An onslaught of challenges has brought Sri Lanka’s tourism industry, a pillar of its economy, to a halt. The country will face an uphill battle in restoring a once thriving sector.
A must visit destination in its hey day
Sri Lanka was poised to be one of the world’s best holiday destinations in the coming years due to the country’s rich culture, wealth of natural resources and diversity of accessible experiences on offer. It received major endorsements such as Lonely Planet’s best country in the world to visit in 2019, topping the National Geographic Travellers’ ‘Cool List’ in 2018 and was one of the best countries to travel according to Conde Nast Traveller Readers’ choice awards in 2021. The buzz around the island was hard to miss.
In the decade from 2009 to 2019, international arrivals more than quadrupled from 448,000 to 1.9 million, peaking in 2018 at 2.3 million inbound visitors, according to GlobalData. Concurrently, inbound tourism spending increased rapidly from $394.4 million in 2009 to $3.6 billion in 2019, with a high of $4.4 billion in 2018. In turn, tourism became an important income generator for Sri Lanka, accounting for more than 12% of the country’s GDP in 2019 and the third-largest source of foreign exchange reserves – behind worker remittances and the apparel industry.
Covid-19 and geopolitics compound industry woes
However, tourism-dependent Sri Lanka suffered its first major setback with the Easter bombings in 2019. This initiated the collapse of Sri Lanka’s inbound tourism flows as international arrivals declined by 18% year-on-year (YoY) and tourist expenditure fell by 17.7% YoY. This was then immediately followed by two years of pandemic restrictions. Inbound visitors fell to just 116,600 or 6% of 2019 levels in 2021, and inbound tourism expenditure fell to as little as $213.1 million.
Further compounding the country’s struggling tourism industry is the Ukraine–Russia conflict, which will likely result in an absence of tourists and tourism spending from these countries for the foreseeable future. In 2019, Russia and the Ukraine were Sri Lanka’s seventh and thirteenth largest source markets, respectively. Similarly, China was Sri Lanka’s third largest source market in 2019, however the country shows no signs in relenting on its strict ‘zero-COVID’ policy which has essentially brought outbound travel to a standstill. These challenges, amidst the ongoing economic crisis which has seen inflation soar to 50%, daily power cuts and shortages of basics such as fuel, food, and medicine, according to BBC News, will undoubtedly make the revival of the country’s tourism industry extremely challenging.
Tourism revival – an uphill battle
At a time when the rest of the world has seen increased demand for tourism in recent months, Sri Lanka will have an uphill battle to climb to restart its tourism industry. Its new tourism ambassador, Sanath Jayasuriya, is reportedly promoting tourism as an instrument for economic recovery. The country’s initial strategy to attract inbound tourism appears to be strengthening ties with India and promoting Hindu sites. There is also untapped potential in the country’s meetings, incentives, conferences, and exhibitions (MICE) segment particularly with India, Pakistan and Bangladesh, which could bring immediate cash-flow. However, the country may find it difficult to restore appeal in the short term – even as it starts its revival plan.