PEST Analysis Of Sri Lankan Tourism Industry

Assignment Lanka Writer

April 27, 2021

Categories: Marketing
Tags: corona, covid, covid19, PESTLE, sri lanka, tourism

PEST Analysis is a very advanced way to determine the external parameters that affect a business or industry. Let's look at Tourism today.

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Sri Lanka is a country located in the Indian Ocean rich of Eco resources, having fabulous places, jungles, mountains, views to view. It has being renowned as a prominent destination for tourism since past due to its strategic location covering major sea routes.

Political

Terrorism

The Easter Sunday attack which was carried out by an extremist group in April 2019 turned up the peaceful atmosphere, which was prevalent for a long time, upside-down by creating a lot of uncertainty , insecurity and tension among the general public. The top tourist hotels in the Colombo vicinity became the target of the terrorists killing dozens of innocent local and foreign civilians. This was a major blow to the tourism industry and the arrival of tourists to Sri Lanka started to decline sharply consequently. National security is of utmost importance in maintain political stability of a country. A peaceful atmosphere is very vital to ensure safety of the travelers and for investments.

Political Uncertainty

The tensions between the super powers in the world create a lot of political instability regionally as well globally. Ex India China rift for borders, USA China trade war, Syrian Crisis, Brexit deal are some of classic examples to elucidate the impact of arrivals of foreigners from the respective countries. Europe and Asia have recorded the highest number of tourists arrival markets to Sri Lanka during the year 2019, which is 887,572 and 839,470 respectively.

Due to its strategic location, Sri Lanka has become the central focus of China & USA . The objective is to consolidate themselves and use the ports and harbors for military purposes. A non alignment foreign policy plays a pivotal role in balancing the super powers and this can be acquired through stable political environment and a strong leadership.

The implementation of a national tourist policy is vital for any government who comes into power to uplift the industry irrespective of party policies.

Economic

The number of international tourists who have arrived to Sri Lanka during the year 2019 is 1.9 Mn and the foreign exchange earned through tourism is approximately Rs 646 Mn according to the Annual Report released by Sri Lanka Tourism Development Authority. This is the third major source of revenue generation to the economy. Economic contribution from tourism is 4.3% to GDP and it is a percentage of 13.7 from the total foreign exchange earnings. and employment opportunities generated through tourism is around 400, 000. The employment generation can be further split as direct and indirect of which 174,000 are engaged in direct employment and the rest indirectly. Easter attacks paved the way for the government to bring down the taxes by a considerable amount, subsequently opening the doors for a stimulus economic package to boost the tourism industry.

Higher foreign exchange gains due to depreciation of local currency: Since the dollar is getting appreciated against the local currency, more foreign exchange earnings can be earned through terrorism but unfortunately, the outbreak of Covid 19 pandemic has reversed the Sri lankan economic life cycle by 360 degrees. The government’s decision to suspend all inbound and outbound flight operations across the world in order to prevent the spread of this virus across the country has created a significant unemployment situation. Most of the top class hotels had to go for salary cut options, downsizing the staff, dismissal of staff on contract basis to run the operations. Communities who were indirectly engaged in tourism has lost their jobs and it had a huge impact on their life styles and existence. Sri Lanka is still a developing country and the debt to GDP ratio has increased to 87% at end of 2019. The loss of foreign exchange to the economy from tourism will aggravate the revenue generation, consequently leading to delay in paying debts and bringing dire economic repercussions.

Social

Sri lanka is a country renowed for an ancient history of 2500 years. This has created a strong cultural bond within the sri Lankan community. This cultural influence has created a reputation for good hospitality. Tourism has spread to every nooke and corner in the country. Running small guesthouses, small hotels, restaurants, bar, tea boutiques has become a major source of revenue for people Also people who do arts and crafts, spice gardens, batik shops, woodwork will be able to earn more with the increased number of tourists. There are other so many indirect employment opportunities that has being generated such as people working as drivers, guides etc. But the covid 19 pandemic has created a major set back in the tourist industry and it has affected the most of the people who are directly and indirectly involved in the sector. The negative side of tourism is that it has affected the values of our people, particularly our youth. It is evident that some tourists engage in anti – social acts..

Technological

Use of social networking

At present all attractive locations can be viewed through websites and social networking has become an effective medium in the promotion of tourism. Google maps have been developed to find locations and online apps and websites to find destinations and travel. The tourists can book online and can get their reservation done through various websites, make payments online through credit cards.