It has been famously said that Sri Lanka is a five-star island with a three-star image. In other words, we are a country blessed with extraordinary natural beauty, rich history, and cultural treasures, yet we fall far short in how we present ourselves to the world. How we treat the very visitors we depend on is an altogether different story, with greed and exploitation becoming the name of the game.
From the minute a tourist steps out of the Bandaranaike International Airport to the moment they leave, they face a constant battle against overpricing, inefficiency, and at times, outright exploitation. The ‘battle’ begins almost immediately with online taxi app drivers having to sometimes physically fend off the airport driver mafia, a problem that has now spread beyond the airport to popular tourist sites like the historic Galle Fort. Rather than making tourists feel welcome, these turf wars leave them wary and scarred.
In the highly competitive Asian tourism market, Sri Lanka is simply not the only ‘girl on the beach’. We are competing against many others that include seasoned campaigners like Thailand, Cambodia, Vietnam, and Malaysia – all offering similar experiences at significantly lower prices.
In 2024, the average daily cost for a tourist in Thailand was estimated at $ 90, in Vietnam at $ 75, and in Cambodia at $ 65. In Sri Lanka, that figure had climbed to over $ 110, that too minus the guarantee of a decent experience. Given that inflation and cost of living in the West are biting into disposable incomes, an increasing number of tourists are becoming price-sensitive. As a result, they are leaning on AI-powered travel tools to get them the best deals, including instant comparison of destinations and pricing.
As for the recent past, Sri Lanka, unfortunately, appears to be pricing itself out of contention. But one cannot blame the industry for that, as it is compelled to charge to cover increasing costs while margins remain thin. One example is the vehicle prices here being among the highest in the world. This inflates transport costs for tourists, especially those who prefer private vehicles over public or group transport. Even budget travellers face a cost squeeze, with high fuel prices that are 20-40% higher than in many competing markets, making travel expensive.
Hotel prices are another sore point. Thanks to high electricity costs, import taxes on food and beverage, and VAT increases, Sri Lanka’s accommodation costs are spiralling. A two-star room here can cost the same as a five-star room in Bangkok or Kuala Lumpur. For mass-market tourists, who make up the bulk of arrivals, this is a deal-breaker.
For the longest time now, Sri Lanka’s tourism industry has been unable to make up its mind on which way it should go – mass market or niche market – ultimately settling for a combination of the two. Some argue that Sri Lanka should abandon the mass market and focus on high-end niche tourism. In theory, this makes sense: high-spending tourists require fewer numbers to generate revenue. But in practice, the nation’s infrastructure is far from ready. In today’s information age, one bad experience and one social media post can discourage dozens of potential tourists. No amount of slick marketing campaigns can outweigh the damage caused by viral negative reviews.
If Sri Lanka is serious about attracting premium visitors, it must urgently address basic shortcomings such as ensuring adequate street lighting in tourist zones making night-time exploration safe, upgrading of roads in popular tourist areas, providing clean sanitary facilities at attractions, providing public transport late into the night, and safety – the Tourist Police remains under-trained, under-staffed, and often unable to communicate in foreign languages.
Another silent reputation killer is the unregulated accommodation sector. For example, in Arugam Bay, a world-renowned surfing hotspot, out of more than 230 hotels and guesthouses, only about 50 are registered with the Sri Lanka Tourism Development Authority (SLTDA). This pattern is repeated across the country: mushrooming guesthouses, Airbnbs, and homestays that operate without oversight, undercutting registered establishments while paying little or no taxes. Such operators may offer lower rates, but when safety, hygiene, and service standards are compromised, it is the country’s reputation that suffers.
The Government’s recent decision to allow tourists to obtain local driving permits at the airport is a good example of progressive policy being stifled by poor rollout. On paper, it aligns with global trends and enhances independence for travellers. But its sudden implementation has sparked strong pushback from tour guides, travel agents, chauffeurs, and the like, who comprise the local tourism ecosystem. Instead of preparing the industry with a phased introduction, the authorities simply rammed the policy, fuelling tensions within an ecosystem that sustains thousands of livelihoods.
On the flip side, one of the biggest ironies in Sri Lanka’s tourism industry is the persistent allegation of stepmotherly treatment of domestic travellers. During times of crisis, such as the ethnic war, the Easter Sunday attacks, the pandemic, and the 2022 economic collapse, it was locals who kept the industry alive. Yet, once foreign arrivals rebounded, domestic tourists have again been sidelined and often discriminated against in pricing and access. This is shortsighted. Countries like Japan, Thailand, and Malaysia actively nurture their domestic tourism base as a stabilising force. Sri Lanka has much to learn from them.
Another growing issue is the infiltration of foreign nationals into the tourism business, often under the guise of being ‘long-term tourists.’ These operators run guesthouses, tour services, and adventure companies while routing profits to offshore accounts. This means the real economic benefit never enters Sri Lanka’s Treasury, amounting to not only a form of asset exploitation but also leaving the tourism ecosystem high and dry.
If Sri Lanka wants to stay competitive, radical change is required from the lowest rung of the industry to the top decision-makers. The first priority is to rethink the pricing strategy by benchmarking against regional peers and adjusting taxes, levies, and electricity and fuel pricing to make the country more attractive without eroding quality. Seasonal pricing models should also be considered to encourage off-peak travel.
Next, infrastructure must come before marketing, such as upgrading roads, streetlighting, sanitation, and signage in all key tourist zones, as well as ensuring reliable, affordable late-night transport in major hubs. The Tourist Police should be professionalised through the recruitment of multilingual officers trained in hospitality, with visible posts established in all major destinations. In addition, the informal sector needs firm regulation, with SLTDA registration made mandatory for all accommodation providers, alongside minimum safety, hygiene, and service standards.
Domestic tourists must be empowered by ending discriminatory pricing against locals and launching targeted domestic travel campaigns during low seasons to sustain businesses. Technology should be fully integrated into the sector, using AI and big data to monitor tourist behaviour, preferences, and complaints in real-time, while creating a national tourism app that integrates bookings, transport, safety alerts, and cultural information.
Finally, sustainability should be made a central selling point, with the promotion of eco-friendly operations and community-based tourism, positioning Sri Lanka as a green, ethical destination that appeals to the growing market of environmentally-conscious travellers. Ultimately, the transformation must be more than physical; it must be social. From policymakers to tuk-tuk drivers, there needs to be a shared understanding that every tourist interaction is an advertisement for the country. The thinking should not be ‘how much can I charge this person today?’ but rather, ‘how can I make them want to come back and bring five friends?’
Premium hotels and luxury resorts are useless if, the moment guests step outside, they face chaos, harassment, or poor service. Consistency of experience is the key to building a premium brand. Sri Lanka has a narrow window to reposition itself. Global tourism is recovering post-pandemic, but competition is fiercer than ever. If Sri Lanka does not up its game now, it risks falling back, overshadowed by destinations that are cheaper, safer, cleaner, and more hospitable.
Tourism is one of the few sectors capable of delivering quick foreign exchange inflows without massive capital investment. But it can only do so if managed sustainably, competitively, and with a clear vision. As things stand, our five-star island will remain stuck with a three-star image unless both the Government and the industry are brave enough to overhaul the system, root out exploitation, and deliver the service and value that today’s travellers demand.