Friday Jan 23, 2026
Friday Jan 23, 2026
Friday, 23 January 2026 00:26 - - {{hitsCtrl.values.hits}}
Sri Lanka Tourism Industry lost $1.3 billion in 2025
The reality of business is that we have to be strongly data driven as consumer lifestyles are constantly changing and companies have to adopt. An important point to note is that some data is better than having no data when making business decisions.
It is strange but there are instances when data is shown, people find it hard to believe the reality and the focus changes to the authenticity of the information rather than trying to find an insight. When it comes to tourism we have data that is shared by Sri Lanka Tourism Development Authority( SLTDA) and Central Bank. Global trends on traveller behaviour can be understood by data shared by the World Tourism Organisation (WTO). I strongly feel that the Sri Lanka tourism Industry must pause for a while and take stock of the data and understand the reality before chasing the 3 million visitor target that will bring in the estimated $5 billion to the country.
ABC of business
The ABC of business management is Segmentation, Targeting and Positioning, popularly called STP. In simple words what this means is: who are the consumers the company is targeting and why are they attracted to a company's proposition- product and brand promise. Then comes the more important decision: what is the single minded idea we want them to have after experiencing our brand. We call this the ABC of business.
Whilst it may sound very scientific and complex. A simple supermarket manager with just an advanced level qualification close to our home practices it with absolute precision. He knows who the customer is, what product range they buy, how often they visit the supermarket and what to say to get their attention. He is also aware of the “ perception” a typical housewife has on other supermarket brands in the neighbourhood. In other words he practices the ABC of business management.
ABC of tourism
What Sri Lanka Tourism needs to do is the same. If we look at the data that has been shared of the industry in the last three months, we see how the fundamentals have moved not by design to accident.
What I mean by accident is that over time due to the lack of strategic direction a new consumer group has become attracted to Sri Lanka Tourism. As I said before, some will question the data but I will try to understand the story behind the data. Do the dots connect to make a story?
Data collected from the twelve month airport exit survey done between July, 2024 and June 2025 has revealed that 70% of the visitors to Sri Lanka has been University graduates whilst 46% of them were young explorers between the ages of 20-35 years. The data was collected on a sample size of twelve thousand exit travellers and five thousand incoming visitors on the technique of stratified sampling which means that the sample is representative in nature. The survey was conducted by SLTDA with the support of the Market Development Facility (MDF), Government of Australia.
The data shared by the Central Bank justified these findings as Sri Lanka recorded a 15.1% increase in tourist arrivals in 2025, reaching 2.36 million with a spending of $3.22 billion. This resulted in per-capita spending at $1,363 from the $1,544 a year back. Which is a decline of 12%. Industry practitioners say “ the data explains the short duration that foreigners stay in our properties and also they have become very price-sensitive. Hence, we see that the dots connect. This is the reality and the first challenge is for us to accept this reality.
The changing traveller to Sri Lanka
Now comes the tough question. Is this the consumer we want Sri Lanka to attract- University graduates and young explorers who book their journey online. A more prudent question to ask is how did we end up attracting this type of customers to Sri Lanka-who planned to visit the country just one month before( Source: Airport exit survey, 2025).
The research study also stated that 55% of the travellers spent their money on accommodation and transport which indicate the spending power of the new target consumer coming into Sri Lanka. 46% book their vacation on line which tells us the power of social media. 62% of them are on a non-package tour means the formal sector is losing influence on the traveller to Sri Lanka.
The reason why we attract this type of customers- university graduates and young explorers could be due to the story telling that has been done in the last ten years by the technique “influencer marketing.” The typical influencers picked by the industry were from different countries to share their story on social media and get the followers of them to come to Sri Lanka. A careful analysis of the data means the strategy is working. But the million dollar question is, is this the consumer that Sri Lanka wants in the future? Isn’t it a waste of carrying capacity for little Sri Lanka.
Desk research reveals that over 150 odd influencers have been utilised by Sri Lanka in the last two years for destination promotional work. They have reached around five hundred million people and engage around ten million travellers. A back of the envelope calculation would mean an approximate ten percent conversion rate that resulted in four million visitors coming into the country in the last two years.
In the absence of strategic communication campaigns like “The sunny side of life by Maldives Tourism” or “Truly Asia by Malaysia Tourism” has left a void in the market that resulted in the influencer marketing strategy attracting a new wave of travellers - University Graduates and young explorers. This is the reality. Let’s accept it.
A point to note is that this low share of voice (SOV) of Sri Lanka Tourism has been at play for the last few years. All of us are responsible for the current situation. Not just the current administration.
$1.3 bill loss in 2025
Whist the share of voice (SOV) debate can be argued endlessly, the result is that Sri Lanka has lost out a higher spending group of consumers coming into the country which is why the per capita spending has declined by 12% to $ 1,363 dollars and the duration of the stay also coming down. The per day spend had also declined by 14% to $148 from the earlier $171. Which is why Sri Lanka lost $1.3 billion revenue in 2025 and the dollar earnings were changed by the Central Bank last year. This is a serious development that policy makers and the industry must deliberate and re-strategise.
The loss in tourism revenue in 2025 due to the above reason estimated at $1.3 billion means the ROI from the industry has significantly dropped whilst there was overcrowding at the key sites like YALA and Sigiriya. A point to note is that successive governments have only paid lip service to this industry and not done justice to the industry that can actually develop to get the country out of the financial crisis.
Global agencies like the World Bank and ADB have repeatedly voiced the potential of the tourism industry for Sri Lanka’s growth and if properly regulated it can be a $ 10 billion industry. But the advice has gone to deaf ears.
I would argue that it’s a systemic weakness in the system that has resulted in the poor development of the Tourism industry coupled with corruption and bad governance.
An important fact that we must register from the recent airport exit survey that was done also reveals that 62% of the tourists that came were “Non package travellers” and that “46% booked the visit through online travel agents” (OTA). This gives us an indication of the profile of the consumer that Sri Lanka has attracted. The data also highlights the importance of the “Consumer Pull” strategies that are required in the overall marketing strategy of Sri Lanka Tourism rather than the current “Sales Push” strategy that is loaded with exhibitions and B2B campaigns.
Where to start
If one were to examine this data, it is an interesting challenge that any professional marketer may have been up against in one’s corporate life. What needs to be done is to first identify the target consumer that Sri Lanka wants to attract and thereafter ask how these people can be reached with a message that is attractive. The product features of brand Sri Lanka is wide- beaches, wild life, history, culture, tracking, etc.
The country reintegration is a structured global communication campaign which includes an above the line communication strategy on TV, Radio, Press, Magazine (traditional media and online). Social media be it FB, Instagram, TikTok, YouTube advertising but backed by below the line media like PR and consumer promotions.
A combination of “push and pull” based marketing communication would be required so that we can move to changing the traveller mix.
As of now it is a mix of ‘packaged tour travellers’ as against online bookings that is skewed to 46% and 62% being “non-package travellers.” It is a very interesting challenge and it can be done. Especially when the market share Sri Lanka has is at American 0.4% of the global travellers.
Tell our story
The naked truth is that Sri Lanka has to tell the story to the world rather than the world stitching a story about Sri Lanka which is different to the reality. It is sad but a junior marketing executive in a private sector firm handling a noodle brand does this task with a horseshoe budget of a few hundred thousands of rupees and demonstrates a result with increased market share.
Sri Lanka Tourism on the other hand has around Rs. 18 billion plus in the bank for the last one year with an additional Rs. 100 million that the private sector spends independently and yet we cannot tell a “compelling story” to the world. Sad but true.
New Tourism Act ?
Last week I attended a brainstorming session by the two tourism chambers on the proposed new Tourism Act which will repeal Act No 38 of 2005. It was an interesting discussion given that the policy makers have not included any of the tourism chambers even though 99% of the industry revenue is generated by the private sector.
Given that the market conditions have changed in the last twenty years, changing the policy making structure is apt. But what is important is to find out the key issue in the current Act: the global campaign being a non-starter. May it is better to address this key issue than focussing on all energy to develop a new policy making structure.
The logic being that we can see that Sri Lanka is rudderless on tourism strategy. There is no point wanting to target 3 million tourists and $ 5 billion in tourism revenue if the correct type of travellers are not attracted. The key concept that must govern policy making is “carrying capacity”. What is the optimum carrying capacity that key sites like Sigiriya Rock, Yala or Horton Plains can take. We need issue based policy making rather than structural reform as time is ticking.
7 key next steps:
1) A high level task force must be appointed( Private and public sector) to understand the latest data and understand the reality.
2) The key issue of Who the Target Consumer must be agreed for Sri Lanka Tourism in the key 10 markets) and agree which of the Sri Lanka Tourism product range will fit the traveller requirement.
3) The President-appointed Rapid Task force must be appointed to drive the launch of the “Global Communication campaign.” This includes Top 10 markets PR activation programs.
4) The infrastructure that must be “ fixed” in relation to the product range selected must be prioritised i.e Toilets at Dalada Maligawa, Online purchase of tickets at Yala and Sigiriya.
5) The 5 year Tourism Master plan must be developed and formalised which includes a Regional activation plan implemented by the Provincial Council Tourism Department.
6) Agree the anomalies of the Tourism Act No 38, 2025 and start a consultative process so that within a year it can be formalised (Policy document)
7) Appoint a Research agency to conduct a Habits and Attitude study of travellers in the Top 10 markets for Sri Lanka Tourism.
(The thoughts are strictly the views of the author and do not reflect the organisations he serves in Sri Lanka or globally)
