(Bloomberg) -- Tourists are scrambling to leave Sri Lanka and hotels are bracing for cancellations after a deadly terrorist attack 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.
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 canceling trips for clients. That would hurt an industry that contributes almost 5 percent to the economy.
The foreigner death toll rose to 39 on Monday, including nationals from India, Portugal, Turkey, the U.K. and the U.S. The Sri Lankan government blamed the local group National Thowheed Jamath for the attack after confirming seven suicide bombers carried out the blasts.
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 U.S., Canada and the U.K. cautioned citizens about traveling to Sri Lanka, with the U.K. warning about the possibility of more attacks.
Annika Wesche, a 27-year-old law student from Germany, arrived in Colombo on Sunday on the final leg of her three-month visit in the country. She struggled to get through to family and friends back home after authorities blocked platforms like Facebook and Whatsapp.
“I’m now worried about going back,” she said, citing reports of a pipe bomb found along the road leading to the international airport. “Will there be flight cancellations?”
The attack is a setback for the tourism industry, an economic bright spot for the Indian Ocean island’s economy, which has struggled to regain its footing following a three-decade civil conflict that ended in 2009 and political turmoil last year. Visitor arrivals have increased more than five times since the war ended.
“Even during 26 years of war, we did not experience a calamity like this,” said Hiran Cooray, chairman of Jetwing Symphony Ltd., the investment arm of Sri Lankan hotelier Jetwing. While there have been some cancellations so far, Cooray said “the tourism industry will come out of this.”
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.
Brandon Craig, a 27-year-old scuba diving instructor from London, said he was heading to church in Colombo on Sunday when he heard of the attacks. “It was quite a scary experience,” he said, adding that he’s returning home on Wednesday.
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.
In a bid to minimize 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 on Sunday 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 economic growth, which slowed to 1.8 percent in the fourth quarter, the weakest 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.
Tourism revenue is the third-largest and fastest-growing source of foreign income in the country, according to Citigroup Inc. Inflows have helped to ease foreign exchange pressure in recent years, with the government also selling international bonds this year and extending an agreement with the International Monetary Fund on a $1.5 billion loan to help boost buffers.
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 Ltd. 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 ten-acre project near the Finance Ministry and other government offices that also includes residential, office and commercial space.
The Shangri-La will be closed until further notice following the explosion at its 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 percent last year, compared to the company’s weighted average of 68 percent. The two Shangri-La hotels in Sri Lanka were the company’s worst performers last year, losing $18.8 million, according to a 2018 final results announcement filed with Hong Kong’s stock exchange last month.
Sanath Ukwatte, president of The Hotels Association of Sri Lanka, said the Mount Lavinia Hotel, which he owns, has had about 20 percent of its bookings canceled, 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.”
(Updates with comments from tourists.)
--With assistance from Lilian Karunungan, Netty Ismail, Abeer Abu Omar, Iain Marlow, Bruce Einhorn and Debjit Chakraborty.
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