In December 2024, tourist arrivals to Sri Lanka reached a record 248,592, reflecting an 18.18% increase compared to December 2023. This positive momentum continued into 2025, with 39,415 tourist arrivals recorded in the first week alone. These positive trends suggest a promising future for businesses in the tourism sector.
However, the number of Sri Lankan migrant workers going abroad surpassed 300,000 in 2024, furthering existing issues in several industries including tourism. Furthermore, available data reveals that Government and private training institutions in tourism and hospitality collectively produce only around 10,000 graduates annually through their training programmes.
Therefore, challenges persist, particularly for vulnerable Small and Medium-sized Enterprises (SMEs) and due to the skills shortage caused by a significant exodus of workers.
In an interview with The Sunday Morning Business, Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) President Keerthi Gunawardane highlighted the need for multi-skilling along with long-term policy plans and incentives to support the sector.
Following are excerpts from the interview:
How are SMEs adapting to the current challenges in the tourism sector?
The significant threats faced by the tourism sector in the past, such as Covid-19 and the subsequent economic crisis, badly affected the SMEs in the industry. Subsequently, aspects such as changes in bank support also added to the challenges.
Prior to these crises, Sri Lanka witnessed notable growth in tourism, which presented a favourable environment for the SME sector as well as larger industries, marked by substantial investment feats by both.
Therefore, this particular crisis, in the backdrop of such an economic context, resulted in a number of issues, including many cash flow problems. SMEs in particular had to experience intensified obstacles, especially considering that they were unable to leverage opportunities of approaching banks in order to revive their businesses. This added to the major struggles faced by the sector.
Currently, with tourist arrivals improving, many businesses stand to take advantage of these dynamics. However, despite this positive development, there lies a disadvantage for many industries, both small- and large-scale, due to the skills shortage in the market, preventing them from catering to tourist needs to a certain extent.
In terms of contribution from the SME sector to tourism, it is significant. A large portion of the revenue is generated from small- and medium-scale hotels and related businesses.
How significant is the skills shortage in the post-crisis period and what initiatives should be implemented to effectively address this?
The skills shortage also stemmed from the crisis period, particularly during Covid-19, as the country saw substantial levels of migration of many experienced and skilled workers due to the high cost of living, resulting in a shortage that affected the tourism sector.
As a result, in the current context of the tourism sector, which has seen notable growth, businesses and hotels encounter a severe shortage in skilled workforce. Moreover, there is an evident demand for multi-skilling and multitasking employees, as they are not restricted to specific aspects.
The required numbers of staff are not available, and both large and SME businesses and hotels find it difficult to meet their staffing requirements at present.
Additionally, several programmes held by the FCCSIL revealed that there was more of a shortage in labour in rural areas and the outskirts of Colombo rather than in the city itself. Initiating and facilitating more training programmes will be crucial for the tourism sector moving forward.
Could you elaborate on the programmes conducted by the FCCISL to address challenges faced by Micro, Small, and Medium-sized Enterprises (MSMEs) and tackle skill shortage issues?
The FCCISL has worked with several organisations such as the International Labour Organization (ILO) and National Apprentice and Industrial Training Authority (NAITA) to support the industry, especially the SME sector. Many participant trainees are selected from among school leavers who could not enter universities and progress in their higher education.
Interestingly, these programmes have helped several trainees undertake their own small-scale businesses, such as homestays, as this allows participants to be exposed to specific areas of specialisation. One noteworthy success story comes from Nuwara Eliya, where three participants have started a homestay business.
In terms of specific programmes, the work-based learning programme in the tourism sector, led by the NAITA and FCCISL, was notably successful and proved to be useful to participants, with 525 completing the programme successfully.
The specific training programme, covering districts such as Nuwara Eliya, Kurunegala, Puttalam, Trincomalee, Jaffna, Galle, and Matara, facilitated the participants to handle sector-specific tasks effectively as well as creatively. We wish to further enhance the knowledge and expertise of participants.
The work-based learning programme mostly involved providing theoretical knowledge, followed by practical training experience. The training was given at three-, four-, and five-star hotels for all trainees to obtain practical experience under the supervision of lecturers.
This yielded positive results, notably with eight participants recruited on the spot in Nuwara Eliya at the certificate-awarding ceremony by the hotels selected for training. This indicates that training programmes of this nature are able to address demand and supply concerns as well as create employment opportunities instantly. We also wish to expand these initiatives, opening this programme to more youth.
The Skills for Inclusive Growth (S4IG) programme conducted with support and funding from the Australian Government yielded effective results as well. This programme specifically focused on training coaches, revealing the importance of professional business coaching and business development services for MSMEs.
The coaches subsequently engaged in the sharing of knowledge and expertise as well as coaching small-scale hotels and businesses, facilitating them and helping solve their problems.
As inviting specific business owners and conducting coaching would not be a feasible option for many MSMEs, this particular programme focused on training coaches, facilitating them with skills to solve problems faced by MSMEs right away. This has created the opportunity to conduct similar coaching for participants of the work-based learning programme as well.
One significant issue revealed during this particular programme was the lack of digital, technological, and ICT skills in many MSME sector owners/workers. This led to the training of a separate segment of digital content development coaches who managed to provide necessary technological support, helping these MSMEs expand their business activities while continuing to engage with technology.
In understanding the setbacks pertaining to a skilled workforce, the FCCISL has undertaken several programmes to facilitate skill enhancement in the sector and to encourage multi-skilling among the workforce.
The objective is to facilitate youth joining these programmes to leverage this experience and obtain hands-on experience, as well as employ multi-skilling abilities pertaining to different areas in the hotel industry, which will prove to be highly beneficial to participants and employers in order to manage cost and improve productivity. This is a positive incentive for large- and small-scale hotels and businesses to move forward successfully.
What emerging opportunities do you see for businesses in the tourism sector?
There are a number of high-potential emerging trends in areas such as ecotourism and adventure tourism, with an increased number of tourists expressing interest in these areas.
Sri Lanka especially stands to gain significantly from these opportunities due to its natural attractions. Even as a country that has 103 rivers, there is a lack of initiative in relation to aspects such as camping and adventurous activities.
There are emerging opportunities that should be leveraged and viable options for businesses to emerge, as these might not necessarily require substantial investments or capital infrastructure facilities, allowing easier access even for SMEs. As there is interest in these areas globally, areas such as ecotourism and sustainable tourism can gain from these trends.
What policy reforms and strategic plans would you recommend for tourism-related industries?
It is crucial that Sri Lanka implements a long-term policy when it comes to tourism and other industries, identifying benefits on a long-term basis, as this will assist support programmes as well. Closely observing improvements and developments in the specific sectors can help face potential economic shocks and vulnerabilities. Therefore, a clear policy is required.
Additionally, any incentives planned for this sector should be identified and announced early to attract more tourists, workforce, and further infrastructure, either in the forthcoming budget or through other means.
In the tourism sector, the Government expectation of tourist arrivals is quite high and seemingly an achievable target. However, long-term policies are of great importance in reaching these particular targets and attracting more investments, as investors should be aware of the benefits they would reap from their particular investments.
As a country with a rich culture, natural beauty,and significant diversity, enhancing marketing and promotional efforts is another key aspect to prioritise while expanding training programmes to ensure high-quality service across the country. Currently, the shortage in staffing affects the extent and quality of service provided, consequently requiring increasing numbers of people to receive training with rising demands and broadening scope.
Particularly in the hospitality industry and tourism sector, many people who start at the foundational levels end up creating their own business and entrepreneurial ventures, leading to many success stories. Therefore, strengthening the skill development aspect at the starting level can prove to be significantly beneficial.
The specific targets and plans for tourism should be backed by strong policies. As of now, such strong backing is somewhat lacking. This should be a priority and successful implementation of such strong policies could easily pave the way for reaching the targets set out by the Government, leading to increased potential, more investment opportunities, and the involvement of more employees in the sector.
As the Government is still in its early stages, formulating a detailed plan might take longer. However, a comprehensive plan is the way forward for this promising sector.
People interested in joining the sector will likely continue to experience rising demand, both locally and globally. The opportunities in the region are also growing, and countries such as Japan and other Asian countries offer sufficient opportunities for employment in the sector.