Choosing our dance partners: An impact-investment playbook for Sri Lanka’s next tourism chapter

TOURISM is one of Sri Lanka’s greatest assets, and one of its most delicate. It remains the fastest and most direct mechanism for transferring wealth from global markets into local hands, a rare sector where economic, social, and environmental benefits can converge if managed wisely. Yet it is also acutely vulnerable to shocks, overdevelopment, and poor governance. The challenge before us is not whether to grow but how to grow, and, crucially, who we invite to the party.

- By Miguel Cufat

Tourism has often been described as the fastest transfer of wealth from rich to poor. Unlike exports, remittances, or foreign investment, it functions through countless small transactions between travellers and local providers of food, accommodation, transport, and experiences. But this apparent simplicity hides a complex truth: not all tourism is created equal. Every tourist dollar leaks, some to airlines, global booking platforms, foreign travel agencies, and international hotel chains. While some of this is inevitable, what matters (and must be measured) is the proportion that stays in the country, circulating among guides, small hotels and restaurants, and communities. That retention, known as “leakage,” can vary from as little as 10% in mass-market, all-inclusive models to more than 70% in independently organised travel where visitors spend locally.

The real question for policymakers is therefore not how many people come, but which types of travellers they are, where they go, and how their spending behaviour ripples through the economy. The independently minded traveller, whether a budget or an affluent experiential guest, typically generates stronger local linkages, more authentic interactions, and lower environmental pressure than large-scale, volume-driven tourism. This is well known.