Sri Lanka’s tourism industry has begun its recovery after the setbacks suffered due to this year’s economic and political crisis, along with the protest campaigns that brought down President Gotabaya Rajapaksa.
Sri Lanka’s tourism sector plays an important role in the island nation’s economy, accounting for 12 percent of the nation’s gross domestic product. Tourism is also Sri Lanka’s third largest foreign exchange earner, providing much-needed revenue for the government. Tourism provides employment opportunities, adding thousands of direct and indirect jobs to the Sri Lankan economy.
Tourism Ministry sources revealed to The Diplomat that the current regime has earned more than $1 billion in foreign exchange from tourism since taking office at the end of July. The ministry estimates that by December 2022, Sri Lanka will have received approximately $1.7 billion.
In March 2022, approximately 106,500 tourists arrived in Sri Lanka, a massive increase in tourist arrivals compared to March 2021, when only 4,581 tourists entered the country. However, tourist arrivals dropped to 30,207 in May 2022 due to the economic crisis on the island. The decline in tourist arrivals due to the COVID-19 pandemic was one of the factors contributing to the decline in Sri Lanka’s foreign exchange reserves. Therefore, economic analysts are of the opinion that if there is an increase in the influx of tourists, it could have a positive impact in getting the nation out of its current economic crisis.
Although the government previously forecast that tourist arrivals would increase in July and August, due to fuel shortages, only 37,760 tourists visited the country during this period.
Sri Lanka has launched several online programs to increase tourism from alternative destinations. Due to the ongoing war between Russia and Ukraine resulting in an energy crisis, thousands of tourists from Europe are expected to visit Sri Lanka in November and December.
Meanwhile, sources from the Ministry of Tourism told The Diplomat that the government has taken many initiatives to revive the tourism industry with novel packages. The Murugan-Shiva Shakthi trail to attract Indian tourists is one such package. In August, India accounted for 16 percent of total tourist arrivals.
Meanwhile, “Russian tourists have massively boosted October arrivals, allowing Sri Lanka to rebound by 41 percent to 42,026 from a low of 29,802 in September 2022,” a ministry official said. The official also revealed that Sri Lanka has recorded approximately 600,000 arrivals so far this year and expects to attract a further 200,000 arrivals in November and December.
However, this figure is certainly less than the anticipated target of one million arrivals and $2 billion in revenue. During the political crisis, before current President Ranil Wickremesinghe was appointed, Sri Lanka saw more than 30 flights withdrawn weekly. The political and economic situation in Sri Lanka resulted in negative travel warnings imposed by certain countries and adverse media campaigns, including negative portrayal of Sri Lanka through social media. That may have contributed to tourists taking their wallets elsewhere.
Now the trend is moving in the opposite direction, with the addition of flights. Russia’s largest charter airline, Azur Air, resumed direct flight services between Moscow and Sri Lanka last week, with more than 330 Russian tourists arriving on the first flight. Emirates airline, Qatar Airways and flydubai have also increased flights to Sri Lanka, seen as a positive move by several economic analysts.
“We can see that the country is currently moving in the right direction and I am confident that Sri Lanka could see net receipts in excess of $2bn and over 2m arrivals in 2023, a positive indication,” an analyst said. to The Diplomat.
According to a senior Ministry of Tourism official, “Sri Lanka is fielding the largest team of almost 90 local travel industry stakeholders for the World Tourism Market (WTM) in London starting next week after a gap of three years”. Therefore, the official warned, “it is vital that the current protests are minimized, as these protests will have negative sentiments on Sri Lankan destination promotions.”
As a democratic country, Sri Lanka welcomes peaceful protests, but analysts are concerned that the unrest is taking a toll on Sri Lanka’s fragile economy.