Brexit would have a positive impact on Sri Lanka’s tourism industry, Colombo-based equities broker Bartleet Religare Securities (BRS) said yesterday, in opposition to a popular and growing view to the contrary. “We anticipate a positive Brexit impact on Sri Lanka as a cheaper alternative for the British travellers,” BRS said in a research report.
In the same breath, BRS noted that Sri Lankan companies operating in the Maldives could face a tough proposition in the future, as the British, a major market in the high-end destination, would shy away from the archipelago due to a weakening pound. According to BRS, the full effect of Britain leaving the European Union (EU) on the tourism industry is likely to be witnessed in the 2018 financial year. This is likely, as British Prime Minister Theresa May has said that she will announce Article 50 to formally exit the EU and start negotiations to determine the level of association Britain will have with the EU in the future, at the end of March 2017. Currently, almost all the members of the EU are calling for Britain not to be allowed any special treatment in future access to the world’s second largest economic and third largest demographic single marketplace in the world.
Even after the Britons voted to leave the EU this June, the pound sterling crashed to its lowest levels compared to the US dollar in over 35 years and a further flash crash was witnessed earlier this month. The terms of Brexit, May manages to negotiate, are expected to have an even bigger impact on the pound. The pound is now trading at around Rs.184, compared to Rs.221 prior to Brexit. Contrary to the view of BRS, other analysts have noted that even Sri Lanka would become more expensive for British tourists, since there are cheaper destinations in Asia with better service standards. Further, the cheaper and developing tourist destinations in Eastern Europe could also become a closer alternative for the British, instead of Sri Lanka, especially during the off season. The industry stakeholders are calling for more promotions in the UK to attract more British to Sri Lanka in the post-Brexit world. Global commentators are divided over how different levels of Brexit would affect the EU economy.
Western Europe, which is the main region of the EU, made up 32 percent of Sri Lanka’s tourist arrivals for the first nine months of this year with 485,623 tourists, growing 17.5 percent year-on-year. The arrivals from the UK for the same period were 143,412 tourists, nearly 10 percent of the total tourism market, with a growth of 17.3 percent compared to 2015.