Since Sri Lanka’s worst economic crisis in Mar 2022, the share prices of nearly 55% of the
hotels listed in Colombo Stock Exchange (CSE) have risen on a Year-on-Year basis, according to First Capital Research (FCR).
“Nonetheless, we anticipate that there is still potential for these shares to provide further returns as
the tourism industry continues its path to recovery,” FCR said.
Sri Lankan tourism industry has been one of the first to gradually recover following consecutive blows from the 2019 Easter attack, the Covid-19 pandemic, and the worst economic crisis in decades. As the Sri Lankan economic crisis eased to a certain level in Aug 2022, the majority of European countries, including Switzerland, France, UK, Sweden, and Norway, have relaxed their advisories on travel to Sri Lanka. As a result, with the resumption of multiple airlines and cruise tourism, along with increased promotions, including MICE tourism, FCR expects tourist arrivals in Sri Lanka to surpass one million mark in 2023 with a target of 1.2 million in arrivals and $1.9 billion in earnings.
The total number of tourist arrivals in Sri Lanka grew consistently from 2H2022 amidst the easing down of the economic crisis with the immediate implementation of necessary measures by the government in order to obtain the IMF fund. This has boosted travel confidence among tourists. Accordingly, 2023 started off the year on a positive note and recorded more than 100,000 arrivals each in the first two months.
“We expect the trend to persist until Mar 2023 considering the seasonality of tourists and expect the arrivals to stabilize in the upcoming months. (Tourists arrivals from 1st to 26th March – 105,714, accordingly, YTD arrivals surpassed 300,000 in 2023),” FCR said.
It noted that LKR has depreciated over 90% compared to pre-pandemic times, which made the cost of living in Sri Lanka more affordable for international travelers. Despite an increase in local prices, accommodation and other travel costs have significantly dipped by c.25% from pre-pandemic level rates in terms of USD as a result of LKR devaluation which would be an encouraging factor for tourists to visit Sri Lanka.