security situation and partly due to misconceptions and disinformation about the image of SriLanka. The negative image of Sri Lanka is due to the wide publicity given by the international media about the civil disturbances and acts of violence. In order to counter the misconception, the Sri Lanka Government will launch an Image Restoration stir on a sustai ned basis for a minimum period of two years by means of a public relations and communication campaign supplemented, where necessary, with limited advertising in the key international markets, by using the services of a professional public relations firm with an international network. The current trend in international travel is for tourists to be attracted not so much to a destination, but to circumstantial tourist products. The Ceylon Tourist Board has identified this significant development and is readiness to develop specific tourist products to which international travelers could be attracted.ConclusionGiven its natural advantages, the tourism sector is viewed as one of the most important engines of growth and development in the Sri Lankan economy and as such, is a key focus in the Governments industrial strategy. Tourism main supporting sectors account for more than 8.0 per cent of GDP. In relation to employment, agriculture transport, storage & communication, construction, a nd distribution are the primary beneficiaries from a dollar spent within the tourism industry. Further, these sectors account for over 7.0 per cent of the employed labor force. However, the descriptive analysis points to the continued low and declining impact of the industry on the overall economy in particular in the context of other countries like Thailand, Malaysia and Kenya. However the investment shares for tourism sector being high the unstable political situation could be the closest reason for this less performance in the case of comparison.With the end of war, the expected boom in the industry over the years to come will have a noticeable impact. The second empirical modal shows a strong relationship between the political stability and macroeconomic performance in particular with reference to the tourism sector. It is highly recommended to maintain a stable political situation of the country in order for industries like tourism to flourish. This essay has, in the main, addr essed two of the important elements of an economic significance of the tourism industry. Further work to be undertaken includes the computation and comparison ofcyclical movements of tourism sector performance in response to the global economic and political changes.