US embassy cable - 05COLOMBO1100

UNCLAS SECTION 01 OF 02 COLOMBO 001100 
 
SIPDIS 
 
DEPT PASS TO USTR JON ROSENBAUM 
GENEVA TO USTR 
 
E.O 12958: N/A 
TAGS: ECON, ETRD, CE, MV, Tsunami 
SUBJECT: Post-Tsunami Struggles for Sri Lankan and 
Maldives Tourism Sectors 
 
1.  Summary:  Six months after the December 26 tsunami, 
Sri Lanka's tourist industry is lagging.  According to 
major tour operators, tourist arrivals have fallen 
sharply in 2005.  While the government has reported an 
8% increase in arrivals in the first 5 months of 2005, 
tour operators say that most of these arrivals were aid 
workers.  Meanwhile, Maldives experienced a 50% drop in 
arrivals in the first 5 months of 2005.  End Summary. 
 
2.  According to major tour operators, tourist arrivals to 
Sri Lanka have dropped by as about 50% to 60% following 
the December 26 tsunami.  Gehan Perera, Managing Director 
of Aitken Spence Travels, one of the largest inbound tour 
operators to Sri Lanka, said that their company has faced 
a marked decrease in arrivals this year.  For example, the 
company handled 1,700 tourists in May 2005 compared with 
3,200 tourists in May 2004.  June arrivals have been lower. 
The downturn in arrivals has badly affected their affiliate 
company, Aitken Spence Hotels Ltd, which operates several 
hotels throughout the country including on the tsunami- 
affected southern coast.  The first quarter of 2005 has 
been particularly bad with occupancy rates dipping to 
10-12% compared with 90% last year.  Occupancy levels 
have improved slightly in May-June to about 30% from 
about 50% in 2004.  John Keells Holdings (JKH), another 
leading player in tourism, has reported a 50% drop in 
average annual occupancy levels in their resort hotels 
in the post tsunami period.  Amith Sumanapala, Director 
of Walkers Tours, the largest inbound tour operator, 
said his company has also seen a 50% dip in arrivals 
compared to last year. 
 
3.  Data given by operators and reports from people 
visiting the southern coast contradict government 
statistics.  The government owned Ceylon Tourist Board, 
the main tourism promotion agency, says arrivals are up 
8% to 208,000 in the first 5 months of 2005.  According 
to their statistics, arrivals in May have increased by 
36%.  Tour operators say that most of these arrivals 
were aid workers.  Most of them choose not to stay in 
resort hotels and spend less than tourists on meals and 
other services. 
 
4.   Tour and hotel operators are concerned about the 
upcoming winter tourist season (the peak season), which 
begins in October, but hope that a USAID-assisted 
promotional program for the tourist industry (to do 
promotions in key markets such as UK, Germany, France 
and India) will help to reverse the situation.  Tourism 
sources attribute Sri Lanka's failure to re-capture 
markets to a lack of effective promotions.  Private 
companies such as John Keells have also invested 
heavily in market promotions.  For instance, John 
Keells Group has hosted several groups of foreign 
journalists and top agents in Sri Lanka since January. 
They have also traveled to key markets for market 
promotions.  They believe that a mass scale "customer 
awareness" program is still needed to really create 
awareness of the market.  Tourism sources also say it 
is too early to comment on winter bookings given a 
recent trend to book holidays at the last minute. 
However, several charter operators have already reduced 
their airline seat allocations. 
 
5.  Maldives:  According to the Maldives Association of 
Tourism Industry (MATI), tourism shows a sign of 
recovery although arrivals and occupancy rates are 
still much lower than in 2004.   Tourist arrivals to 
Maldives dipped by 50% in the first five months of 2005 
to 139,000 from 283,000 in 2004.  Consequently, the 
average occupancy rate in resorts has dipped to 57% 
from 94% in 2004.   Indications are, however, that the 
industry is picking up, as the drop in arrivals 
decreased to 40% in May compared with drops by 70% in 
January and 50% in February.  In a bid to attract 
tourists again, the Government of Maldives and private 
sector operators are focusing on promoting the safety 
of tourists. A plan now under preparation focuses on 
safeguarding the international airport, improving 
telecommunications, enhancing early warnings and 
upgrading resort safety plans. 
 
LUNSTEAD