Sri lanka: The probable future of MLO’s in the south-east coast.

Sri Lanka is an emerging tourism destination that offers many natural, historical and cultural attraction to potential visitors. In 2017, Sri Lanka recorded a record high of tourism visitation of 2.1 Million visitors (Mirror Business, 2017) and is aiming to double the amount of tourist arrivals by 2020 (Xinhua, 2017). As a developing economy, the country faces challenges and sees opportunities that impact the future competitiveness of the destination.

The report at hand is aspiring to predict the probable future for the Southern Coastal Area of Sri Lanka, focusing on Medium and Large Organizations. The research area spreads from Dikwella to Hambantota, concentrating on specific points of interest with varying potentials for future development in the coming 5 years. The researchers consider the research area as one. Nevertheless, there are areas, which stick out according to aspects such as their main attractions as well as their population and development potential. Hence, the cities which are chosen to move into focus are Dikwella and around, Tangalle and surroundings, as well as the Hambantota area.

The purpose of this research was to collect and evaluate relevant information in order to assess the match between the destination area features/assets/potential and the present/attending/actual markets. The destination area that was examined is the coastal area of the Southern Province of Sri Lanka, which runs from Dickwella up to Hambantota area map

The focus during this research laid on the Medium and Large Organizations (MLO’s) that are active in the area. In order to fulfill the assignment a strong cooperation was established with the research group who focused on the Micro and Small Enterprises (MSE’s).

In order to complete the research, a goal was set accompanied with a set of research questions, which are displayed below:

  • What are the relevant stakeholders and how are they involved in the tourism of the research area ?
  • Which are the relevant determinants of competitiveness for the concerned area ?
  • How do the MLOs contribute to the competitiveness of the destination ?
  • What is the probable future development of the South-east area of Sri Lanka ?

Probable future

On basis of the present competitiveness analysis, a probable future has been predicted for the researched area, and will be discussed in the following part. An overview of what is the most likely to happen in the area as a whole will be given first. However, the South-east area has been divided into three zones by the researchers, which will develop in three different ways. It has been concluded that these areas are currently in different stages within the tourism life cycle. All three area have their own characteristics and the researchers placed them in different phases of the Butler life cycle which can be found in Appendix and further explanation of the position in the lifecycle of each destination in the respective parts.

First of all, the area in general from Dickwella up to Hambantota has the potential to turn into an attractive and diverse tourism destination. The area will welcome more tourists due to the strategy of the government to increase the numbers of international arrivals. As a consequence, the other beach destinations along the south coast will become more crowded, as it is already visible, and the tourism will be pushed over to the east. Furthermore, the Southern highway currently in construction and planned to be completed by 2019 will increase the accessibility of the South Area to open up the area to tourism development. As a consequence, more tourism infrastructures will be needed and built up in order to match the increasing demand. If there are more infrastructures, more facilities, and more product development, the general length of stay within the area will also increase, and the market profile of the tourists will probably be extended to new kinds of tourists who can leave more money in the area. Since the area will developed, it will attract more foreign direct investors especially the economic ones, who will see the potential of Tangalle as a future major beach destination, and will participate in the development of these tourists facilities. However, all these developments in the area will lead to new requirements; the government will need to be more involved and to implement the rules and regulations which are currently not executed; the need for skill employees will rise. It has been highlighted that the first source of revenue for the South Coast comes from fishing, and this probably won’t change. However, since tourism arrivals will increase in the area, the contribution of tourism in the GDP will increase in the meantime.


Dikwella, the starting point of the concerned area, has a promising future ahead.  Currently, the researchers consider this area to be an involving destination. This is based on the primary development around Hyrakitya beach and the empty beach of Dikwella. An increasing number of guesthouses and homestays can be seen, therefore residents start to notice the increasing number of tourists.

Indeed, it is nowadays attractive mainly because of its stunning beach, Hiriketiya, which is already crowded by backpackers and surfers. The spot is still remote and kept secret, even though it experienced a big development in the recent two years. From the analysis of the area, what can be expected in the future ins a continuous growth, attracting more visitors from a specific market: young travelers and  surfers looking for this special atmosphere that Hiriketiya has to offer. What can be expected due to this specific market profile is also an increase of high spending travelers visiting the area. Hiriketya will finally flourish become more visible as a tourist destination. The area is meant to be successful, due to the western management and planning of the businesses established in the area, which will continue to develop. The area is currently dominated by MSE’s, which will keep developing since the residents started realizing the tourism boom of the destination. However, the area won’t attract more MLOs in the future, which will rather settle in the biggest developing areas such as Mirissa or Tangalle. Furthermore, the nearby town of Dickwella, might benefit from the development of Hiriketiya Beach.


For the Tangalle region, the researchers placed the region in the development phase. The area is the most tourism oriented out of the three areas and will develop further. Nevertheless there are still many opportunities for development along the coast, which is also noticed by international hotel chains like Marriott.

It is observable already, that a lot of construction is going on. As far as our interviews showed, on many of the constructions site big Hotels are being built. Since there is not much space for building along the beach, the Tangalle area will become more widespread. It is probable, that Tangalle will attract more FDI that is economically motivated. If big Hotels want to strengthen their presence in along the Eastern South Coast, it is most probable that this will happen in the Tangalle area. An increase in tourism is expected along the coast, due to new constructions, but also because similar beach destinations in the middle area of the south seem to become more crowded. Furthermore, it will be easier to access Tangalle due to the highway that is soon to be finished. In relation to a bigger number of tourists and already full of facilities, more restaurants and other tourist facilities will open up. Because of the new kind of accommodation that attract a different kind of tourist, who is not a backpacker, these facilities might have a more western character. More tourism will probably also lead the product offerings in the area when it comes to water based and entertainment product development when local residents or the government see opportunities to earn more money. Since more products will develop, the average length of stay could increase.

In high season, the supply will match the demand and prices might rise. In low season, an oversupply might be visible that leads to competitive pricing.

Speaking generally, the various offerings of Tangalle, that consist of MSE and MLO supply, will make more competitive in the future. Some residents consider the region touristy enough though. When tourism grows, this might have an influence on the service quality and the hospitality.



Hambantota, the border of the researched area, is not expected to develop as much as the two zones described previously.  The researchers placed this region in the exploring phase. Not many tourists can be found in this region, however the government have/had plans to invest in the region in order to attract more tourists by increasing the accessibility. The current plans for the areas remain unknown and the political situation of the town is quite unstable. Furthermore, the area is not attractive tourism wise because of the lack of tourism infrastructures. For all these reasons, the foreign direct investors won’t be attracted to come in, and Hambantota won’t developed. As a result, The harbour will stay in chinese hands and the airport will go to India, but the current development plans for these infrastructures are so opaque that the Sri lankans probably won’t be able to use it. However, due to the investments from China and India which take place in Hambantota, chinese and indian business travelers might increase slowly.  The only tourist advantage that the area has to offer is its proximity with the national parks which offer wildlife tourism. For this reason, the existing supply will remain and be able to be filled, but a only few business, if none, might settled around the big hotels. As analysed previously, the MLO’s which work as a destination and don’t need the surrounding environment to exist, will be able to survive. In general, Hambantota experiences such a missplaning from the government that it cannot be promised to a flourishing future, and the Sri Lankan government will need place a focal point on the area.


The least development area is the Hambantota region. Therefore the researchers placed this region in the exploring phase. Not many tourists can be found in this region, however the government have/had plans to invest in the region in order to attract more tourists by increasing the accessibility.



The conclusion is based on how the MLO’s can contribute to the competitiveness of the area that has been researched. All stakeholder groups have an influence on the competitiveness of a destination. The researchers encountered mainly accomodation MLO’s. Promotion which is done by MLO’s, has certainly an effect on the area in order to make it more attractive. However, in some cases like the Shangri-La Hotel, which is a destination of its own it doesn’t necessarily increase the competitiveness of the area, since it doesn’t need its surroundings in order to be compete. They can though, provide jobs and educational training and therefore contribute to an increase in livability for the residents. Furthermore, they can help in promoting the destination as such and boost international visibility of an area, which in turn can increase the number of visitors to an area. This finally, can help higher the tourism expenditure. Other than that, the accommodation MLO’s, which offer activities have an effect on the tourist’s satisfaction, increasing the competitiveness. Moreover, the researchers discovered that especially hotel chains offer their own educational programs. Therefore, they are able to skill residents that increases the competitiveness of the area. Sometimes, this skilled personnel leaves the facility it has been trained in and spreads the knowledge when working somewhere else. In case of the FDI, by, for example the construction of the highway, the accessibility increases, which has an positive effect on the competitiveness. On the other, the plans of India buying the airport near Hambantota, will have an negative effect on the competitiveness, since there are no plans to increase the accessibility through this airport.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at

Up ↑

%d bloggers like this: