Sri Lanka - Country Commercial Guide
Travel and Tourism
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Overview 

Tourism has traditionally been the third largest foreign exchange earner in the country.  Tourist arrivals in Sri Lanka recorded a steady recovery in 2022 despite significant headwinds due to unprecedented disruptions of heightened social tensions, fuel shortages and power outages, and travel advisories. This recovery was supported mainly by high global vaccination rates, increased air connectivity, along with the lifting of travel restrictions issued by major source countries.  Sri Lanka recorded over 719,978 tourist arrivals in 2022, a 72.9 percent increase from the previous year owing to the aftermath of the pandemic. It is estimated that the sector earned around $1.1 million in 2022.  Earnings from tourism in 2022 amounted to $1,136 million, compared to $507 million in 2021, recording an impressive annual growth of 124.2 percent but still far below $4.4 billion earnings in 2018. Sri Lanka offers a mix of attractions including beaches, wildlife parks, rainforests, tea plantations, ancient ruins, Buddhist cultural sites, and festivals.  The country ranked 74th out of 117 countries in the Travel & Tourism Competitiveness Report 2021 of the World Economic Forum. In 2022, India (17.1 percent), Russia, (12.7 percent) and United Kingdom (11.8 percent) contributed the largest number of tourist arrivals, followed by Germany (7.7 percent), and France (4.9 percent).   

Investment in the tourism sector was limited in 2022, with projects approved that year valued at around $68.43 million (48.8 percent decline from 2021).  Delays and down-scaling of projects by investors and shocks to the construction industry during the economic crisis contributed in large part to the stymied investment in the sector.  The government wishes to attract global names to Sri Lanka.  Several international and regional hotel chains are building or operating hotels in Sri Lanka, including Hilton (Hilton Yala Resort opened in August 2023), Marriott, Shangri-La, and Movenpick.  Shangri-La and Movenpick commenced operations in 2017, while Hilton took over management of DoubleTree by Hilton Weerawila Rajawarna Resort in 2020.  Others such as Sheraton and ITC Hotels are in the process of completing projects.  A few local conglomerates control most of the luxury resort hotels in Sri Lanka.  In addition, the boutique hotel concept is rapidly catching on.  During Sri Lanka’s lengthy civil war (which ended in 2009), international hotel companies were absent from the country.  Hilton had been the only global player in Sri Lanka, managing a luxury hotel (which is government owned) and an apartment complex in Colombo for many years.  

Tourism offers both investment and trade opportunities.  The government currently offers beach land and islets for tourism development.  Eastern Sri Lanka is an area that offers significant potential due to the quality of beaches in this area.  Locations such as Pasikudah and Arugam Bay are premier destinations, especially for surfing enthusiasts.  The country has several parks and forests that are home to a multitude of wildlife and unique flora species and is considered a biodiversity hotspot by several international environmental groups.   A prohibition on sales of land to foreigners may complicate development of new properties.  Eco-friendly resorts are also gaining popularity with many developers opting to establish “green” hotels to attract a growing ecotourism market segment.  Increased tourism drove significant growth in the restaurant industry until the global pandemic. 

Out of the international airlines flying to Sri Lanka, revealed that Sri Lankan Airlines, Qatar Airways, and Emirates are the three most popular carriers, handling a combined 65.4 percent of all tourist arrivals in the Sri Lanka. In addition to other airlines, budget carriers such as IndiGo and Fly Dubai are also gaining popularity among travelers. Sri Lankan Airlines is well-received among the major source markets, while IndiGo and SpiceJet are particularly popular among tourists from India. Aeroflot and Azur Air are popular among Russian travelers, while Qatar Airways and Emirates are frequently used by tourists from Europe. 

The growth in arrivals was attributed to factors such as advances in vaccination, ease of travel, lifted restrictions and increased consumer confidence. However, the spread of the Omicron variant, Russian invasion of Ukraine, challenging economic conditions, rising inflation, and stagflation had a negative impact on tourist arrivals.  Additionally, improved air accessibility to Sri Lanka and resumption of cruise tourism also played a positive role in the growth of arrivals. 

Leading Sub-Sectors 

  • Casual Dining Restaurants 
  • Hotel Equipment 
  • Hotel Franchise  

Opportunities 

The tourism sector offers considerable long-term opportunities for U.S. suppliers in a range of areas such as infrastructure, technology and consultancy services, hotel equipment, furniture, water purification systems, electrical systems, energy efficient equipment, restaurant and kitchen equipment, food and beverage, bathroom accessories, spa and fitness equipment, and water sports equipment.  Sri Lanka relaxed almost all tourism related import restrictions in 2023. 

The increased expansion of the hotel sector, upgrading of current properties, and construction of international hotel chains requiring high-end inputs and technology, provide significant prospects for U.S. companies. 

The number of casual dining, fine dining, and quick service restaurant outlets have significantly increased in Sri Lanka during recent years.  International and domestic restaurants are expanding their operations.  Various new-to-market restaurant companies continue to explore opportunities and make investments.  U.S. suppliers with an interest in Sri Lanka have increasing options to introduce U.S. products to the growing culinary and hospitality sectors. 

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