Sri Lanka - Country Commercial Guide
Travel and Tourism

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-28

Overview

Tourism has traditionally been the third largest foreign exchange earner in the country.  Sri Lanka recorded over 1.9 million tourist arrivals in 2019, a 21 percent drop from the previous year owing to the aftermath of the April 2019 Easter Terror Attacks. It is estimated that the sector earned around $3.5 billion in 2019.  Approximately 570,000 tourists arrived in 2020.  The effects of the global COVID-19 pandemic crippled the sector in 2020, which is currently catering almost exclusively to local tourists and international arrivals under strict “travel bubble” restrictions.  Sri Lanka offers a mix of attractions including beaches, wildlife parks, rainforests, tea plantations, ancient ruins, Buddhist cultural sites, and festivals.  Sri Lanka ranked 77th out of 141 countries in the Travel & Tourism Competitiveness Report 2019 of the World Economic Forum.  India and the People’s Republic of China (PRC) contributed the largest number of tourist arrivals, followed by the UK, Germany, and France. 

Investment in the tourism sector was limited in 2020, with projects approved that year valued at around $66 million. 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, Marriott, Shangri-La, Six Senses, 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 Pasekudah 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.

After closing airports to commercial traffic in March 2020, Sri Lanka opened up again to foreign tourist arrivals under a “bio bubble” concept in January 2021.  “Bio bubble” waives the quarantine requirements for leisure travelers, allowing them to leave the confines of their hotel rooms, so long as they stay at approved hotels and refrain from interacting with locals.   Fully vaccinated tourists are allowed to bypass the “bio bubble” and travel freely within the country after a negative PCR test performed on-arrival, but implementation of the program remained challenged as of September 2021.

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. 

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.

Resources

The Hotels Association of Sri Lanka                              

Sri Lanka Tourism Development Authority