current issues in tourism industry in sri lanka

Bombs to buzzing beaches: Sri Lanka sees tourism surge after long crisis

Hotel attacks, COVID-19 and an unmatched economic crisis devastated Sri Lanka’s feted tourism. Now, visitors are returning amid a promotion campaign. But industry insiders say more is needed.

Colombo, Sri Lanka –  Devmith Kaggodarachchi’s beachfront hotel in the southwestern coastal town of Hikkaduwa, a tourist hotspot 136km (85 miles) from the capital Colombo, is nearing full capacity.

The three-star hotel, with air-conditioned rooms and private balconies looking into the Indian Ocean, is busy serving tourists visiting for the Christmas season.

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That is not how it’s been for Sri Lanka’s tourism industry over the past four years. Tourist arrivals dropped drastically in 2019 after bombings in three luxury hotels and three churches on Easter killed more than 250 people. The COVID-19 pandemic hit before Sri Lanka had a chance to recover.

The country’s economic and political turmoil in 2022 – when its then-President Gotabaya Rajapaksa and his family had to flee, and essential commodities like fuel became almost impossible for everyday people to secure – further pushed tourists away from Sri Lanka.

But a concerted promotional drive to attract foreign visitors, aided by geopolitical tensions unrelated to the country, appears to finally be bearing fruit, offering the nation an engine of revenue that could play a pivotal role in helping Sri Lanka’s economy recover.

In 2023, Sri Lanka recorded more than 1.3 million tourist arrivals by the second week of December, official data show. It is the first time arrivals have crossed the 1 million mark in four years. More than 150,000 tourists visited in November, the highest monthly tally since March 2020.

“Tourists are trusting us now. After going back to their country, they talk good about us. Business is good at the moment,” Kaggodarachchi told Al Jazeera. “Our hotel can serve about 150 tourists at a time. At the moment,  there are 130”.

Most tourists who have visited this year are from India, which hosted three roadshows promoting Sri Lanka’s tourism sector in April.

But the Russian war in Ukraine has helped Sri Lanka too. Russia is the second-highest source of tourists to the country this year, at a time Russian tourists are not welcome in many other nations.

“There were limitations on countries Russians could visit. They could visit Sri Lanka. We had that advantage,” Sri Lanka Tourism Development Authority (SLTDA) Chairman Priantha Fernando told Al Jazeera.

Encouraging numbers, but higher revenue needed

Industry stakeholders say that while higher tourist arrivals are a positive sign, there is a need to attract high-spending tourists to generate more revenue for the economy.

President Ranil Wickremesinghe has also urged the tourism sector to improve its products and services to cater to high-end tourists.

From January to November, tourism contributed $1.8bn in revenue – an increase of 78 percent compared with the same period last year. Tourism is Sri Lanka’s third-largest source of foreign exchange. On average, a tourist spends $181 daily, according to government data.

Suranga Silva, a professor in tourism economics at the University of Colombo, suggested that Sri Lanka could use its uninhabited islands to boost high-end tourism by offering exclusivity.

“If we can develop our islands as high-end tourist destinations, we can get tourists to spend more than $1000 daily. The service must be worth what they pay,” Silva told Al Jazeera.

Research published in 2018 identified at least 87 islands in Sri Lankan territory. Many are neglected and can be used to develop tourist resorts, bird sanctuaries and scenic attractions, the research found.

“Only luxury hotels aren’t enough. Tourists should be given a valuable tour package including domestic charter flights to take them to these locations,” Silva said.

In 2021, the World Economic Forum ranked Sri Lanka 74th among 117 countries on its Travel and Tourism Development Index, which measures factors and policies that enable the development of the travel and tourism sector.

“Right now, there is no advantage for any foreign investor to invest in Sri Lanka,” Fernando, the tourism authority chairperson, conceded. “These are the things we have to look at and come up with policies that will facilitate greater investment.”

“I feel it will be 2029 by the time we receive 5 million tourists, of which half at least spend $500 a day”.

‘Don’t kill the goose that lays golden eggs’

But even as Colombo promotes the country’s tourism internationally, many businesses in the sector fear that the government is at the same time weakening their ability to compete for global travellers.

From January 2024, the Sri Lankan government will lift an exemption on value-added tax (VAT), which it had extended to tourism operators in 2020.

“Our industry generates foreign exchange revenue quickly. So, our request is to exempt us from VAT,” Rohan Abeywickrama, the president of the Association of Small and Medium Enterprises in Tourism, told Al Jazeera.

Sri Lanka’s parliament recently voted to increase VAT from 15 to 18 percent, adding to the concerns of the sector.

That is to meet tax collection targets agreed with the International Monetary Fund which is offering the government a $2.9bn bailout package to tide over the country’s worst economic crisis since independence.

Businesses catering to tourists are already paying a Tourism Development Levy, Income Tax and Turnover Tax.

“When all these taxes are imposed on us, our production costs go up. So we become an expensive tourist destination,” Abeywickrama, an industry veteran who is also on the government’s tourism advisory committee, said.

“Tourism is driven by the private sector and is important to generate revenue. So the government must protect us and encourage us to remain in business. They shouldn’t kill the goose that lays golden eggs”.

The tourism sector is also asking the government to provide relief on their mounting debt and the multiple electricity and water tariff hikes imposed since last year.

Tour operators and safari four-wheel drive drivers say they have to put up with old vehicles as the government banned vehicle imports in early 2020 to control dollar outflows.

“The vehicle fleet is over 15 to 20 years old, which is a challenge with more breakdowns and high cost of repairs,” Nishad Wijetunga, the president of the Sri Lanka Association of Inbound Tour Operators (SLAITO), told Al Jazeera.

“Vehicle imports have not been allowed for the sector in spite of making requests and having discussions with the authorities”.

Brain drain

The mass migration of Sri Lankans to other countries in search of jobs has also hurt the tourism industry.

More than 280,000 Sri Lankans, including 78,000 skilled workers and nearly 16,900 professionals, have migrated this year, according to figures obtained by Al Jazeera from the Sri Lanka Bureau of Foreign Employment.

Skilled workers make up less than 40 percent of the tourism sector, the Sri Lanka Institute of Tourism and Hotel Management (SLITHM), the capacity-building arm of Sri Lanka Tourism, has said.

To create skilled staff and retain them, the institute is conducting training programmes that require participants to work in the local hospitality sector for a year to receive their certification.

“Since we are investing in the training, we are bringing in a payback component, which is they have to work in the country to receive the certification,” SLITHM Chairman Shirantha Peiris said last month.

‘Optimistic for 2024’

Still, a buoyant Sri Lankan tourism authority is targeting 2.3 million tourist arrivals and $4.6bn in revenue next year.

To achieve this, the country has launched its first global tourism marketing campaign in 16 years, under the tagline “You Will Come Back For More”.

“We have identified nine tourist markets in which our digital marketing campaigns will be strengthened next year. We will also be getting vloggers and influencers to visit our country and produce promotional content,” Fernando said.

In late October, the government announced it will issue free tourist visas to visitors from seven countries, including China, India and Russia. This initiative, launched as a pilot project, will run until March 31, 2024.

Many tourists are already convinced.

In Mount Lavinia, a suburb of Colombo, 29-year-old Spanish national Guillem Fox was strolling along the beach with his French partner Mathilde Flachot.

“We will be travelling around the country, visiting wildlife sanctuaries, the tea plantations and maybe try out surfing in the south,” Fox told Al Jazeera. The couple plan to stay for about a month. “From the moment we arrived, the people have been really helpful,” he said.

“That’s a really nice feeling.”

Sri Lanka's economic crisis dashes hopes for post COVID-19 tourism recovery

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Reporting by Sunil Kataria in Balapitiya and Galle, Additional reporting by Uditha Jayasinghe, Writing by Shilpa Jamkhandikar in Mumbai, Editing by Raissa Kasolowsky

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Achieving a Sustainable Future for Sri Lanka's Tourism Industry

SLTDA Establishes Sustainability Tourism Unit

February 1, 2023

SLTDA and UNDP Representatives ceremoniously opening the Sustainable Tourism Unit

26 January, Colombo, Sri Lanka: Sri Lankan Tourism Development Authority (SLTDA) is pleased to announce the launch of a Sustainability Tourism Unit, an initiative aimed at supporting sustainable practices in Sri Lanka’s tourism sector. The unit, established with the support of the United Nations Development Programme (UNDP) in Sri Lanka through the Biodiversity Finance Initiative (BIOFIN), will promote sustainable practices throughout the  tourism industry in the country.

Sustainable tourism intends to minimize negative social, economic, and environmental impacts while maximizing positive contributions to local communities, culture, and heritage, and is considered an essential aspect of both national and international tourism policies. In compliance with the Sustainable Development Act passed in 2017, and the Tourism Strategic Plan 2017-2020, the Sri Lankan Tourism Development Authority (SLTDA) took proactive measures to incorporate sustainability in the tourism industry through introduction of the National Sustainable Tourism Certification program in 2018. The first phase of the program focused on the hotels and the accommodation sector, while it is currently being extended to include other sectors such as travel operations and destinations. The establishment of the Sustainability Tourism Unit is expected to provide support and enhance such initiatives while working towards achieving key objectives including;

• Lead the implementation of sustainability related components of the National Tourism Policy 
• Formulate and implement strategies to promote sustainability related concepts with private sector tourism service providers
• Liaise with international organisations and donor agencies for sustainable tourism initiatives.
• Implement sustainable tourism certifications programme schemes for all tourism service categories in Sri Lanka 
• Strengthen the linkages between the tourism industry and the sustainable management of biodiversity and cultural heritage sites  
• Strengthen collaborations between the national level and provincial level tourism management agencies

"We are committed to promoting sustainable tourism in Sri Lanka and believe that this new unit will play a vital role in achieving that goal," said SLTDA Chairman, Priantha Fernando. "We are proud to have partnered with UNDP to establish this important initiative and look forward to working together to make Sri Lanka a leader in sustainable tourism."

Commenting on UNDPs role in supporting wider tourism initiatives in the country, Ms. Azusa Kubota, Resident Representative, UNDP in Sri Lanka stated, “UNDP is proud to be a long-standing partner in the Sri Lankan tourism industry. Particularly, at this crucial time, through strategic initiatives such as the Sustainable Tourism Unit and the Sustainable Destination Certification scheme can significantly contribute towards improving people’s livelihoods and the country’s overall long-term objectives of attaining a more green and inclusive recovery from the pandemic and socio-economic crisis.”      

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Rebound of Sri Lanka’s Tourism sector: RIUNIT report

The Research Intelligence Unit (RIUNIT) has released a comprehensive report shedding light on the current state of the Sri Lankan Travel and Tourism sector. Despite the challenges posed by the global COVID-19 pandemic and subsequent economic crises, the data reveals promising trends in tourist arrivals and spending, indicating a gradual recovery in the industry, paving the way for ample opportunities for investors to explore. 

In an exclusive interview with the research team, Chalaka Gajabahu, Chairman, Sri Lanka Tourism Promotion Bureau said that “the 2023 tourist arrival trends paint an optimistic picture, especially when reflecting on the circumstances of the past year. We have successfully accelerated the recovery process despite numerous challenges, from the onset of the COVID- 19 pandemic to the recent economic crisis. In contrast to our competitors such as Malaysia, India, and Vietnam, who did not experience economic challenges, our recovery, when compared to theirs in numbers, stands out significantly. We anticipate an even more substantial year ahead for us. We are currently formulating a comprehensive plan that will be unveiled in the coming month”

The report indicates a notable surge in tourist arrivals to Sri Lanka, reflecting renewed confidence in travel. In 2022, there was a significant year-on-year growth of 270.18%, with a total of 719,978 visitors. The trend has continued into 2023, with tourist arrivals totaling 904,318 from January to August, surpassing the entire year's arrivals in 2022.

After a sharp decline in 2020 and 2021, tourism receipts saw a slight increase in 2022, reaching US$1,136.30 million. The first two quarters of 2023 also showed positive signs, with receipts totaling US$503.9 million in Q1 and US$371.1 million in Q2.

Tourism receipts Q1 2022 - Q2 2023

Source: Compiled by the Research Intelligence Unit (RIUNIT) with data from Central Bank of Sri Lanka

Sri Lanka continues to attract tourists from diverse regions, with major Middle Eastern, Indian, European, and Asian carriers contributing to the country's popularity. In 2022, Sri Lankan Airlines held the highest market share at 33.3%, followed by Qatar Airways and Emirates.

In a significant turn of events, several international airlines that had temporarily suspended or significantly reduced their operations to Sri Lanka during the global COVID-19 pandemic have now resumed full-time operations. 

Airlines that have recently resumed operations, launched new services, or commenced scheduled operations Thai AirAsia Resumed Operations, Air China Resumed Operations, Air Seychelles Launches a New Service, Uzbekistan Airways Resumed Operations, Alliance Air Resumed Operations Air France Resumed Operations, Azur Air Resumed Operations Aeroflot-Russian Airlines Resumed Operations, THAI Smile Airways

Launches a New Service

Source: Compiled by the Research Intelligence Unit (RIUNIT) with data from the Airport and Aviation Services (Sri Lanka) (Private) Limited 

“Several international airlines that temporarily suspended or significantly reduced their operations to Sri Lanka during the global COVID-19 pandemic have now resumed full-time operations as passenger demand have rebounded and the payload is met. Among these airlines are QATAR Airways, SINGAPORE AIRLINES, and Emirates,” Airport and Aviation Services Sri Lanka (Private) Limited

The report provides insights into fluctuations in cruise line arrivals to major ports, with March 2024 emerging as the busiest month. The data indicates a growing interest in cruise tourism, with various cruise lines choosing Sri Lanka as a destination.

Total upcoming cruise arrivals to major ports by month Nov. 2023 - Apr. 2024

Source: Compiled by the Research Intelligence Unit (RIUNIT) with data from CruiseDig

The complete RIUNIT report on the Sri Lankan Travel and Tourism sector can be accessed on the organisation's website. Interested parties can visit RIUNIT website to access the full report to gain in-depth insights into the industry's current state, emerging trends, and potential investment opportunities.

The Research Intelligence Unit is a London based think tank with a strong presence in Asia and recently celebrated 20 years of service in Sri Lanka.

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Sri Lanka eyes tourism boom in 2024 via slick ads, digital nomads

India-Maldives spat offers new chance to build on last year's promising results

COLOMBO -- Sri Lanka is crafting a new tourism strategy, aiming to build on a promising 2023 by honing its advertising message, wooing digital nomads and raising per-traveler revenue. It may even have a chance to capitalize on shifting geopolitical winds amid tensions between neighboring India and the Maldives.

The South Asian island welcomed over 1.48 million visitors last year -- roughly double that of 2022, when the country defaulted on sovereign debt, suffered severe shortages and saw protests topple the government. Buoyed by glowing tourism features in international magazines like Forbes and Conde Nast Traveler, the country is hoping for at least 2.3 million in 2024.

Sri Lanka aims to transform tourism

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Tourism industry kicks off 2024 with over 30,000 arrivals in first week

Monday, 8 January 2024 02:58 -     - {{hitsCtrl.values.hits}}

• Tourism Minister Harin Fernando expresses optimism, anticipating sustained growth throughout 2024
• Russian holidaymakers lead arrivals so far followed by India and Germany

Sri Lanka’s tourism industry has kicked off 2024 on an optimistic note, with provisional data revealing a robust start, surpassing 30,000 arrivals in the first week. “We are yet to receive the official figures, but I learned that it has exceeded the 30,000 mark as of Friday. It is encouraging to see the boost in arrivals, giving a positive outlook for the industry. We hope the industry will be able to maintain the growth momentum throughout the year,” Tourism Minister Harin Fernando told the Daily FT. As per provisional data released by the Sri Lanka Tourism Development Authority, during the first four days of the month it has welcomed a total of 25,619 visitors. The figures for the first week of January 2024 indicate an upward growth compared to the 20,875 registered in the same period in 2023, with Russian tourists leading this increase. The daily arrivals have also more than doubled, reaching over 6,400, compared to the levels of over 3,300 recorded in the same period last year, showcasing a noteworthy improvement in tourist influx. Breaking down the top markets during the first week of January 2024, Russia led with 5,060 arrivals, followed by India with 3,333 and Germany with 2,109. Other notable markets contributing to the positive trend include the UK, Australia, China, France, Netherlands, US and Maldives. Sri Lanka Tourism has set ambitious targets, aiming to welcome 2.5 million tourists and earn $ 4.6 billion. Furthermore, the long-term strategy envisions increasing arrivals to 5 million and generating an impressive $ 21.6 billion within five years. “As Sri Lanka strives to recover and rebuild its tourism sector, these early indications of growth in arrivals bring a sense of optimism for the industry to move towards its long-term growth targets,” Fernando added.  Though missing the target of 1.55 arrivals and $ 2.7 billion income in 2023, the Minister said that the private sector-led industry showed its resilience and appeal to the world by ending the year with 1.48 million holidaymakers and generating $ 2.06 billion.

Tourism earnings up 82% YoY to over $ 2 b in 2023