Sri Lanka tourism revenue will come under renewed scrutiny as authorities prepare to launch a leakage survey aimed at determining how much tourist spending actually remains within the domestic economy. The findings are expected to reshape revenue assessments and policy planning.
Sri Lanka tourism revenue to be reassessed via new leakage survey
Sri Lanka is set to conduct a comprehensive leakage survey later this month as part of efforts to determine the true economic contribution of its tourism sector. The initiative, led by the Sri Lanka Tourism Development Authority, is intended to provide a clearer picture of how much foreign exchange generated by visitors ultimately stays within the country, rather than flowing overseas through imports and profit repatriation.
Speaking at a media briefing in Colombo, SLTDA Chairman Buddhika Hewawasam said the upcoming study will focus on identifying how much of the revised average daily tourist spending actually benefits the local economy. Earlier this year, following an updated survey, the authority revised its estimate of daily per-visitor expenditure to US$148, down from the long-standing figure of US$171 that had been in use for nearly a decade.
The planned leakage survey aims to determine how much of the US$148 remains in Sri Lanka after accounting for various outbound flows. This distinction is critical for policymakers, as headline tourism earnings figures can often mask the real level of domestic economic benefit generated by the industry. By quantifying leakages, authorities hope to arrive at a more accurate assessment of net tourism income.
In the tourism context, leakage refers to the portion of tourist spending that does not circulate within the host economy. This can occur through several channels, including the import of food, beverages, and other inputs used by hotels and restaurants catering to foreign visitors. It also includes the repatriation of profits by foreign-owned hotels, airlines, and tour operators, as well as remittances sent abroad by foreign workers employed in the sector.
Additional sources of leakage include overseas marketing and booking costs, particularly when reservations are made through international platforms or travel intermediaries based outside Sri Lanka. While such arrangements are often necessary to attract visitors in a competitive global market, they reduce the share of tourism revenue that directly supports local businesses and workers.
Economists note that some degree of leakage is inevitable in any open economy, especially in sectors that rely on imported inputs or foreign investment. However, when leakage levels are high, the economic impact of tourism can be significantly diluted. In such cases, only a fraction of gross tourism receipts translates into local income, employment creation, and community development.
A leakage survey is a structured analytical exercise that measures the extent of these outflows by examining supply chains, ownership structures, import dependence, and spending patterns across the tourism industry. Data is typically gathered from hotels, travel operators, suppliers, and financial records to map how tourist dollars move through the economy and where they exit.
For Sri Lanka, which relies heavily on tourism as a source of foreign exchange and employment, the exercise is particularly important. Accurate measurement of Sri Lanka tourism revenue is essential for effective policy formulation, especially at a time when the country is focused on economic recovery, fiscal consolidation, and sustainable growth.
By understanding the true net contribution of tourism, policymakers can design targeted interventions to reduce unnecessary leakages. These may include encouraging greater use of locally sourced food and materials, supporting domestic ownership and value addition, and promoting skills development to reduce reliance on foreign labour. Over time, such measures can increase the share of tourism income retained within the country.
The findings of the survey are also expected to support broader goals related to sustainable and responsible tourism. Internationally, there is growing emphasis on ensuring that tourism benefits host communities and contributes to inclusive development rather than exacerbating economic disparities. A clearer picture of leakage will help Sri Lanka align its tourism strategy with these global best practices.
Industry stakeholders have welcomed the initiative, noting that more accurate data will strengthen decision-making and improve transparency. As competition intensifies among destinations in the region, understanding and improving the efficiency of tourism revenue retention could enhance Sri Lanka’s competitiveness and resilience.
Overall, the planned leakage survey represents a significant step toward refining how Sri Lanka measures and manages tourism income. By moving beyond gross arrival and spending figures, authorities aim to ensure that tourism growth translates into meaningful and lasting economic benefits for the country.