Sri Lanka’s Tourism Sector

Sri Lanka’s tourism sector mainly comprises travel and transportation, accommodation, catering, recreation and entertainment, and other supplementary services.  Being positioned in a strategically important location in the Indian Ocean in terms of both naval and aerial transportation, the country has historically been a busy travel destination. Traditionally, Sri Lanka’s tourism industry has been oriented towards “sun and beach” tourism, and the country is well-known for its astonishing landscapes, rich cultural heritage, and hospitality. Sri Lanka has much more diverse tourist attractions than in other currently popular tourist destinations in the South Asian region. Over the years, tourism industry has been one of the major foreign exchange sources for Sri Lanka. It was the fourth largest source of foreign exchange with revenues over US$410 million in year 2006 and a major employer providing thousands of direct and indirect jobs (SLTDA 2007). The tourism sector contributed 3.1% to the total foreign exchange earnings in 2007, but the figure slumped to 2.6% by the end of 2009 largely due to the unsafe environment prevailed in the country (SLTDA 2010^a). However, this is a marginal increment of 1.1% compared to year 2008 where foreign exchange earnings increased from US$ 319.5 million in 2008 to US$ 326.3 million in 2009 (SLTDA 2010^a).

At present, Sri Lanka is in a rapid post-war recovery process, and the tourism sector is also gaining a rapid momentum. The present peaceful environment in the country prompted numerous western countries to relax their travel advisories on Sri Lanka. The interest on Sri Lanka as a travel destination has grown tremendously during the post-war period. For instance, The New York Times ranked Sri Lanka at the top in it’s “The 31 Places to go in 2010” travel article (nytimes.com 2010).The National Geographic Channel has also rated Sri Lanka as the second best place to visit in its travel documentary “World's Twenty Best Tourist Destinations” (National Geographic Channel 2010). Reflecting this growing interest, the first three quarters in the year 2010 alone showed a staggering50%, 46% and 37% of increases in tourist arrivals respectively, compared to the previous year (SLTDA 2010^b). According to the World Tourism Organization, Sri Lanka has the advantage of having 49 sites classified as unique attractions, 91 rare attractions, 7 world heritage sites, and 6 of the 300ancient monuments in the world, giving a significant edge over its tourism competitors in the region (de Silva 2000).
With rising tourist arrivals, it is expected that employment opportunities in the tourism sector would also grow significantly. A total of 52,071 individuals were employed directly in the tourism sector with about 62% of them in accommodation and catering, while the indirect employment in the sector was estimated at 72,899 for the year 2009 (SLTDA 2010^a). In addition, the tourism sector is a leading source of revenue generation for many public sector institutions such as Tourism Development Authority, Ministry of Port and Aviation, national wildlife parks, national museums, botanical gardens, and establishments under the Ministry of National Heritage and Cultural Affairs. For instance, revenues collected from embarkation tax contributed over US$ 6.9 million in 2009 while tourism development levy and Cultural Triangle entrance fees accounted for US$ 3.68 and 3.66 million respectively (SLTDA 2010^a).

At present, there are 249 registered tourist hotels in Sri Lanka with a total of 14,461 rooms (SLTDA, 2010^d). In addition, there are numerous unregistered facilities that provide accommodation for tourists. Parallel to the increase in tourist arrivals, the room occupancy rates in registered tourist hotels have also increased significantly. For instance, the first three months in the year 2010 showed 82%, 84.2% and 78.4% increases in room occupancy rates compared to 2009 (SLTDA 2010^c). According to most recent statistics, foreign exchange receipt per tourist per day is US$ 81.8 for the year 2009 which is a 6.7% increase from 2008, while the average duration of stay of a tourist was estimated at 9.1 days (SLTDA 2010).

Major Tourist Markets and Trends

Western Europe traditionally has been the major tourist source market for Sri Lanka, followed by South Asia, and North East Asia. According to Sri Lanka Tourism Development Authority , trends in the recent past indicate that Western Europe market has dropped from 63.2% in 1999 to 38.1 % in 2008, and to 37.9 % in 2009 while the market share of South Asia has grown from 14.4%in 1999 to 37.9% in 2009 (Table1).

Table 1: Relative Importance of Market Segments for Tourism Industry in Sri Lanka

	Percentage Share
Market Region	1999	2008	2009
North America	4.2	5.5	5.6
North East Asia	6.4	6.3	7.0
South East Asia	5.4	4.0	3.8
South Asia	14.4	29.2	28.2
Australasia	3.5	5.0	5.8
Western Europe	63.2	38.1	37.9
Eastern Europe	1.4	6.7	5.9
Middle East	1.1	3.8	5.3
Others	0.4	1.4	0.5

Source: SLTDA 2010^a

EU countries such as U.K., Germany, Netherlands, and France have been the most lucrative tourist markets for Sri Lanka over the years. However, with the unstable security situation in the country, Sri Lanka’s tourism sector has experienced a decline in its traditional tourist markets. Meanwhile, Asia has emerged as the second largest source of tourism to Sri Lanka, accounting for 39% of the total arrivals in year 2009 (Table 1). However, it’s been documented that most travelers from Asian countries such as India are mainly business travelers. In contrast, European travelers comprise mainly of leisure travelers, and they are the most significant for the tourism industry with their high spending and lengthy durations of stay.
With improving security situation in the country, the traditional Western European tourism market is rapidly gaining the market share. For instance, the survey on foreign departing tourists in 2008-2009 conducted by the SLTDA (2010^b) reports that over 55% of tourist are from Western Europe.A comparison between the first three-quarters tourist arrival statistics by regions and country of residence for years 2009 and 2010 indicates that North American region recorded the largest growth as a tourism market, followed by Middle East and Western Europe.  However, when considered the actual number of tourists, Western Europe as a region remains the largest tourist market for Sri Lanka. Among Western European countries Norway, France, Germany, Switzerland, and Italy showed the highest percentage growths in terms of tourist arrivals.

Sources

SLTDA^a. (2009). Annual statistical report. Sri Lanka Tourism Development Authority.

SLTDA^b. (2010). Tourism Research and Statistics. Retrieved October 29, 2010, from http://www.sltda.gov.lk/

SLTDA^c. (2010). SLTDA Monthly Statistical Bulletin for September 2010. Colombo: Sri Lanka Tourism Development Authority.

SLTDA^d. (2010). SLTDA Monthly Statistical Bulletin for July 2010. Colombo: Sri Lanka Tourism Development Authority.