Believing in the Long Term Potential of Tourism in Sri Lanka

Interview with Harith Perera, Executive Vice President for Business Development at Acorn Group

During this time of uncertainty and great challenge for the tourism industry, a group of veterans from Sri Lanka’s tourism sector, created a splash, with their acquisition of Hemas Holdings’ travel and aviation businesses via a management buyout. The new travel conglomerate, the Acorn Group, encompasses multiple businesses and leading international brands in travel and aviation, offering a range of products and services under three verticals – Aviation Services, Destination Management and Outbound Travel.

The Alliance had the opportunity to speak with Harith Perera, Executive Vice President for Business Development at Acorn Group on the timing of the buyout and how the organization is coping with current challenges. Harith also shared his thoughts on the industry and how the Tourism Alliance can play a significant role in supporting it.

Q: The Acorn Group was officially launched while a global pandemic had broken out. What encouraged you to proceed with the venture, knowing that tough times were ahead?

A: We had been in discussions regarding a management buyout with Hemas since late 2019, and the transaction was scheduled to take place in March 2020. Even after the COVID-19 pandemic broke out in the country in March, the seven of us who participated in the buyout remained fully committed to the transaction. Even in the face of the pandemic and the inevitable fallout for tourism, we recognised the long-term potential for the industry and the financial position of each business to sustain an extreme period like this. That is why we decided to go ahead with this venture, undeterred by what was going on around us at the time.

We feel that the Acorn Group is well placed in inbound travel, outbound travel and airline representation. We can boast of market leadership in many segments, cumulatively. We are very strong in the European market for inbound travel, and have a strong presence in the corporate outbound travel segment. We are regionally based in Thailand and Maldives at this moment. We want to consolidate our market position further by expanding our partner network, while also pushing an aggressive growth strategy in South Asia.

From the outset, we embarked on a very aggressive new business drive and we made a strategic decision to diversify into non-tourism related sectors as well. One result was purchasing a 40% stake in AIA Holdings, one of the premier education institutes and facilitators in Sri Lanka. We are also looking at other revenue lines, which are directly or indirectly connected to travel and aviation. Having said that, we have streamlined and restructured our operations and cut down costs to the bare minimum to conserve resources at this time, as our immediate objective is to survive the pandemic and this difficult period.

Q: You spoke about the long term potential of tourism in Sri Lanka. In your opinion, what is that potential?

A: If you take Sri Lanka as a tourist hub, we are a very resilient industry. We have survived three decades of war, we faced the tsunami, Easter attacks, and now COVID. I am confident about the country’s tourism potential due to a number of reasons.
We are placed well geographically, we have fantastic beaches, history, culture, nature. All the ingredients of a tourist destination are here in Sri Lanka, in plenty. Therefore, what we need to do is survive the pandemic and then be more aggressive in our sales and marketing, and I believe that Sri Lanka will bounce back quite fast.

Q: What are your thoughts on tourism businesses diversifying into other areas?

A: Tourism is a very sensitive industry, it is very volatile, and reacts to many environmental factors. This means that there will always be ups and downs. From a corporate risk assessment point of view, it makes sense to diversify your business and move into other unrelated areas as well, in order to weather the storms that may come your way.

Looking at it from a different perspective, many people involved in the tourism industry are very passionate and driven by their love of tourism. For them, it will be very challenging to diversify into unrelated areas. And it is understandable that a person who has dedicated their life to tourism can’t suddenly get in to an area like agriculture or manufacturing. But those who come from a corporate background, where diversification is very much a part of the game, will find it easier to step into unrelated fields and grow their business. So, at the end of the day, it really depends on the type of person/people who are running the business.

Q: What is your advice for DMCs regarding what they should be doing during this period to survive and sustain?

A: In the immediate short term, they need to look at their costs. In my opinion, staff cost is one of the biggest costs for a DMC, so they would need to look at how that can be managed, while retaining talent. In the medium to long term, they need to adopt technology and be digitally ready, and they also need to reconsider the product offering.

I believe that we need to move to more experienced based products, where we can differentiate from all other entities that offer services similar to a DMC. I firmly believe in the DMC model because a country like Sri Lanka needs the services of DMCs to cater to the needs of travellers. The country has its own infrastructure challenges, it is so diversified, season based, has a large number of hotels, and so many sites and attractions. Therefore, we need someone to function as a central point and manage the entire offering. That’s where the DMC plays a crucial role, in my opinion.

Q: What can individual tourism players do during this time to sustain their business?

A: Some of them are very individualistic, they run the entire show. However, that sort of experienced person is also ageing, so they need to begin looking at the next level of leadership. This is a good time to pass down the knowledge and experience, hire professionals, and have a sustainable plan for transition for when the time comes to take a step back.

Q: What can government authorities, as well as the Tourism Alliance do to help tourism businesses during this time?

A: What we really need now from government authorities is financial support. As we speak, there are DMCs shutting down, unable to survive this period of zero revenue. Furthermore, when things eventually open up fully, the strategic plan for tourism in the country needs to be ready, together with various media promotions to say that Sri Lanka is back.

There are two very strong industry associations SLAITO and THASL, which are already very busy supporting their members with a number of issues and concerns. So, I think the Tourism Alliance can play a different role, by supporting areas like industry skills developments and education. In my opinion, the Alliance can play a complimentary role to the work done by the other industry associations, so that all players within the country’s tourism industry can benefit.

Q: What motivated you to serve on the Alliance Advisory Group?

A: After the Easter attacks of 2019, some of us from the industry felt that the work done to send out positive messages to potential travellers and position Sri Lanka as a viable destination was inadequate. So, led by Malik Fernando, we decided to form an unstructured alliance and do what we thought was needed at the time. That was the beginning of the Love Sri Lanka campaign, the start of a dynamic website that was publishing up to date and positive news about the destination.

We have come a long way since then, but there is still a lot more to be done. The Alliance can add value to the destination by way of training, helping develop products, attracting skilled workers and lobbying on behalf of the industry. We are currently working on a number of important initiatives such as a job portal for the industry, agent training programs, and developing more sustainable tourism products in the country. I believe that these are all very important initiatives and have the potential to make a significant positive impact on the industry.