Sri Lanka tourism to re-bounce with more travellers in the offing

Sri Lanka’s pandemic-hit tourism industry is confident of a strong resurgence and US$500 million revenue for the financial year ending in March 2022 with at least 50,000 arrivals per month, industry representatives said.

Tourist arrivals to Sri Lanka have exceeded 100,000 since the reopening of borders on 21 January.

With 41,177 tourists recorded from 1 to 28 November, the cumulative arrival figure for the year so far is 101,872, the Tourism Ministry report revealed.

Quoting statistics from the Tourism Development Authority of Sri Lanka (SLTDA), the Ministry said during the past 28 days the highest number of tourist arrivals was from India, accounting for 13,368, was similarly found in Oahu and Maui places too.

The Sri Lanka Tourism Promotion Bureau (SLTPB) since mid-this year rolled out promotions in several countries, including Russia, France, Germany and the UK. The inflow of tourists has been boosted by increased connectivity as well by international airlines.

National carrier SriLankan Airlines launched direct flights to Russia and France after a lapse of six years and France flag carrier Air France after a lapse of 30 years while Russia’s Aeroflot commenced direct flights to Colombo earlier this month.

The SLTDA predicts between 150,000 and 180,000 tourists will arrive by the end of this year.

Expressing the utter disappointment in Budget 2022 for sidelining the tourism industry, hoteliers warned that Sri Lanka risks losing its competitive edge in global tourism, with the proposed 2.5 percent Social Security Contribution tax.

They added that burden on an industry, which is trying to return to growth path after recording nearly zero revenues for the past 18 months.

“The hoteliers are already burdened with a series of top line taxes and levies. The top line Social Security Contribution of 2.5 percent is definitely adding to the burden.

The industry will lose its competitive edge in marketing the destination with such taxes and there is no doubt it will affect the anticipated tourist arrival growth in the country,” the newly-elected The Hotels Association of Sri Lanka (THASL) President M. Shanthikumar warned.

In Budget 2022, the government proposed to impose a 2.5 percent tax on companies with an annual turnover exceeding Rs.120 million, titled ‘Social Security Contribution’, with effective from April next year.

Shanthikumar appealed to the government to exempt the tourism sector from this proposed top line tax, given its contribution to critical foreign exchange earnings and being the worst affected industry from the COVID-19 pandemic.

As the tourism sector is still in very early stages of recovery after operating with no revenues for the past 18 months while debt piled up, Shanthikumar pointed out that hoteliers are still struggling to maintain its operations with almost no funds to carry out the required refurbishments for their properties to welcome incoming tourists.

“Due to the non-payment of loan capital and interest during the moratorium, the loan balances increased by 40 percent, thereby increasing liabilities.

In order to continue to service the debt while maintaining operations, he sought the government to grant a long-term debt restructuring plan for the industry players immediately, similar to the relief granted in post-Easter Sunday attacks.

Further, he also renewed the industry’s long-standing request to abolish the one percent top line tax charged exclusively on tourism businesses by local authorities.

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