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Tuesday May 21st, 2024

Sri Lanka’s tourism push struggles amid internal, external concerns

In August most beaches in the West and South coasts are caught in Monsoon rains. The East is sunny.

ECONOMYNEXT – Sri Lanka’s tourism revival is facing a challenge in bringing in more high spending foreign visitors due to increasing protests locally while monetary tightening, impacts of Russian invasion into Ukraine, and rising inflation globally.

The move is likely to slow the island nation’s recovery from the unprecedented economic crisis as it is unlikely to achieve its expected revised down tourism revenue target of $1.5 billion.

The number of arrivals suffered in September and fell to as low as 29,000, its lowest in 11 months. The tourism authorities have cited “bad publicity” about Sri Lanka in the international media including global reportage of fuel and food scarcity as the key reason for the drop.

Monthly arrivals to the Indian Ocean island nation plummeted in September to around 29,000 from as high as 106,000 in March this year mainly due to the economic crisis which later turned into a political crisis and forced then president, prime minister and the government to resign amid public protests.

In October, however, the arrivals rebound by 41 percent from the previous month to 42,000.

The industry was hopeful of cashing in on winter holiday makers during the three months from November and marketing the country as an economical holiday destination amid growing commodity prices in the West after the Ukraine war.

The plan was to attract long-haul travelers with sharp depreciation of the rupee causing foreigners to spend more.

However, a growing crisis globally will pinch on the island’s tourism sector despite the vigorous efforts the industry has taken to come out of the economic and political crisis this year, industry analysts say.

The tourism authorities’ attempts to promote Sri Lanka among foreigners including in India, Europe, and the United States have yet to see some significant returns.

“Sri Lanka had the Russian airlines issues, the protests in the country and the travel advisory placed on it. But it has fought against all that,” Priyantha Fernando, Chairman of Sri Lanka Tourism Development Authority told EconomyNext, referring to Russian Aeroflot’s decision to suspend Sri Lankan operation over a legal battle.

“However we cannot do anything about the external issues. There are long queues forming in European
and Western countries too,” he said referring to gas and fuel queues.

“Those factors cannot be controlled.”

“Cautiously optimistic”

Global tourism industry has grown by 60 percent in the first seven months of this year compared to the previous year, according to a recently published United Nations World Tourism Organization (UNWTO) report.

However, it is only “cautiously optimistic” as the global economic environment still has not recovered.

The UNWTO cautions that the combination of tightening monetary policies in all major economies to curb rising inflation, increasing energy and food prices, and the growing prospects of a global recession as indicated by the World Bank, are major threats to the recovery of international tourism through the remainder of 2022 and 2023.”

“The uncertain economic environment seems to have nonetheless reversed prospects for a return to
pre-pandemic levels in the near term,” UNWTO said.

“Rising inflation and the spike in oil prices results in higher transport and accommodation costs, while
putting consumer purchasing power and savings under pressure.”

Locally, Sri Lanka is threatened by reemerging protests against increasing taxes, and long delayed reforms, which have become mandatory for an International Monetary Fund (IMF) loan to move away from economic crisis. The IMF backing is now seen as a must for other countries and multilateral creditors to support the island nation to face the economic crisis.

The government has aimed at a revised down $1.8 billion foreign inflow from tourism this year in October after aiming at $2.5 billion in March. However, industry officials now say, they can only reach less than $1,5 billion revenue in 2022.

Sri Lanka so far has generated 568,258 travelers for the first 10-months.

After Russia recommenced flights to Sri Lanka in October, four months after suspending the operations following a legal spat, Russian tourist numbers have started to rise compared to the previous months.

Many airlines have now resumed flights to Sri Lanka including Russia-based Aeroflot and AZUR as well as Air France in the last one month.

“There’s a slight pick up (hotel booking) with some Indian traffic and Sri Lankan expatriates at the moment. But we believe the actual pick up will start from January next year,” Sanath Ukwatte, immediate-past President of the Hotels Association of Sri Lanka.

However, industry experts say Indian tourists usually do not spend much like European tourists, which is the island nation’s key market.

Russia and its neighborhood countries show better arrivals, but they mainly go to resorts, instead of city hotels where the bulk of hotel rooms are available.

“Hotel bookings are averaging around 30% and we hope it to increase to about 40% by December, it is still way below our pre-covid levels,” Ukwatte said. (Colombo/Nov04/2022)

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  1. Piyanjali says:

    In Sri Lanka Tourism there is no proper mechanism to investigate complains of tourist who faced trouble in Sri Lanka. There are many cheatings and crimes happened against tourist.

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Your email address will not be published. Required fields are marked *

  1. Piyanjali says:

    In Sri Lanka Tourism there is no proper mechanism to investigate complains of tourist who faced trouble in Sri Lanka. There are many cheatings and crimes happened against tourist.

Sri Lanka declares May 21 as National Mourning day over Iranian President’s death

ECONOMYNEXT – Sri Lanka declared a national mourning day on Tuesday, May 21 in view of expressing its solidarity with Iran after sudden death of Iran President Ebrahim Raisi following a helicopter crash.

President Raisi and eight others including Iranian Foreign Minister Hossein Amir Abdollahian were killed in the crash when the helicopter had a “hard landing” reportedly due to adverse weather conditions with heavy fog. However, President’s two convoy helicopters reached the destination safely.

“The Sri Lankan government has declared a national mourning day on tomorrow (May 21) on behalf of the sudden death of Iranian president Mr. Ebrahim Raisi,” the Department of Government Information said in a statement.

It also urged all the state institutions have to hoist the national flag half mast.

Raisi was in Sri Lanka on April 24 to launch the Uma Oya dam on a one-day official visit amid tight security. His helicopter crashed when he was returning to Iran after launching a dam in the Azerbaijan border.

President Raisi is seen as a hardliner and a potential successor to Supreme Leader Ayatollah Ali Khamenei.

Earlier this month, Sri Lanka’s Foreign Minister Ali Sabry said the island nation will deal with Iran for investments and trade without being caught into the United States-led sanctions.

Sri Lanka was unable to receive $450 million from Iran for a recently opened Uma Oya multipurpose project started before the sanctions.

Sri Lanka now exports tea to Iran for no dollar payment. Instead, Sri Lanka tea producers are paid by the state-owned Ceylon Petroleum Corporation (CPC) in rupees for the pending crude oil import payments for Iran.

President Ranil Wickremesinghe expressed his condolences on the tragic incident.

“Sri Lanka is deeply shocked and saddened by the tragic death of President Ebrahim Raisi, Foreign Minister Amir Abdollahian and other senior Irani official,” he said in his official X-platform.

“I express my deepest sympathies and sincere condolences to the bereaved families, the government and the people of Iran.”

Raisi, a Muslim jurist, served as the eighth president of Iran from 2021 until his death. (Colombo/May 20/2024)

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Sri Lanka helps launch Global Blended Finance Alliance

ECONOMYNEXT – Sri Lanka has joined a group of nations led by Indonesia which aims to mobilise capital to achieve carbon neutrality, Minister of Water Supply and Estate Infrastructure Jeevan Thondaman said.

The Global Blended Finance Alliance mooted by Indonesia in 2018, was formally launched at the World Water Forum in Bali today.

Among the other founding members are Fiji, France, UAE, Kenya, Luxembourg and Canada.

“Through our collective efforts, the Global Blended Finance Alliance aims to mobilise both public and private capital to help nations achieve carbon neutrality and the SDGs,” Thondaman said on social media platform X (twitter).

“The world has a USD 2.5 trillion funding gap to achieve the Sustainable Development Goals (SDGs) by 2030,” he said.

Blended finance is the strategic use of development finance, such as public and/or philanthropic funds, for the mobilisation of additional commercial finance towards sustainable development in developing countries. (Colombo/May20/2024)

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Sri Lanka rupee closes slightly stronger at 299.60/75 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee appreciated slightly to close at 299.60/75 to the US dollar on Friday, from 299.70/80 the previous week, dealers said. Bond yields were up.

A bond maturing on 15.12.2026 closed up at 10.15/35 percent from 10.05/15 percent.

A bond maturing on 15.09.2027 closed up at 10.45/55 percent from 10.25/40 percent.

A bond maturing on 01.07.2028 closed at 10.80/90 percent.

A bond maturing on 15.01.2030 closed at 11.70/80 percent.

A bond maturing on 01.10.2032 closed up at 11.90/12.05 percent from 11.85/12.00 percent. (Colombo/May20/2024)

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