Sri Lanka’s tourism industry, which showed promising signs of recovery in 2025, now faces a self-inflicted setback as the government moves to challenge international online travel agents (OTAs) such as Booking.com, Agoda, and Expedia.
Tourism Minister Vijitha Herath has accused these global platforms of tax evasion and monopolistic practices, vowing to create a government-backed centralised booking system through the Sri Lanka Tourism Development Authority (SLTDA). The proposed platform is intended to handle bookings for hotels, transport, tours, and even souvenirs, thereby reclaiming control of the country’s digital tourism space.
While the government insists the move will secure fair taxation and regulatory oversight, industry experts fear it may backfire. Hoteliers and tour operators warn that Sri Lanka could face a blackout on international booking sites, stripping the country of vital global visibility. Already, some properties have reportedly been delisted from Booking.com, raising alarm within the sector.
Analysts argue that the attempt to compete head-on with established international platforms is misguided. Booking.com and its peers built their dominance by offering seamless usability, instant confirmation, verified reviews, global marketing reach, and price competitiveness—all features tourists rely on. By contrast, Sri Lanka’s proposed system is still in development and, according to insiders, falls short on technical readiness and customer confidence.
Smaller hotels and guesthouses are particularly exposed. Many already pay 18 percent commissions to global booking sites and could face an additional 18 percent VAT under new rules. “We’re running under capacity already. Piling on more costs will make us uncompetitive,” one hotel owner said.
The crisis is compounded by the dysfunctional domestic online train ticketing system. Tourists attempting to book scenic journeys such as Kandy–Ella frequently fail to secure tickets due to brokers bulk-buying and reselling them at inflated prices. “Visitors end up paying double, which damages Sri Lanka’s image,” a tour guide noted.
Despite such setbacks, the country welcomed 1.37 million visitors in the first seven months of 2025, with July alone recording 200,244 arrivals—a 6.6 percent increase over last year. Tourism earnings from January to June reached US$1.71 billion, up 10 percent year-on-year. Visa liberalisation for 40 countries has also boosted arrivals. Yet experts caution that without monthly arrivals exceeding 290,000, Sri Lanka will fall short of its 2025 targets of 3 million tourists and US$5 billion in earnings.
Critics stress that policy ambiguity, ad hoc promotions, and antagonism toward global OTAs risk undermining recent gains. Instead of isolating itself, Sri Lanka must strengthen cooperation with international platforms, modernise digital infrastructure, and address systemic flaws. Otherwise, the sector’s fragile recovery could unravel, leaving the island struggling to compete in a highly competitive global tourism market.
