COLOMBO, Sri Lanka – Sri Lanka’s tourism industry is experiencing substantial economic leakage, with approximately one-third of its revenue, estimated at USD 1.13 billion annually, flowing out of the national economy. This issue was highlighted at a recent ‘National Validation Workshop’ jointly organised by the Sri Lanka Tourism Development Authority (SLTDA) and UN Tourism.

The study presented at the workshop revealed that this economic leakage primarily impacts three key tourism sub-sectors: accommodation, travel agents, and wellness. The primary causes identified include significant expenditure on imports and commissions paid to international entities.

Key Factors Contributing to Leakage

More than USD 800 million is spent annually on importing essential goods for the tourism sector, such as food items, machinery, and furniture. This substantial reliance on foreign suppliers contributes significantly to the revenue outflow.

Furthermore, commissions paid to online travel agents (OTAs) and foreign tour operators represent another major leakage point. In the spa and wellness sector, over 50 per cent of revenue is lost due to the employment of foreign therapists and the use of imported products.

Strategic Shift Towards Retention

Sri Lanka’s tourism sector generated USD 3.17 billion in revenue in 2024, making it the country’s third-largest source of foreign currency. However, authorities now recognise that increasing tourist arrivals alone is insufficient for maximising economic benefit. The focus is shifting towards implementing strategies designed to retain a larger proportion of this revenue within the national economy.

By Maldives Insight Staff