Full tourism recovery predicted by winter season end

• Tourism earnings lag due to ongoing discounts, competition
• Calls for coordinated effort to harness tourism sector’s full potential
• Senior Deputy Governor says if earnings can be improved to $10 b in 5 years, could help current account balance, stable currency
• Asia Securities shows formal leisure players poised for strong comeback in 2020, largely driven by local demand and growth in Maldives

By Charumini de Silva

Sri Lanka’s tourist arrivals are expected to fully recover by the end of this winter season post-Easter Sunday setback, though earnings are lagging, a top official said this week.

“From the Easter Sunday setbacks, by end of this season we will be back to the same levels. We expect by the end of the winter season our tourist arrivals will return to normal,” Central Bank Senior Deputy Governor Dr. Nandalal Weerasinghe said. He made these remarks at the 3rd Annual Sri Lanka Investment Conference titled ‘2020: A big innings on a tricky wicket?’ organised by Asia Securities on Tuesday.

However, Dr. Weerasinghe said that this year’s tourism sector earnings may not be as much as anticipated, with the ongoing discounts and competition.

Sri Lanka’s winter season starts from latter part of November, and goes on till March next year, with a peak in December. But unfortunately due to the Easter Sunday attacks, forward bookings that the industry was counting on did not come in, and a 30% to 50% decline is anticipated, compared to the same season a year ago.

Projections for tourist arrivals in 2019 were revised downward to 1.9 million following the Easter Sunday attacks, from the initial projection of 2.4 million.

The Senior Deputy Governor called for a coordinated effort to harness the full potential of the tourism sector.

“The tourism industry has been identified by the Government as a thrust sector, and is a low-hanging fruit. If we can get to an income of $10 billion from the current $4 billion levels within the next five years, it will help the economy to have a current account balance and as a result have a stable currency,” Dr. Weerasinghe said.

According to official data, tourist arrivals in November were down 9.5% and in the first 11 months by 19.6% from a year earlier. The cumulative 11 months haul was almost 1.7 million compared to 2.08 million in the corresponding period of 2018. The collective first 11 month earning was $ 3.1 billion compared to $ 3.9 billion in the same period of 2018, which is a 20.5% decline.

Following the Easter Sunday attacks, tourist arrivals slumped by 70.8% to a record low of 37,802 in May. The change in arrivals between 2018 and 2019 was 57% in June, 46.9% in July, 28.3 % in August, 27.2% in September, 22.5% in October and 9.5% in November.

Though chasing growth, tourism officials took comfort from the fact that the pace of decline was waning.

Asia Securities Head of Research Kavinda Perera said the leisure industry is expected to return to normal by the 2020/21 winter season. “Sri Lanka’s formal leisure players are poised for a strong comeback in 2020, largely driven by local demand on stronger consumer sentiment and growth in the Maldives,” he said.

Perera also said the recent tax stimulus on NBT, ESC and VAT are beneficial to the formal sector, while Maldives market is on an upward swing and newer properties should remain resilient against competition.