We are getting more and more tourists every quarter, which is a positive indication for the economy. There is no question about that. After the financial crisis, Sri Lanka is turning around and it looks attractive for tourists to pick Sri Lanka as a destination. I simply calculate earnings per tourist, it was 1,854 USD in 2017; it grew to 1,877 USD in 2018. This steady growth indicates that tourists were not just arriving in larger numbers but were also willing to spend more during their visits. You can see that tourist earning growth was slightly higher than the tourist arrival growth.
Fast forward to 2024, the situation has changed significantly. Every month, tourist arrival growth surpasses earnings growth. We are getting more tourists who spend less, indicating a shift in the demographics of our visitors. Earnings per tourist were 1,567 USD in 2024 for the first five-month period, reflecting a potentially thriving tourism sector; yet, it dropped to 1,498 USD in 2025 for the same period, signaling a worrying decline. We are receiving more people who burden the infrastructure, create more waste, and cause congestion in popular areas, leading to a diminished experience for both tourists and locals. The potential for earnings is decreasing, creating a paradox where increased tourist numbers do not equate to greater economic benefits. Are we going to be a Costco country or an LVMH country? Our policymakers should decide which model is the most suitable for us.
Personally, I favor the LVMH model. It will be easy to handle the amount of tourists and hit our revenue targets. It will strengthen the country’s image as well as sustainability. On the other hand, the Costco model might get us more revenue with a lot of stress on the current system. The locals are already pushing back in some areas. I think the former model is suitable and will keep everyone happy.
I welcome the government’s move to grant visa-free entry to 40 countries. We have to make it easier for our visitors. It is always better to reduce the red tape. Sri Lanka is well known for doing the opposite.
Sri Lankan authorities are not doing enough to market the country’s allure. Turkey, Azerbaijan, Georgia, and many Middle Eastern countries usually have very good campaigns. We should look at them and learn. If possible, we should mimic and stand out at the same time.
Most of the hotels listed on the Colombo Stock Exchange have high levels of debt. Introducing more taxes and burdens will certainly drive away tourists and investments. Our banking system already owns a lot of debt related to tourism. It will pose a risk to the health of the economy, and it is crucial to keep the tourism sector healthy and help it recover. We are not out of the woods yet.