Sri Lanka Launches Leakage Survey to Identify How Tourism Revenue Stays Local, Here’s All You Need to Know
Sri Lanka’s Tourism Development Authority (SLTDA) is also likely to initiate a very important ‘leakage survey’ by the end of this month in order to obtain a clear idea about the revenue earned through the tourism sector. The purpose behind this initiative is to overcome concerns about the economic benefits and the leakage of tourism revenue earned through foreign tourists.
Revising Per Day Spending Estimates: A Reflection of Changing Tourism Dynamics
The leakage survey follows a significant revision of the per day spending estimate for foreign visitors to Sri Lanka. According to SLTDA Chairman Buddhika Hewawasam, a recent survey revealed that the per day expenditure of foreign tourists has been revised down from US$171 to US$148. This figure was originally established a decade ago, and the recent recalculation reflects changes in the global tourism landscape and shifts in visitor spending habits.
The revised spending amount will serve as a baseline for the upcoming leakage survey. The goal of the survey is to determine how much of the $148 per day spent by tourists remains in Sri Lanka, supporting local businesses, communities, and development projects. The survey will provide more detailed insights into the flow of tourism money within the country and how much is lost through various mechanisms.
What is Tourism Leakage?
In the context of tourism, “leakage” refers to the portion of tourism revenue that exits the host country’s economy, rather than circulating locally. This occurs through various channels, including:
- Imports: A portion of money spent by tourists on food, beverages, and other goods may be spent on imported items rather than locally sourced products.
- Foreign-Owned Enterprises: Profits made by foreign-owned hotels, airlines, and businesses are often repatriated to the company’s home country, rather than being reinvested into the local economy.
- Foreign Worker Remittances: When tourism businesses hire foreign workers, part of the income earned may be sent back to their home countries, further reducing the amount that stays within Sri Lanka.
- Overseas Marketing Costs: Costs associated with marketing Sri Lanka as a tourist destination abroad may also contribute to leakage, as funds spent on advertising and promotional activities often flow outside the country.
While some degree of leakage is inevitable in any open economy, the extent of this outflow can be significant in countries heavily reliant on tourism. High leakage rates mean that a smaller fraction of the money spent by tourists directly benefits local communities, jobs, and the overall economy.
Why the Leakage Survey Matters
The leakage survey will measure the extent to which tourism revenue leaves Sri Lanka’s economy. This data is essential for understanding the true economic impact of tourism and for creating policies that reduce leakage and ensure that tourism benefits are more widely distributed. For countries like Sri Lanka, where tourism plays a key role in the economy, minimizing leakage is crucial for sustainable and equitable development.
The findings of the leakage survey will help the SLTDA and the government assess where the money is going, which sectors benefit most from tourism spending, and where improvements can be made to ensure that more of this revenue stays within the country. Additionally, understanding the dynamics of leakage will help policymakers make informed decisions about how to encourage more local investment in tourism, reduce reliance on foreign imports, and ensure that the tourism sector supports long-term economic growth.
The Role of Tourism in Sri Lanka’s Economy
Tourism is a major driver of economic growth in Sri Lanka, contributing significantly to foreign exchange earnings, job creation, and infrastructure development. In 2025, Sri Lanka saw an increase in international visitors, with many coming to experience the country’s rich cultural heritage, beautiful landscapes, and vibrant ecosystems. The tourism sector generates over $1.3 billion in annual spending, with popular destinations like Colombo, Kandy, Galle, and the coastal resorts drawing tourists from around the globe.
Despite the sector’s contributions to the economy, the potential for more sustainable growth is often hampered by high leakage rates. By conducting the leakage survey, the SLTDA is seeking to improve its understanding of these dynamics and strengthen the sector’s economic contributions to Sri Lanka’s overall development.
Tourism Growth and Sustainable Development: A Future Vision
Sri Lanka’s government is working toward transforming tourism into a key pillar of sustainable economic development. To achieve this, it is essential to ensure that tourism growth benefits local communities, supports responsible tourism practices, and promotes the long-term health of the country’s economy.
By identifying areas where leakage can be reduced, the SLTDA aims to maximize the positive impact of tourism. For instance, policies that encourage local sourcing of goods and services, support for small businesses, and strategies to encourage reinvestment of profits in local development projects can help mitigate leakage.
The leakage survey is part of a broader effort to ensure that the tourism sector aligns with Sri Lanka’s sustainability goals. The findings will also inform initiatives designed to enhance the competitiveness of Sri Lanka as a destination, improve visitor satisfaction, and create a more inclusive tourism economy that benefits everyone, from rural communities to urban centers.
A Step Toward Responsible and Profitable Tourism
Sri Lanka’s upcoming leakage survey is an important step toward achieving more responsible and profitable tourism. By gaining a deeper understanding of how tourism dollars flow within the country, the government can implement more effective policies that ensure tourism contributes to long-term, sustainable economic development. The results of the survey will not only shape the future of tourism in Sri Lanka but also help build a stronger, more resilient tourism industry that benefits both local communities and the nation as a whole.
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