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TABLE OF CONTENTS

Introduction

PESTEL analysis..........................................................................................................1
2.1

Political environment...........................................................................................2

2.2

Economic environment........................................................................................3

2.3

Social environment...............................................................................................2

2.4

Technological environment..................................................................................9

2.5

Environmental factors........................................................................................11

2.6

Legal factors.......................................................................................................13

Trends and uncertainties faced by tourism industry of Sri Lanka........................15

Scenario planning.......................................................................................................15

Bibliography...............................................................................................................16

LIST OF FIGURES

Figure 1 Macro-Environmental Factors..................................................................................1


Figure 2- Scenario Planning.......................................................................................................4

Introduction

Sri Lanka is an island nation with a rising tourism industry. Right from the independence in 1948,
the authorities have committed to attract foreign investors and tourists to Sri Lanka (Sri Lanka
(Anon). Sri Lanka is rich with many beautiful beaches, resorts, hotels and spas. Sri Lanka is an
appropriate tropical paradise island within the Indian Ocean placed near India, having a diversity
of points of interest starting from historic to archaeological and natural. Strategic importance
gave the exposure to this island kingdom to establish links among West and East from ancient
times due to its array of natural points of interest ranging from archaeological, historic, long
background embraced with its rich traditional tradition, literature, records and none other than its
humans whom fine acknowledged for his or her friendliness and hospitality has caused many to
visit this stunning island.Incorporating the diverse culture, Sri Lanka commits to offer tourists a
unique and memorable experience. By keeping the trust, the minister of tourism has appointed
me as the Chief Executive Officer (CEO) of the Tourist Board of Sri Lanka and assigned me to
come out with a 10 year strategic plan to rise the tourism. Before, formulating the plan, the author
intends to conduct a PESTEL analysis to identify the opportunities and threats towards this
industry.
PESTEL analysis
PESTEL analysis is a tool used by marketers to analyse and monitor the macro-environmental
(external marketing environment) factors that have an impact on an organisation (Professional
Academy, Anon). The result of which is used to identify threats and weaknesses which is used in
a SWOT analysis. The factors under consideration of this analysis are as follows.

Figure 1 Macro-Environmental Factors


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Source: Professional Academy (Anon)

Political Environment
Tourism is the second biggest growing commercial enterprise place after data technology inside
the global economy. Among the economies are a success in advertising their country and
locations and producing a considerable quantity of foreign exchange from tourism sector. Even
international locations with terrible degree of infrastructure and facilities are able to appeal to
investors to invest cash in their u. s. a. for tourism promoting.
Tourism advertising is a completely complicated phenomenon because the number of
uncontrollable elements is greater than the range of advertising and marketing blend variables.
although the traditional advertising information says that the bigger political factors have an
effect on the advertising and marketing provide in product advertising and marketing however it's
far extra outstanding inside the case of tourism. The political upspring, terrorism, non-secular
fundamentalism, degree of crime belief through the foreign vacationer impacts the prospects of a
destination. Sri Lanka is likewise going through a down turn inside the tourism enterprise
because of the above motives. The elements of low in step with capita vacationer investment
sustained attempt for tourism advertising through the developing nations have emerge as
The authorities have set a target of receiving 2.five million tourist arrivals by means of the 12
months 2016. For you to acquire this goal, several promotional and developmental sports were
initiated. One such promotional initiative is the announcement of the year 2011 as go to Sri
Lanka 12 months, where each month is promoted with a unique appeal
And pageant. Sri Lanka obtained the big possibility to organize the common wealth games in
Hambantota. The Commonwealth games will provide a possibility for the United States of
America to exhibit its visitor attractions and construct a higher infrastructure.
Ports: Work is also underway for the expansion of the existing Colombo port, under theColombo
South Port Project. Another large port facility is being developed at Hambantota, with
considerable Chinese investment.
Roads: Several road development and expansion projects such as the Southern HighwayProject,
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Colombo - Katunayake Expressway, National Highway Sector Project and Road Sector
Assistance Project are underway to improve the road connectivity to various cities.
Power: The government is working towards the goal of being self-sufficient in terms ofpower
generation. The first phase of the Norochcholai Coal Fired Power Plant was declared operational
in 2011; work is also underway on the Upper Kotare power plant, Trincomalee Coal Fired Power
Plant, and the Kerawalapitiya power plant.

Economic Environment
The Sri Lankan tourism enterprise is considered one of the quick rising industries of the
economic system with common annual revenue people $ 500 million at present. It is the 6th
largest foreign exchange earner in Sri Lanka. It has created employment for about 125,000 folks.
At gift, nearly 1/2 1,000,000 vacationers go to the United States of America each year. Sri Lanka
has uncommon sandy seashores, huge greeneries, historical artefacts, and a great weather,
brilliant landscape in the highlands, a wealthy biodiversity and friendly and inviting humans.
These unique possibilities will be utilized to broaden the tourism enterprise as a prime increase
zone in the improvement of the economy. In present Sri Lanka has achieved an excessive
increase in tourism enterprise with the modern-day political stability in addition to the hole of the
North and East to vacationer. Today Sri Lanka tourism contributes distinctly to the Sri Lankan
economy. Due to the fact after the cease of the civil struggle in 2009, Sri Lanka witnessed a
robust upsurge in tourism.

The governments imaginative and prescient is to convert Sri Lankan

tourism quarter, by using 2020, to be the largest fore earner within the economy;
role Sri Lanka as the arenas maximum precious and Greenest Island and appeal to
excessive spending tourists whilst preserving the use of as cultural values, natural
habitats and surroundings.

The government has cantered 2.5 million travellers with the aid of 2016

and room potential of about 45,000 to fulfil this goal. This area is also expected to
acquire investments in excess folks$ 2 billion within the medium time period in
regions of luxurious lodges, excessive great residencies and high cease shopping
department shops.
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The government recognizes the multiplier effect of tourism development in


creating employment possibilities and distribution of wealth thru a selection of
economic activities predominantly in the SME quarter, taking the benefit of SMEs
being capable of link micro organizations from one aspect and massive scale
company zone on the opposite aspect. A number of the key targets to be
accomplished thru the 5 yr. approach are as follows: Increase tourist arrivals from
650,000 in 2010 to 2.5 MN by 2016.

Attract USD 3,000 MN as Foreign Direct Investment (FDI) to the country within
5 years.

Increase the tourism related employment from 125,000 in 2010 to 500,000 by


2016 and expand tourism based industry and services all island.

Distribute the economic benefits of tourism to a larger cross section of the society
and integrate tourism to the real economy.

Increase the foreign exchange earnings from USD 500 MN in 2010 to USD 2.75
Ban by 2016.

Contribute towards improving the global trade and economic linkages of Sri Lanka.

The multiplier impact within the investment on tourism is envisaged inside the production,
furnishings, delivery and meals and beverage industries inside the use. Estimates monitor that
those industries will provide new direct and oblique employment opportunities to approximately
350,000 humans.
The cease of a three-decade long civil conflict in 2009, Sri Lanka has witnessed remarkable
growth and with an actual GDP increase charge of 8% in 2010, a bounce of 125.2% inside the
inventory market in 2009, and 32% year-on-year growth in vacationer arrivals in 2010, and
additionally The united states with a consistent with capita earnings of USD 2400 in 2010
enjoyed eight% financial boom. Sri Lanka is on its manner to turning into a major tourism
Destination in South Asia.
There was a surge in tourism arrivals straight away after the warfare with report forty six%
increases in 2010 with overall arrivals surpassing 650,000 confirming the truth that Sri Lanka has
been globally acclaimed as one of the greatest locations for the discerning tourist trying to find
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peace, tranquillity and multi-faceted sights. And additionally, in keeping with reputable
information, March 2011 arrivals were the highest ever for a single month due to the fact
December 2010. Its 84000 traffic came.

Statistical data of tourist arrivals in 2009- 2010

Figure 02 Statistical data of Tourist arrivals in 2009-2010


Source - www.archaeology.lk
A Conducive taxation strategy for tourism
And additionally these days government is conductive a friendly taxation strategy for tourism
industry. To compete within the worldwide arena, the provider Taxes have been simplified for the
benefit of tourism requirements should fit the worldwide expectancies. Enterprise the earnings /
profits are situation to a 12% It need to also be ensured that the most benefit of tourism is
exceeded directly to the network and economic growth is supported thru domestic cost
introduction. tax.
The prematurely value of funding in entertainment and tourism associated sports and plant and
machinery as well as branded customer merchandise are subject to low taxes. Responsibilities on
vehicles have been decreased to promote tourism related offerings. Taxes imposed at various
levels of government are being consolidated to make an enterprise pleasant tax regime.
Developing enterprise Professionalism

The authorities will improve productivity of the tourism industry, through constructing
professionalism inside the travel and lodge industries. The non-public region will be
recommended to set up global famed human resource development centres to satisfy the rising
wishes of the tourism industry regionally and overseas. Lodge management and tourism
promoting topics may be furnished inside the curriculum of college academic programmers.
Simultaneously, the government will enlarge maximum guide to the personal quarter training
establishments if you want to retain the standards of offerings. Licensing of tour guides that
allows you to standardize their carrier (thru a competency check) and accreditation of journey
retailers can be undertaken.
Improving service standards
Protection requirements and safety aspects of tourism will be given a high precedence.
Regulatory bodies may be reinforced to make certain the high-quality standards of merchandise
and security aspects of vacationers. Policies, policies and institutional mechanisms relating to the
protection of tourists and the surroundings may be strengthened. Strict coverage vigilance and
tracking may be performed to decrease tourism related crimes and abuses.
Socio Cultural surroundings
The socio cultural surroundings, then, includes the entire variety of behaviours and relationships
in which people have interaction of their private and private lives, which include:
The characteristics of the populace (e.g. age, sex, race or ethnicity, elegance)

Values and attitudes

Lifestyles and relationships.

Subculture is an attribute of businesses, and this will suggest society as an entire, organizations
within society, or maybe agencies of societies and international locations.
As an instance, the way of life of Sri Lanka has been stimulated by way of many stuff inside the
beyond however has managed to hold an awful lot of its historical and rich factors. Typically it
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has been stimulated by way of faith and colonization by using the Dutch, the Portuguese and the
British.
As with other components of the surroundings, the relationship between commercial enterprise,
tradition and society entails a two-manner interaction. even though we have a tendency to
consider enterprise as operating according to an extraordinary instrumental rationality of
earnings-and-loss and the backside line it's also stimulated by using the social-cultural putting
wherein it's far embedded. On the identical time enterprise impacts the wider way of life and
society profoundly. Those impacts may be seen as either advantageous or negative.
for instance, a good deal of what we think of as making up the lifestyle of modern society
consists of the outputs of personal zone corporations in what might be referred to as the tradition
industries, including popular song, films, literature, newspapers and magazines.
The subculture industries make up a vast part of enterprise activity, reflecting the shift from
production to provider industries within the wealthy economies. Lifestyle has end up an
increasing number of large business as a growing percentage of client expenditure is devoted to
way of life purchases rather than cloth requirements. This may be visible within the boom of the
huge variety of businesses involved with amusement and tourism.
As an instance, cheap flights have enabled growing numbers to widen their cultural horizons
through overseas travel and local visiting this means that a traveller can travel locally by means
of using aircrafts.
Tourism area is turning into the most effective boom engine in the new millennium. Tourism
involves travelling to noticeably undisturbed or uncontaminated herbal regions with the unique
objects of studying, admiring and playing the surroundings and its wild vegetation in addition to
different current cultural and historical elements. Those consist of locations of archaeological and
ancient significance, pilgrimage centres, sanctuaries, country wide parks, hill resorts and sea
beaches, and so on. Tourism is travelling for predominantly recreational, entertainment functions,
or the provision of services to guide this enjoyment tour. the world Tourism organisation defines
travellers as those who "journey to and live in locations out of doors their traditional
surroundings for now not more than one consecutive 12 months for entertainment, business and
different purposes no longer related to the exercising of an interest remunerated from inside the
location visited". Tourism has grown to be a
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Popular international leisure hobby. Tourism is critical for country like Sri Lanka because of the
huge intake of money for organizations with their items and services and the opportunity for
employment inside the service industries associated with tourism. Those service industries
encompass transportation services consisting of cruise ships and taxes, accommodation along
with inns and enjoyment venues, and different hospitality industry offerings which includes
motels.

Demographics
Religions in Sri Lanka
Sri Lanka is the 53rd most populated nation inside the global, with an annual population boom
price of zero.
Seventy three%. Sri Lanka has a delivery fee of 17.6 births consistent with 1,000 people and a
demise charge of 6.2 deaths consistent with 1,000 people. Populace density is highest in western
Sri Lanka, particularly in and around the capital. Sri Lanka's tradition additionally revolves
around faith. Sri Lankans are very non secular due to the fact the records of the island has been
worried with faith numerous instances. There are numerous Buddhist temples in Sri Lanka and
many mosques, Hindu temples and church buildings all throughout the island. The spiritual
preference of an area can be determined via the number of religious institutions in the area. The
North and the East of the island has many Hindu temples and mosques due to the fact a big
Tamiland Muslim populace is living in the ones areas. The interior of the island is frequently the
Buddhist populace and there are many Buddhists living in all parts of the island due to the fact
they're the largest religious organization in Sri Lanka.

Figure 03 Population Growth


Source - www.archaeology.lk

Population growth in Sri Lanka

Percept
Religion
Buddhism
Hinduism
Islam
Christianity

69%
15%
8%
8%

The Buddhist majority observe Poway Days, once per month according to the lunar calendar.
The Hindus and Muslims also observe their own holidays. Sri Lanka was ranked the 3rd most
religious country in the world by a 2008 Gallup poll, with 99% of Sri Lankans saying religion
is an important part of their daily life.
Country like Sri Lanka has an opportunity of attracting more religious tourists or the people
who are willing to tour for pilgrimage purpose. Because in Sri Lanka there are four different
religions therefore both religious tourists can visit special temples situated in Sri Lanka such as
Dhalatha Maligawa, thirukketheeswaram, MadeMaratha church and Mosques

Technological environment
The tourism enterprise has proved in particular appropriate for the adoption of facts generation
because of its dependence upon the deliver and alternate of statistics at some stage in the
manufacturing and distribution chain. As an incredibly facts in depth enterprise, tourism is
present process fast and radical contemporary changes. A huge variety of opportunities find out
on daily basis through using facts and communication generation. Now records generation is
getting used for an expansion of features in the tourism enterprise, ranging from an internal
corporation function to external conversation among distinctive elements of the industry. The
continuous improvement of information era has profound implications for the entire tourism.
Today, a huge variety of tourism sectors is taking the advantage of the information superhighway.
Technology helps the speed and efficiency with which statistics of the tourism enterprise is
processed, saved, retrieved, distributed and otherwise manipulated. Records era can lessen prices
of facts coping with, growth velocity of data transfer and retrieval and increase customer
involvement within the manipulate of transactions. It has flexibility of product specifications and
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more reliability of records transferred.


Opportunities for Sri Lankan Tourism

there is a developing focus that ICT has appreciably changed tourism worldwide. It is of

essential significance to gather the talents and tools and to have interaction in a multi-channel
strategy to attain the final client decreasing dependence on overseas media, overseas excursion
operators and others inside the traditional price chain.

merely having a web presence isn't always sufficient. Extra distinctive understanding is

required of aspects along with usability and see and different factors of on line branding and
advertising. As well as offering content on line, there ought to be offerings as seek centres,
availability checks and on line reservation and fee.

Sri Lanka, particularly Colombo, gives an extensive form of providers of internet layout,

website improvement and different ICT associated applications and offerings at low-priced fee
levels, this can assist the aims of the tourism quarter to make the most of information and verbal
exchange era.

An instance of an e -tourism initiative is the ambition of the international Finance agency

(IFC) of the arena bank institution and the South Asia corporation improvement Facility (SEDF)
to put into effect on-line accommodations booking portals in Sri Lanka (primarily based on
systems of Worldhotellink.com Ltd) a part of their initiative to expand sustainable tourism inside
the area, benefiting neighbourhood communities.

The e -Sri Lanka initiative is likewise critical - a stakeholder - led , multi donor funded

countrywide improvement initiative with the goal to grow the ICT quarter and use of ICT as an
enabler for socio financial improvement is the obligation of the information and communication
era affiliation of Sri Lanka (ICTA)

Tourism publications are an increasing number of mixed to ICT and e-mastering in to

their coaching methodology and schooling in technical side is necessary.

Natural environmental
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Sri Lanka Tourism having embarked on worldwide Tourism enterprise because the mid-60s has
treaded a direction with a vision of becoming the foremost visitor vacation spot in Asia. The
tourism industry possesses the experience in tourism and had the power to be resilient for the
duration of the previous couple of a long time, not handiest to resurrect on every occasion
uncontrollable factors intervene however also to broaden the industry.
The impact of tourism beforehand the surroundings and vice versa is mutual. Bad affects from
tourism can stand up while the extent of vacationer use exceeds the environment's potential to
cope, in the acceptable boundaries of exchange. Unrestrained traditional tourism creates
capability threats too many herbal regions. This may put stress on a place and bring about soil
erosion, accelerated pollutants, discharges into the ocean, natural habitat loss, accelerated stress
on endangered species and heightened vulnerability to woodland fires. Moreover, it could incur a
stress on water resources and pressure neighbourhood populations to compete for using important
assets. Tourism developers constitute a massive segment of all users of coastal assets. Their
activities are of primary challenge to coastal managers. Monetary success inside the tourism area
depends closely at the fitness of the herbal resources upon which tourism is built. If coastal
waters become polluted with the aid of hotel waste water discharge, vacationers will cross
somewhere else. Considering coastal tourism is good sized in the course of the Asian vicinity, it's
miles critical to keep and in which feasible decorate the environment to remain aggressive.
Sri Lanka has a protracted-standing reputation as a famous solar, sand, and sea vacation
destination. Tourism development sports inside the coastal regions, together with Hikkaduwa,
Negombo and Rekawa Lagoon, have contributed to growing degradation of precious coastal
habitats and natural settings. The advent of site visitors and uncontrolled increase followed by
way of mass tourism improvement has additionally generated a number of poor financial, social
and environmental consequences on the host groups. From a financial angle, mass tourism tends
to develop at the expense of, or the overall alternative of, traditional financial sports together with
fishing and farming. development of mass tourism and luxury tourism also have commonplace
results together with social department, inflation of property charges, improved price of residing,
furthermore, growing tourism sports reasons congested visitors, accelerated environmental
pollution, and unpleasant development. Sri Lanka is in need of alternative improvement options
to foster a sustainable tourism industry.

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Legal environment
Environmental laws, regulations and institutions in Sri Lankan tourism
Sri Lankas tourism enterprise which become institutionally setup in 1966 underneath the
Ceylon tourist Board act No. 10 of 1966, operated together with the Tourism development
Act of number 14 of 1968 for an over 40 years.
This law on Tourism determines the concepts, policies and measures on the status quo,
activities and administration of tourism, with the aims to sell, broaden and make bigger
cultural, ancient, [and] nature tourism in sustainable ways, 1 to convert right into a modernday tourism industry.
Environmental regulations

Countrywide surroundings policy

The policy pursuits to promote the sound management of Sri Lanka's surroundings balancing
the needs for social and financial development and environment integrity. It also targets to
manage the surroundings by using linking collectively the sports, hobbies and perspectives of
stakeholders and to assure environmental responsibility.

National forestry policy (1995)

The policy was drawn as much as provide clear guidelines for protective the closing natural
forests of the use so one can conserve biodiversity, soil and water resources. in accordance
with the policy, the forests under the jurisdiction and located under 4 control systems ranging
from strict conservation, non-extractive use, control of a couple of use forests for sustainable
manufacturing of timber and control of forests with community contribution.

National air nice control policy (2000)

The reason of this policy is to keep accurate air pleasant to lessen morbidity due to air
pollutants and in flip lessen countrywide expenditure.

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Countrywide watershed management coverage (2004)


Coverage aims to converse, guard, rehabilitate, sustainably use and control the watershed
while managing their surroundings traits with the involvement of the people.
Purifier production policy (2004)
The objective of this coverage is to comprise the cleaner manufacturing idea and practices
into all development sectors of the country. To enforce the policy sect oral rules have been
evolved for fitness and tourism in collaboration with the Ministry of fitness and Ministry of
Tourism.
Country wide Bio safety coverage (2005)
The policy on bio safety set the overall framework wherein adequate protection measures
might be advanced and put into force to decrease viable risks to human fitness and the
environment whilst extracting most advantages from any capacity that cutting-edge bio
technology may additionally offer.

Country wide policy on wetland (2005)


This policy seeks to present effect to national environment coverage and different applicable
country wide guidelines even as respecting country wide commitments, protocols, treaties,
and agreements to which Sri Lanka is celebration.
This coverage assertion reflects Sri Lanka's constitutional, worldwide and country wide
obligations, which include the Mines and Minerals Act No. 33 of 1992, the countrywide
Environmental Act of 1980, the Coast Conservation Act of 1981 and other relevant rules,
regulations and policy statements. It defines the commitment of government, in partnership
with the human beings, to effectively control the construction sand resource for the advantage
of gift and future generation.

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Trends and uncertainties faced by tourism industry of Sri Lanka

Eradication of terrorism has taken the tourism industry in an uprising trend. However, drug
trading and smuggling, violent crimes against foreigners, increasing number of sexual
harassments, unregistered tourist resorts, insufficient infrastructure growth, lack of tourists
from developed nations, staff migration due to low wages, inadequate network for
disseminating and exchanging information, insufficient promotional efforts and potential
negative cultural impacts tend to lower the tourists attraction.
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Scenario planning

Any organization that involves in tourism should read the minds of tourists before their
arrival to match their needs while preserving the cultural values. More priority has to be
extended for intense usage of IT to save time of both parties. The security aspect of the
tourists has to be guaranteed to the highest level. The flow chart designed for this is as
follows.
Figure 2- Scenario Planning

Identify
tourists'
taste

Match
cultural
values

Priorotise
IT

Market
the
capacities

Guarantee
the
protection

Offer and
feedback

Source: Constructed by the author

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Bibliography

Angina, J., Jayakody, D.M.M.S., Pereira, K.S.M., Pathmanathan, N.G., Zurbaran, T.


&Subramanian, T. (2011), Sri Lankan Tourism industry, BSc. In Business
Management (Special) UGC, Sri Lanka

News.lk (Anon), Sri Lanka's tourism revenue shows 33.9 pct. increase in first 7
months, [Online] Available at: <http://www.news.lk/news/business/item/3411-srilanka-s-tourism-revenue-shows-33-9-pct-increase-in-first-7-months> [Accessed on 27
July 2016]

Panda, T.K., Mishra, S. &Parade, B.B. (2004), Tourism Management: The SocioEconomic and Ecological Perspective, Universities Press (India) Private Limited,
India

Professional Academy (Anon), Marketing Theories PESTEL Analysis, [Online]


Available

at:

<http://www.professionalacademy.com/blogs-and-advice/marketing-

theories---pestel-analysis> [Accessed on 27 July 2016]

Sri Lanka (Anon), Overview of Tourism Industry in Sri Lanka, [Online] Available at:
<http://www.sltda.lk/overview_of_tourism_in_sri_lanka> [Accessed on 27 July

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