One of the country’s best known tourism personalities has commented that negative travel advisories from several European countries and Australia implied that tourists were discouraged from coming here almost like a punishment on the country for pursuing the military option against peace talks.

"It looks as if the tourists’ visits are deliberately discouraged like a punishment - another way of enforcing international sanction,’’ Prof. M.T.A. Furkhan, Chairman of the Confifi group of companies said in the just published annual report of Riverina Hotels Limited.

Reporting a "free for all war situation" here with the government pursuing on a military solution to the Northern conflict, he said that the resulting human rights violations "have severely undermined the integrity of the government in the eyes of the international community."

Furkhan noted that this country situation had led to negative travel advisories from countries such a Germany, France, Italy and Australia leading to a severe downturn in tourist arrivals and the sector had ended up "like the meat in the sandwich" with the international community exerting strong pressure on the government to halt the military option and pursue peace talks.

"One of the by-products of this scenario is the travel advisories issued by countries such as Germany, France, Italy and Australia which have led to severe reduction in tourist traffic. In the unfortunate situation, the tourism sector of the country has ended up like the `meat in the sandwich’ where the international community is exerting tremendous pressure on the government of Sri Lanka to halt the military option and pursue peace talks," he said.

Furkhan said that other than one charter company, virtually all other charter flights such as Condor and LTU had been withdrawn making it difficult for repeat clients to get here for a holiday in the southern part of the country which is hardly affected by the war in the north.

The result for the tourism sector is that tour operators have seized the opportunity to pressurize hoteliers to reduce prices while the hoteliers themselves are confronted with the challenge of even maintaining current prices in the face of severe cost increases.

"In this scenario no one envies those who are responsible to market the Sri Lankan tourism product," Furkhan said.

Riverina Hotels Limited, a member of the Confifi group, has posted a positive bottom line in the year ended March 31, 2008 with a group profit after-tax of Rs.39.6 million, up from Rs.32.9 million a year earlier despite the travails faced by the hotel industry in the context of the security situation.

At company level a profit of Rs.28 million, marginally up from Rs.27.2 million the previous year was posted.

Although the company was carrying Rs.151.5 million retained earnings and the group Rs.180.2 million, no dividend has been declared for the year under review with Furkhan explaining that in the context of the downturn of tourist arrivals into the country which was affecting all hotels, his board decided to reserve the limited cash resources available to face further downturns.

He noted that they were confronted with the dual impact of rising food, energy, wages and other overhead costs on one side and the limitations on the prices due to severe competition on the sales side.

They were also conforming to the Confifi group policy of maintaining the hotel plant in prime condition and have refurbished 36 guest rooms whose condition was not consonant with the hotel’s 4-Star ranking. A Rs.22 million refurbishment was almost complete at the time he wrote his message for the annual report last month.

He has once again reverted to a point he has repeatedly made in previous annual reports of his group – the brain drain of skilled people which he said was not peculiar to the tourism sector here alone.

"Other sectors too, such as manufacturing, agriculture, garments, plantations and healthcare are equally faced with the problem of shortage of skilled personnel in the country," he said.

"Overseas employers are openly recruiting the cream of the crop from what is left behind. The faster we train the faster we lose staff!"

It was therefore a daunting task for managers in the human resources sector to train and make available suitable personnel to meet the day to day challenges with employers here forced to make do with "seconds."

Furkhan also complained of government’s response to these problems saying that it totally disregarded productivity and frequently enforced ad hoc liberal pay increases in both the public and private sectors. This had virtually eroded the competitive edge that Sri Lanka enjoyed in labour cost in the region.

"At the rate at which this problem is escalating, no doubt we are slowly out- pricing ourselves in the international market. Unfortunately there are very few amongst those who hold power who understand the problem, and amongst them still fewer who can do something about it."

Riverina has a stated capital of Rs.194.5 million, a capital redemption reserve of Rs.0.8 million, revaluation reserve of Rs.779.7 million and group retained earnings of Rs.180.2 million. The group is carrying interest bearing liabilities of Rs.30.3 million as a current liability and Rs.48.2 million as a non-current liability.

Net assets per share had grown during the year to Rs.81.45 from Rs.79.01 and the company’s share traded at a high of Rs.59.50 and a low of Rs.22 during the year under review. This compared to a trading range of Rs.65 to Rs.22.25 the previous year.