PREDICTING TOURISM’S RECOVERY FROM THE DEVASTATING Easter terror attacks occupies many minds. Tourism’s economic importance and ability to foster inclusivity makes it a favourite target for terror groups globally. Tourism bounced back 11 months after a terror attack in Mumbai. Bali needed two years to regain itself. Sentiment among hoteliers and tourism industry stakeholders suggests Sri Lanka’s path to recovery may be a jagged one. Lucrative tourist numbers are still down, pushing businesses to drastic measures to survive.

A recent research report by CAL Research ‘Tourism Sector: After the Storm’ found that occupancy levels in hotels in September, five months on from the attacks, was down 40% year on year. While average occupancy has begun recovering from a low of 22% in May, there is still a long way to go to reach pre-crisis levels. The report, published in October by the research arm of the Capital Alliance investment banking group (CAL), gathers insights from 71 properties of listed companies spread across the island.

During phone-based interviews, the hotel management shared their thoughts on the Easter attacks’ impact on business and the nature of the recuperation measures they have implemented. A majority of survey respondents (77%) said they believed that the incremental increases in month-on-month occupancy will continue, suggesting they do not expect a dramatic influx of guests in December. Lower occupancy following a terror attack is not unusual.

However, the plateauing of the occupancy levels, seen between August (42%) and September (43%) at a time when many hotels were pushing discounted offers to locals, presents a disquieting picture. Nearly 80% of surveyed hoteliers saw discounted rates as the only way to improve occupancy. Some properties had nearly halved their rates with industry wide discounts averaging 39%. Out of necessity, hotels have also shifted to targeting the local market with promotional deals. Many of these deals came to an end in November in anticipation of the traditional peak arrivals season starting in December.


With room rate discounts in place, higher occupancies can still mean a downward trend in revenue. John Keells Hotels PLC, a Sri Lankan and Maldivian resort operator, announced net losses of Rs470 million in the September quarter while losses were Rs70 million at Serendib Hotels group. It will be a telling sign of how the peak season is progressing if hotels continue to rely on the local market and re-initiate targeted discounts in the coming months. Official figures on the number of international tourist arrivals to Sri Lanka show incremental month-on-month increases, following the sharp plummet in the aftermath of the Easter attacks.

In October, tourist arrivals were 120,000, down 22.5% from a year ago. While still a sizeable drop, the gap had closed significantly: in July, tourist arrivals had crashed 47% from a year earlier. Hotel operators are bracing for a rough winter. Visitor numbers during peak tourism season from December to March are traditionally boosted with high arrivals from Europe. However, two thirds of the respondents to CAL’s survey believe it’s highly unlikely they will reach the same levels of occupancy as they did in 2018.


In addition to the hoteliers, CAL interviewed a cross-section of industry stakeholders. They included foreign exchange dealers, restaurateurs, tour guides, drivers and retail outlets. The report found tourist areas outside of Colombo have been particularly impacted, with an 83% cumulative drop in sales from cafes, retail outlets and restaurants in Galle Fort since the attack. The findings of the report do contain some pockets of positivity however, with one-fifth of the hoteliers surveyed saying that reaching the same occupancy levels as last year is highly likely.

City hotels have also bucked the trend on occupancy with levels remaining around 80%, even before the influx of visitors for the Borah convention that took place in September. The findings in CAL’s tourism report are not facts, but a collection of sentiments from a range of tourism stakeholders; collectively, they paint a picture of an industry that is moving forward with a cautious footing. With December traditionally the start of the high season, we will not have long to wait to see how many of their expectations become a reality.