Bright Horizons: Navigating Tourism's Growth Revival
Executive Summary
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First Capital
A Janashakthi Group Company
Global tourism bounced back in 1Q2023, reaching 80% of pre-pandemic levels with about 335.0Mn international travelers, more than the 2022 figures.
The Middle East excelled, exceeding 2019 arrivals by 15% and fully recovering within a single quarter. Meanwhile, Asia and the Pacific region hit 54% of
pre-pandemic levels, with this upward trend set to accelerate further as most destinations, including China, have reopened.
In 1H2023, Sri Lanka witnessed a robust tourist arrival recovery, surpassing targets. The currency depreciation and effective tourism promotion campaigns
positioned Sri Lanka as an attractive and affordable destination. Consequently, we have raised our 2023 year-end target to 1.5Mn arrivals, reflecting an
expected 106.0% YoY growth, resulting in earnings of LKR 1.9Bn. Currently, the country-wide occupancy rate stands at 42.0%, leaving ample room for
further recovery.
China accounted for 11.4% of the total tourists to Sri Lanka in 2018 and remained the top source market next to India. The easing of restrictions in China is
poised to bolster tourist arrivals and drive growth in Sri Lanka's tourism sector. The notable increase in Chinese arrivals to Sri Lanka is indeed an
encouraging development for the tourism sector, as Chinese tourists are widely recognized as heavy spenders.
Further, significant devaluation of LKR against USD has made holidays in Sri Lanka even more affordable for international travelers compared to pre-
pandemic levels. Despite an increase in local prices, accommodation and other travel expenses have significantly decreased by approximately 40% in terms
of USD as a result of LKR devaluation.
Sri Lanka possesses significant potential to attract tourists from the Meetings, Incentives, Conventions, and Exhibitions (MICE) sector, primarily owing to its
strategic location in the Indian Ocean. This segment of tourists typically spends three times more than leisure travelers. Sri Lanka has been steadily
approaching pre-pandemic levels in the MICE sector, with India, Bangladesh, Pakistan, Germany, the Middle East (including Saudi Arabia, Doha, and Dubai),
and the UK playing vital roles in contributing to this positive trend.
Top Picks: Overseas Exposure: AHUN, KHL and CONN
Coastal Hotels:
City Hotel:
RPBH,SHOT and STAF
AHPL
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