Lanka’s tourist arrivals surpasses expectations: sparks new hope

Tourist arrivals in Sri Lanka recorded a steady recovery in the first half of 2023 outpacing the targets according to First Capital Research “BRIGHT HORIZONS: NAVIGATING TOURISM’S GROWTH REVIVAL” REPORT.

“This recovery was supported mainly by high global vaccination rates, increased air connectivity, along with the lifting of travel restrictions issued by major source countries. Additionally, the significant depreciation of the LKR and tourism promotion campaigns played a pivotal role in positioning Sri Lanka as an attractive and affordable destination for travel.

“Given the accelerated pace of this recovery, we have revised up our 2023 year-end target to 1.5Mn arrivals (previous: 1.2Mn), reflecting an anticipated YoY growth of over 100.0%.”

Despite Sri Lanka’s year-round appeal to tourists, it’s notable that the Q1 (Jan to Mar) and the Q4 (Oct to Dec) collectively accounted for a significant portion, approximately 66.5%, of the total annual tourist arrivals in 2022.

This trend is evident in the consistently elevated average occupancy levels observed during the first and fourth quarters of previous years.

Earnings from tourism surged at a 20.6% 5-year CAGR from 2013 to 2018, outpacing arrivals growth, driven by the significant depreciation of LKR, resulting in higher average spending per arrival.

Sri Lanka is well below regional peers such as Maldives and Singapore, indicating that Sri Lanka is not positioned as a high-end destination in comparison.

“However the average spending by tourists in Sri Lanka surpasses both the global average and the majority of top Asian destinations including Thailand, and Indonesia, which are preferred by travelers.”

China stands out as the sole Asian country to not only appear in the top rankings for outbound travel expenditure but also to lead the list.

Despite the travel restrictions imposed during the pandemic, China remains one of the largest spenders among arrivals in 2022.

Sri Lanka’s list of the top 10 source markets for 2022 includes seven of the world’s top 10 spending source markets. Sri Lanka accounted for around 0.11% of China’s outbound travelers in 2019 despite China being one of the largest source markets for Sri Lanka.

Further, significant devaluation of LKR against USD has made holidays in Sri Lanka even more affordable for international travelers compared to pre pandemic levels. Despite an increase in local prices, accommodation and other travel expenses have significantly decreased by approximately 40% in terms of USD as a result of LKR devaluation.

Global tourism bounced back in 1Q2023, reaching 80% of pre-pandemic levels with about 335.0Mn international travelers, more than the 2022 figures. The Middle East excelled, exceeding 2019 arrivals by 15% and fully recovering within a single quarter.