Sri Lanka has been attracting tourists from all over the world for many years and the tourism industry is an important sector of the country’s economy. In recent years, although Sri Lanka has seen a drop in tourist arrivals, the Government continues to set ambitious targets for the future.
The tourism industry in Sri Lanka has many facets, with backpacker tourism being particularly prominent. Mostly holidaying on a budget, backpacker tourists tend to spend less during their journey.
The tourism earnings per head for 2022 were around $ 1,578.24, while 2018 saw a corresponding value of $1,877. The numbers indicate a recovery to the levels that existed pre-economic crisis, pre-pandemic, and pre-Easter attacks, but they are still lower than what was achieved in 2018.
Meanwhile, the total number of tourist arrivals to Sri Lanka was recorded at 719,978 up to 31 December 2022, with 91,961 arrivals during December, as per the Sri Lanka Tourism Development Authority (SLTDA).
In 2018, total tourism earnings were recorded at $ 4.38 billion and the number of arrivals was 2,333,796. Moreover, in 2019, tourism earnings per head were $ 1,884.7. The total earnings and number of arrivals stood at $ 3.60 billion and 1,913,702, respectively.
In 2020, amidst the pandemic, earnings per head were $ 1,334.2, while total earnings and arrivals fell to $ 682.5 million and 507,704, respectively. In 2021, earnings per head were a mere $ 1,341.9, while total earnings were $ 261 million and arrivals were at 194,495.
Spending power stagnant
Speaking to The Sunday Morning Business, The Hotels Association of Sri Lanka (THASL) President M. Shanthikumar stated that Sri Lanka needed high-end tourists and that the spending power of tourists had to increase from the present levels.
“The rupee depreciated drastically, which is one of the reasons why spending power is stagnant or low. Most of the clientele we are getting right now are backpackers,” he noted.
According to the SLTDA, the average daily expenditure of a tourist in Sri Lanka was around $ 153 in 2019. This includes expenses for accommodation, food and beverages, transport, shopping, and other activities. In 2020 and 2021, due to the Covid-19 pandemic, the average daily expenditure of tourists in Sri Lanka dropped significantly as fewer tourists were visiting the country.
Anticipated growth
However, as the country is currently recovering from the economic crisis, it is expected that the average daily expenditure of tourists will increase in the coming years.
Speaking to The Sunday Morning Business, SLTDA Chairman Priantha Fernando stated: “We are carrying out certain activities to create more opportunities for people to spend. These are yet to come into the picture.”
He noted that ideally it was possible to earn at least $ 190 per day from a tourist. He further noted that it was anticipated that there would be a gradual increase in earnings to $ 410 per day from a tourist from October to December.
At the same time, the SLTDA was “quite confident” about the 2.7 million target of tourist arrivals to the country this year, while Sri Lanka Tourism would be able to achieve around $ 3 billion in tourist income, Fernando asserted.
He also noted that despite April-May generally being lean months in terms of tourist arrivals to the island, Sri Lanka Tourism was committed to generating more arrival numbers than the previous year.
When compared to other Asian tourism destinations, Sri Lanka’s average daily spending is relatively low. For example, in 2019, the average daily spending of a tourist in Thailand was around $ 173, while in Japan it was around $ 214. However, it is important to note that the cost of living in Sri Lanka is much lower than in other countries, which makes it an affordable destination for budget travellers.
Backpacker tourism in Sri Lanka
While backpacker tourism has been increasing in Sri Lanka, it has not necessarily resulted in higher tourism earnings for the country. Backpackers spend less money per day compared to other types of tourists such as luxury travellers.
While the number of backpackers visiting Sri Lanka is increasing, their lower spending means that the overall tourism earnings are not necessarily increasing at the same rate. According to statistics, the average daily expenditure of a backpacker in Sri Lanka is around $ 30, which is much lower than the average daily expenditure of other types of tourists.
Despite the fact that Sri Lankan authorities can boast about the number of tourists visiting the country, they cannot necessarily boast about the tourism earnings. This is because backpackers, who make up a significant portion of tourist arrivals, tend to spend less money than other types of tourists. In addition, backpacker tourism is often seasonal, with most backpackers visiting Sri Lanka during the peak season from December to March.
Moving towards high-end tourism
While Sri Lanka has been successful in attracting budget travellers, the country is also trying to tap into the high-end tourism market. The Government has identified high-end tourism as a key area for growth and has taken several steps to attract more high-end tourists to the country.
One of the major hindrances to Sri Lanka’s move towards the high-end tourism market is the lack of infrastructure. While the country has many natural and cultural attractions, it lacks the luxury hotels and resorts that high-end travellers expect.
However, THASL’s Shanthikumar stated that Sri Lanka had all the necessary infrastructure to attract high-end tourists.
“We have so many luxury properties, scenic boutique hotels, and villas. However, the promotion has to be done accordingly. Sri Lanka will have to undertake digital promotions and consumer promotions detailing what we have to offer to high-end tourists, because we do have sufficient infrastructure compared to five years ago,” he added.