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Sri Lanka’s Tourism Business Slumps Following April Bombings

While tourism is the country's fastest-growing source of foreign currency, the central bank has lowered the industry's growth forecast in 2019.

by Meera Navlakha
16 July 2019, 6:27am

Once a prime tourist hot-spot, Sri Lanka’s tourism industry is now reeling following a series of bombings which killed at least 257 people on Easter Sunday, April 21. Tourist arrivals on the island went down 70 percent in May and 57 percent in June, compared to numbers in 2018.

“Everything was good before April. Now that situation is finished,” said Nuwan Harshana, a manager of diving school Pearl Divers, in an interview with Reuters.

Pearl Divers, located on a popular southern beach, had to close for two months after the attacks. Harshana and the team reopened the branch in early July, looking towards getting the diver center back to the $800 a day revenue it used to collect.

Harshana is just one of the many players in Sri Lanka’s tourism game, all of whom have had their livelihoods take a hit.

Spa owner Dilum Ranjana had to fire three of his seven employees, as well as delay the opening of a second location. Like the diving school, his spa is now making the bare minimum and has had to adjust to the sharp drop in tourists. His spa only made $570 in July so far – a tenth of what he made last year.

“All my plans are lost, they are ruined,” Ranjana said.

Tourism is reportedly Sri Lanka’s fastest-growing source of foreign currency. Since the end of its civil war in 2009, it quickly rose in the rankings of destinations travelers sought to explore. Over 2.5 million people visited its shores in 2018 alone. But the bombings have brought drastic changes to the island.

According to a travel consulting firm, ForwardKeys, the average online bookings to Sri Lanka fell by 186 percent the week after the attack. Airlines canceled 41 weekly flights to Sri Lanka that week. While some airlines such as Emirates have returned to their normal schedule, there are airlines like China Eastern which only operate half of the flights they previously did.

While countries such as the United Kingdom have more recently reduced their travel warnings to the island, tourist arrivals and interest have visibly plummeted.

Tourism-related businesses amounted to almost 4.9 percent of the country’s gross domestic product in 2018. But with the way things are going, the central bank has reduced its growth forecast from 4 percent to 3 percent in 2019.

The country’s government is concurrently predicting a shortfall of $800-900 million in revenue amassed from tourists. Their main concern at the moment is non-performing loans, according to a bank official.

People like Harshana took loans to support their business but aren’t making enough to hand over the monthly installments the bank requires. In 2017, he borrowed about $57,000 from the bank to create a hostel. The hostel is now closed due to a lack of bookings.

While the bank initially let Harshana postpone loan payments for two months, they are not permitting this in July.

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