Sri Lanka tourism: Tourism suffering after tsunami

COUNTRY BRIEFING

FROM THE ECONOMIST INTELLIGENCE UNIT

Tourist arrivals to Sri Lanka slumped by 20% year on year in the first two months of 2005, reflecting the lagged impact on the tourism industry of the end-2004 tsunami. Arrivals contracted by 23.5% year on year in January to 38,197 from 49,950 arrivals in the same month of 2004. In February the contraction was less pronounced, at 16.4%. Total arrivals in February were 36,645, compared with 43,854 in the same month of 2004. Earnings from tourism also fell year on year by 20% to US$53m in the first two months of this year from US$66.2m in the year-earlier period. India remained the principal source of tourism, followed by the UK and Germany. There was an above average increase in visitors from North America, mainly owing to a large number of volunteers (working with several non-governmental organisations) entering the country for tsunami-related relief work.

In a bid to assist the speedy reconstruction of hotels damaged by the tsunami, the government has granted to the hotel industry a one-year customs duty waiver on imports starting from the beginning of March this year. Eight locally manufactured items (cement, wires and cables, steel, wall tiles, floor tiles, paint and PVC products) have, however, been excluded from the waiver to encourage utilisation of domestically manufactured products. To avail themselves of the duty waiver, hotels are required to enter into a memorandum of understanding with the Sri LankaTourist Board (SLTB), guaranteeing that quality standards will be upgraded. The SLTB has emphasised that this conditionality is aimed at ensuring a better product than pre-tsunami levels.

SOURCE: Country Report