Small and Medium Scale Entrepreneurs in Sri Lanka’s Tourism Sector embrace sustainability

The island of Sri Lanka sparks the imagination with its beautiful nature, beaches and famous tea. Small and medium enterprises play a vital role in the country’s economy, contributing more than 50% of the GDP. Around 75% of these enterprises are in the tourism branch. These include hotels and homestays (33%), spas and ayurveda (18%). Souvenirs, handicrafts, cafes, food and beverages make up most of the remaining enterprises.

Precisely due to their importance, the recently introduced National Sustainable Tourism Certification scheme was expanded to include small and medium enterprises. The scheme, supported by UNDP-BIOFIN since 2018, already covered the hotel branch and destinations.

Smaller accommodation providers now have the opportunity to achieve sustainability certification which in return will add more value to their businesses, an incentive previously made available only to large-scale hotel operators. Companies fall into the bracket of small and medium enterprises if their number of employees is below 300 and their revenue is below 750 million LKR (2,325,129 million USD).

UNDP-BIOFIN hired an internationally accredited organization - Green Destination - to establish the certification.

The sustainability Certification is an endorsement to Sustainable Management efforts taken by SMEs.  The criteria used to award the certification for the SMEs are as follows,

• Care on Solid Waste & Waste Water disposal
• Care on Safety-Security Hygiene
• Careful use of energy and water
• Employee facilities & benefits
• Effort on Environmental Conservation & Contribution
• Steps taken to enhance community benefits
• Efforts taken for cultural protection and enhancement
• Renewable Energy use
• Care on a supplier with Fair Trade as a policy

For example, the usage of renewable energy sources like solar power and reduced plastic consumption may qualify a business to obtain the certification while businesses with harmful waste management practices that may have adverse effects on the environment would get disqualified from the selection process.

After conducting close assessments and observations of the SMEs, the businesses were graded according to the above criteria. and as of December 2023, a hundred SMEs have been certified with an awarding ceremony planned for January 2024. The SME Sustainability Certification has been a game changer with several international travel booking reservation platforms such as Booking.com acknowledging these certification standards. They have agreed to highlight the hotels with the sustainability certification with two green leaves, giving them more visibility among others.  As per Sri Lanka Tourism Development Authority (SLTDA), many international travelers visiting Sri Lanka have expressed their willingness to pay more if their service providers adhered to internationally accepted sustainability criteria. In a context where eco-living is becoming a popular lifestyle among many, there is no doubt that this initiative will open up better business opportunities for the SME sector through sustainability certification. This is bolstered by a survey conducted in November and December of 2023, which showed that certification holders have experienced a 15-20% increase in their income in the post-certification period.

“The Sustainability Certification has encouraged us to improve our sustainability practices in all aspects of operations at our property,” says Gileemale Walawwa, Director of Gileemale Walawwa & Estate, Rathnapura. “Since our property holds a history of 300 years, adapting to sustainable practices means a lot to us. We not only care about the growth of our brand but also help the community around our property to develop through our sustainable practices. The certification has reminded us to maintain our standards and it has also helped us attract more eco-conscious European tourists to our property”

“SMEs are the largest sector in tourism services in the country with a direct community involvement. Through the certification programme we prepare the SMEs for the future tourism market. The certification not only offers an environmental advantage but also a marketing advantage for the SMEs. It gives us an opportunity to showcase the richness of our culture, environment, and society as a whole by recognizing the local authenticity. The Sustainability Certification goes beyond the environmental aspect and supports communities to prosper in various aspects, opening an opportunity for them to cater to the growing global market while enhancing profitability.” says Mr.Upali Rathnayake, Deputy Director General of Sri Lanka Tourism Development Authority sharing his thoughts on the benefit of the certification programme to the SME community.

“At Taru Villas we have been adapting to various sustainable practices like going plastic-free, shifting to bio-produce, reducing the carbon footprint of our hotels for the past few years. However these practices were mostly internalized, and it was through the sustainability certification process we identified the necessity of communicating our efforts to the outside world. The audit conducted in the process was an eye-opener for both SLTDA and the hotel industry to take a closer look at our individual strengths in terms of sustainability and where we can improve” – Krishni Pandithratne, Senior Manager – Marketing and Public Relations

With the single-use plastic pledge coming into place at Taru Villas they have completely omitted serving singular butter portions that come in plastic containers

For a community impacted by many obstacles posed by the Easter Sunday bombing in 2019, followed by the global pandemic and the economic crisis in 2021 and 2022, the certification has brought positive financial impacts. This has also encouraged more individuals to turn into entrepreneurs in their communities using the limited number of resources they have in their rural settings.

Unlike in other sectors of the economy where women take a leading role in contributing to the economy of the country, women labor participation in the Sri Lankan tourism sector is less than five percent and it is assumed that the business ownership is even less than five percent. Considering this factor, special attention is given to support more women entrepreneurs in the tourism sector and to encourage women to engage in a livelihood associated to the tourism sector.

As a first step, approximately five times higher percentage of women entrepreneurs have been selected for the certification. Of the first 100 SMEs certified in Sri Lanka, 27 are owned by women entrepreneurs. Going beyond just achieving the biodiversity targets of the project, this initiative strives to bring about a more everlasting change, through the small steps taken towards creating a more equitable workforce and a nation at large.