Monday, October 16, 2017

Tourist arrivals to reach 3.6 mn in 2020 - Fitch

Fitch expects Sri Lanka tourist arrivals to grow by a compound annual growth rate (CAGR) of 15% over the next four years (2016: 14%), driven primarily by the rapid increase in the inflow from Indian and Chinese markets. Fitch expects tourist arrivals to reach 3.6 million in 2020.

Aggregate tourist arrivals from India and China have trebled over the past five years, and accounted for more than 30% of the total tourist population in 2016. We expect government’s destination-promotion campaigns, which are directed primarily at Asian markets to boost arrivals from Indian and Chinese regions, to outpace European traffic over the medium term.

Fitch does not expect a considerable rise in earnings per tourist over the medium term despite the widely anticipated growth in tourist arrivals. Sri Lanka’s earnings from tourism could be hampered by a number of factors such as limited exposure to lucrative niche markets such as meetings, incentives, conferencing and exhibitions/events (known as “MICE”), and the rapidly growing influence of short-stay and low-spend tourists from emerging-Asian regions.

“We expect daily tourist spend to record a CAGR of around 5% over the next four years, and to fall marginally short of the government’s target of USD210 by 2020. Consequently, we believe Sri Lanka will continue to lag most of the developed tourism markets which generate over USD500 in daily earnings per tourist.

The limited array of exclusive niche tourism products which would entice high-spending up market tourists is also a driver. “For example, MICE, remains significantly under-exploited, accounting for less than 1% of tourist arrivals in 2016.”

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