Sri Lanka’s tourism sees revival amidst challenges

Suranga Silva, a tourism economics professor, suggests leveraging Sri Lanka’s uninhabited islands for exclusive, high-end tourism. Research identifies 87 such islands, presenting an opportunity for development into luxury resorts, bird sanctuaries, and scenic attractions.

Sri Lanka welcomed over 1.3 million tourists by the second week of December 2023, a significant rebound after a four-year struggle. November alone witnessed a surge of 150,000 visitors, the highest monthly tally since March 2020. The newfound trust in Sri Lanka as a tourist destination is attributed to a strategic promotional campaign and geopolitical dynamics that favour the nation.

Indian tourists dominate the arrivals, with a concerted effort from India’s tourism sector to promote Sri Lanka earlier in the year. Additionally, the Russian conflict in Ukraine redirected Russian tourists to Sri Lanka, offering a sanctuary when many nations closed their doors.

While the increased footfall is encouraging, industry insiders emphasize the need to attract high-spending tourists to bolster economic recovery. President Ranil Wickremesinghe urges the sector to enhance its offerings for high-end travellers.

Suranga Silva, a tourism economics professor, suggests leveraging Sri Lanka’s uninhabited islands for exclusive, high-end tourism. Research identifies 87 such islands, presenting an opportunity for development into luxury resorts, bird sanctuaries, and scenic attractions.

However, challenges loom as Sri Lanka grapples with taxation issues. The government’s decision to lift the value-added tax (VAT) exemption for tourism operators in January 2024 raises concerns among businesses. The recent parliamentary vote to increase VAT from 15 to 18 per cent adds to the worries of an already burdened sector.

Rohan Abeywickrama, president of the Association of Small and Medium Enterprises in Tourism, stresses the importance of protecting the industry from excessive taxes to maintain competitiveness. The sector also seeks relief from mounting debts and challenges posed by increased utility tariffs.

The ban on vehicle imports since early 2020 compounds the challenges for tour operators and safari drivers, dealing with an ageing vehicle fleet. The mass migration of skilled workers further exacerbates the situation, posing a threat to the quality of services in the tourism sector.

Despite these obstacles, the Sri Lankan tourism authority remains optimistic, targeting 2.3 million tourist arrivals and $4.6 billion in revenue for the coming year. A global marketing campaign, free tourist visas for select countries, and collaborations with influencers aim to bolster the recovery.