The Hon. Vijitha Herath - Minister of Foreign Affairs, Foreign Employment and Tourism

¶ 01 Statement: Decrease in per capita spending of tourists and foreign exchange earnings in the tourism sector.

¶ 02 1. Tourist arrivals have risen to historic highs in late 2025 and early 2026 due to current Government stability, increased international confidence, reforms enhancing attractiveness, domestic stability, improved access to essentials, strengthened security at airports, hotels, and attractions—re-establishing a fully functioning tourism environment that reflects recovery and draws more visitors.

¶ 03 Per capita tourist spending depends on sources, market shifts, length of stay, pricing practices, and spending components. A 2018 inbound visitor survey (sample 5,000, excluding airfare) estimated average daily spend at USD 173.8 focusing on accommodation, food and beverages, transport, services, and shopping.

¶ 04 A 2024/2025 survey (sample 10,000, excluding airfare) using TSA-compliant methodology and stratified sampling estimated average daily spend at USD 148.26. Compared to 2018, the larger sample and broader questionnaire in 2024/25 can explain statistical differences.

¶ 05 Key shifts in spending shares (percent of total per USD 100): - Accommodation: 32.4% (2018/19) vs 32.2% (2024/25) - Transport within country: 17.0% vs 22.3% - Eating/food/beverages: 25.0% vs 31.3% - Shopping: 12.2% vs 7.9% - Other: 13.4% vs 6.3%

¶ 06 Exchange rate movements and inflation differentials across source markets affect USD-denominated averages. For example, average daily spend converted to rupees rose from about Rs. 28,771 (USD 173.8 at Rs. 165.54/USD in 2018) to Rs. 44,149 (USD 148.26 at Rs. 297.78/USD in 2025).

¶ 07 Post-pandemic, average length of stay patterns in many countries shortened, influencing per-day and per-trip metrics. Inflation trends in key markets also varied between 2018 and 2025.

¶ 08 We are moving to monthly analyses, seasonality breakdowns, and TSA-based improvements to better capture spending patterns, economic impact, and value added.

¶ 09 On reconciling SLTDA earnings with official reserves: SLTDA estimates represent total foreign exchange generated by tourism activities, which are not directly equal to amounts converted through licensed banks and reflected in official reserves due to accounting methods, off-shore card settlements, informal transactions, and retention outside the formal system. There is no direct annual line item in SLTDA to identify the exact portion credited to reserves; CBSL compiles official data under its legal mandate.

¶ 10 SLTDA recently conducted a leakage study across accommodation, travel agents, and wellness sectors. It confirms that a portion of tourism’s gross value leaks outside the domestic economy via unregistered providers and off-platform transactions, limiting accrual to official reserves and tax bases. Identified issues include structural weaknesses in accounting channels and the growing role of unregulated digital platforms.

¶ 11 Measures underway: - Facilitating registration of currently unregistered providers, with outreach on regulatory, commercial, and benefit aspects - Simplifying registration, lowering entry barriers for small/community-based operators - Capacity-building to integrate operators using platforms like Airbnb, Booking.com, and TripAdvisor into a regulated ecosystem - Strengthening enforcement capacity within SLTDA’s legal unit - Advancing a new National Tourism Policy and drafting a new Tourism Act to clarify powers, strengthen enforcement, and close legal gaps (the 2005 Act did not provide sufficient enforceable provisions to act against unregistered operators) - Shifting performance focus beyond arrival counts to earnings, FX inflows, and reserves contribution

¶ 12 On digital payments and FX leakages: - Recognized challenges from off-shore card settlements and platform-based payments that bypass domestic rails, reducing tax capture and official FX inflows - Exploring regulatory frameworks and technical solutions to route more transactions through domestic systems, strengthening collaboration with LankaPay and assessing best-practice models to settle foreign card payments domestically where feasible, while maintaining competitiveness - A three-year action plan, coordinated with CBSL and industry stakeholders, to reduce leakages, enhance compliance, and increase formal FX capture