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Tuesday May 17th, 2022
Business

Sri Lanka tourist sector may take 5-years to reach 2018 levels McKinsey says

ECONOMYNEXT – Sri Lanka may take up to five years to again reach the highest ever arrival figure recorded in 2018 due to international and domestic factors that can constraint the sector, an international consultancy has said.

Sri Lanka welcomed the highest number of tourists in 2018 with 2.3 million arrivals and it dipped to 1.9 million following the Easter Sunday bombings.

“Sri Lanka will return to 2019 levels by 2024, that’s a 5 year dip, but 2018 levels we don’t see in the next five years,” Steven Saxon – Partner, McKinsey & Company, a business consultancy, told an Economic forum in Colombo organized by the Ceylon Chamber of Commerce.

“We are relatively pessimistic on Sri Lankan market recovery compared to some others.”

China’s zero-Covid-19 policy, the growth in domestic tourism markets in many countries may hinder a return to normalcy, Saxon said.

Domestic markets have grown in most Asian countries – China 100 percent, Japan 45 percent, Australia 56 percent, India 62 percent and Thailand 17 percent, according to the McKinsey report

“China has a zero covid policy therefore it will not open anytime soon,” Saxon said. “In China’s case when it does open it will be first essential business travel and last one is leisure.”

McKinsey predicts that there will be a shift from a less frequent, higher ticket size models to longer trips with the possibility of longer-haul trips.

“This (longer trips) may play into Sri Lanka’s strengths. However, travellers look for less friction travel like testing’s, travel passes, insurance etc,” Saxon said.

“What Sri Lanka should be doing is make entry requirements simple and easy, develop domestic segments, develop another regional market till China opens up.”

Sri Lanka’s Tourism Development Authority chief Kimarli Fernando is optimistic that the country can generate 50 percent of the 2018 level tourism to the country by 2022.

In October Sri Lanka has welcomed 21,000 arrivals and it had already doubled to 40,000 by November.

“In comparison, in 2018 we had 200,000 tourists every month,” Fernando said. “So even if we target 100,000 which is 50 percent less, then we have done well,”

“Also we must not forget that there is a large market in India. The airlines too have increased to Sri Lanka from India and I believe they don’t do charity.”

She said Sri Lanka has a very successful vaccination drive, and the country is open to tourism with a level of security.

Sri Lanka has gone through a 30-year civil war and other challenges and has shown a tendency to bounce back quicker in the past.

By International comparison, Sri Lanka’s 2.3 million tourists are relatively small and in the past, the island has shown a tendency to bounce back fast with facilities on a wide range of price points available. (Colombo/Dec 08/2021)

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