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Posted on: Tuesday, December 28, 2004

Sri Lanka tourism battered

 •  Japanese firm stops tours

By Cherian Thomas and Josie Ling
Bloomberg News

Sri Lanka's economic growth will slow as tourists cancel trips because of the devastation caused by the world's worst earthquake in 40 years, economists said. India and Thailand suffered less damage and will recover quickly, they said.

Taken from an amateur footage filmed by a British tourist, shows a view from a hotel room in the Eden Resort, Beruwela, southwest Sri Lanka on Sunday, Dec. 26, 2004.

Associated Press photo

"It's probably the worst blow the Sri Lankan economy has suffered," said Arjuna Mahendran, chief economist and strategist at Credit Suisse Private Banking in Singapore. "Large reconstruction efforts might only start in 2006. The government does not have the resources."

The quake will cut economic growth next year to 4 percent from 5 percent, he estimated, mostly because of a decline in overseas visitors. Tourism earnings rose 11 percent to $266 million in the first 10 months of the year, boosting sales at hotel operations and retailers.

Damage from the earthquake, "will probably be many billions of dollars," said Jan Egeland, the UN's head of humanitarian affairs. Insurers' losses may be less than $5 billion because so little property in the region is insured, according to Robert Hartwig, an Insurance Information Institute economist in New York.

Tourists canceled trips to such destinations as Thailand's Phuket and Malaysia's Penang, curbing sales at companies such as Star Cruises Ltd. and Laguna Resorts & Hotels Pcl.

Tourism is likely to rebound soon in most of the region, said economist Rajeev Malik.

"The calamity won't have a long-lasting impact — tourists will be back in three to four months," said Malik, senior economist at JPMorgan Chase Bank in Singapore.

Tourism accounts for about 6 percent of Thailand's economy and 7 percent of Malaysia's. Indonesia's economy counts on tourists to generate 2 percent of gross domestic product. Resort areas such as Bali were unaffected by the earthquake.

"We are not going to see many people making bookings for Sri Lanka," said Ong Nai Pew, co-chairman of Asiatravel.com Holdings Ltd., a Singapore online hotel reservations company. "But overall, I don't think there will be an impact."

Thailand said 839 people died in Phuket and five other coastal provinces at the height of the tourist season. Phuket, about 560 miles south of Bangkok, attracted as many as 4 million tourists last year, almost two-fifths of all visitors to Thailand, according to local tourist officials.

The destruction to property in an area where many foreigners have luxury beachfront homes may run as high as $256 million at Phuket's Patong beach alone, the Business Day newspaper reported yesterday, without saying where it got that information.

Foreign tourists canceled about 60 percent of their new year's bookings at hotels and resorts in Phuket and other southern Thai beach provinces, Sithi Tandavanitj, the Thai Hotels Association's southern region president, said yesterday in an interview with Business Radio.

"The fear of aftershocks from the earthquake in the coming weeks will keep tourists away," said Chartsiri Sophonpanich, president of Thai Bankers' Association, who estimated that GDP growth next year, forecast by the government at as much as 6.5 percent, would be cut be less than half a percentage point.

Tourists already had shunned Indonesia's North Sumatra province, hardest hit by the quake, because of a conflict between government forces and Muslim separatists in Aceh.

India's tourism accounts for less than 1 percent of its $575 billion economy, Asia's fourth-largest. Finance Minister P. Chidambaram yesterday told reporters "there will be no great fiscal impact."

• • •

Japanese firm stops tours

Japanese travel agent Jalpak in Tokyo has halted tours to tsunami-hit destinations for two days while it assesses the damage to resorts there, said Ryokichi Tamaki, vice president of JALPAK International Hawaii Inc.

Tamaki said some travelers who had planned to visit such areas might come to Hawai'i instead, but that tour packages to Asian destinations such as Phuket and Penang are far less expensive.

He also said Japanese who were planning trips there are generally seeking experiences different from Hawai'i.

JTB, a major Japan travel agency, said it was still collecting data on cancellations related to the tsunami and could not comment further.

— Advertiser Staff