COLOMBO (BLOOMBERG) - Tourists are scrambling to leave Sri Lanka and hotels are bracing for cancellations after a deadly terrorist attack on Sunday (April 21) that killed 290 people targeted foreigners and churchgoers.
Holidaymakers are flocking to the main airport, cutting short their vacations in the wake of coordinated blasts at churches and luxury hotels on Easter Sunday, the worst violence since the end of a civil war a decade ago.
Mr Kishu Gomes, chairman of the Sri Lanka Tourism Development Authority, said he couldn't give an exact count of the number of people leaving, but it could run into the thousands.
Tour operators in India, the biggest source market for visitors to Sri Lanka, are also cancelling trips for clients. That would hurt an industry that contributes almost 5 per cent to the economy.
The foreigner death toll rose to 39 on Monday, including nationals from India, Portugal, Turkey, Britain and the United States. The authorities haven't revealed information on who may be responsible for the strikes.
Top tourist spots, like the Temple of the Tooth in Kandy, remained closed, while several of the bigger hotels in Colombo, such as the Taj Samudra and Ramada, erected barricades and were checking vehicles entering the premises.
The US, Canada and Britain cautioned citizens about travelling to Sri Lanka, with Britain warning about the possibility of more attacks.
"Even during 26 years of war, we did not experience a calamity like this," said Mr Hiran Cooray, chairman of Jetwing Symphony, the investment arm of Sri Lankan hotelier Jetwing.
While there have been some cancellations so far, Mr Cooray said "the tourism industry will come out of this".
The attack is a setback for the tourism industry, which has been an economic bright spot for the Indian Ocean island struggling to regain its footing following a three-decade civil conflict that ended in 2009 and political turmoil last year. Tourist arrivals have increased more than five times since the war ended.
"For the moment, our priorities are to take care of the injured, deceased and their families," said Mr Gomes, who is also head of the Sri Lanka Tourist Promotions Board.
The authorities are contacting families of the victims and sending officials to hotels to check on guests.
Sri Lanka was the top travel destination for 2019 in the Lonely Planet's annual rankings, with tourists attracted by its religious diversity, historic temples, rich wildlife, and growing surf scene.
Mr Pronab Sarkar, president of the Indian Association of Tour Operators, predicted a "knee-jerk reaction" among all tourists and relief thereafter.
"Cancellations and change in plans will be visible for the next 15 days and then it should start reviving again," he said. "The government can't afford to let that sink again," he said of Sri Lanka's rejuvenated tourism sector.
Tourism authorities sprung into action on Sunday, seeking to minimise the damage to the industry. Tourism Minister John Amaratunga gathered industry leaders from the Hotels Association of Sri Lanka, Colombo City Hotels Association and Sri Lanka Association of Inbound Tour Operators to discuss enhanced security measures, according to local newspaper Daily FT.
Central bank Governor Indrajit Coomaraswamy said the tourism industry will take a knock, but it's still too early to quantify the effect on gross domestic product.
Growth slowed to 1.8 per cent in the fourth quarter, the slowest pace since the start of 2014. The Sri Lankan people and the economy have "demonstrated a great deal of resilience", he said in an interview on Bloomberg Television on Monday.
Most of the foreigners were killed at the Shangri-La, Kingsbury and Cinnamon Grand hotels in the capital, Colombo.
The Shangri-La is a high-profile symbol of the nation's attempt to revive development in the country's capital. Hong Kong-based Shangri-La Asia opened the 500-room hotel in late 2017, an event that attracted both Sri Lankan President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe.
It's part of One Galle Face, a 10 acre project near the Finance Ministry and other government offices that also includes residential, office and commercial space.
The explosion took place at the Shangri-La's Table One restaurant, the hotel said in a statement. "We are working closely with local authorities and emergency services to provide our fullest assistance and support to the affected staff and guests," it said.
The hotel was struggling even before the attack. The occupancy rate was just 42 per cent last year, compared to the company's weighted average of 68 per cent. The two Shangri-La hotels in Sri Lanka were the company's worst performers last year, losing US$18.8 million (S$25.5 million), according to a 2018 final results announcement filed with Hong Kong's stock exchange last month.
Tourism inflows have helped to ease foreign currency pressure in recent years. The government sold foreign bonds this year and extended an agreement with the International Monetary Fund on a US$1.5 billion loan to help boost buffers.
Mr Sanath Ukwatte, president of The Hotels Association of Sri Lanka, said the Mount Lavinia Hotel, which he owns, has had about 20 per cent of its bookings cancelled, with more expected.
"Everyone is in shock right now," he said. "This is the first time tourist hotels have been targeted in this manner. Every hotel has increased security."