(Sri Lanka Brief/15 November 2025) Sri Lanka’s tourism sector is showing clear signs of missing its annual targets, raising concerns about the country’s economic outlook. According to the Sri Lanka Tourism Development Authority (SLTDA), as of 12 November, only 1,972,957 tourists have visited the island. While arrivals may cross the two million mark by mid-November, projections suggest the year will close with approximately 2.3 million tourists—far below expectations.
Targets And Reality
At the start of 2025, SLTDA set three scenarios for tourist arrivals:
- Optimistic: 3,000,000 visitors
- Normal: 2,676,596 visitors
- Worst-case: 2,415,000 visitors
Current figures indicate the country will fall short of even the worst-case scenario, signalling a significant gap between planning and performance.
Economic Implications
Tourism is a cornerstone of Sri Lanka’s growth strategy. SLTDA forecasted GDP growth of 3.5% for 2025, slowing to 3.1% in 2026. With tourism positioned as a key driver to sustain growth above 3.1%, the shortfall in arrivals poses a serious challenge. Lower visitor numbers and reduced spending threaten foreign exchange inflows, employment, and investment in hospitality infrastructure.
Receipts Tell a Bleaker Story
While arrivals by end-October reached 1,890,687, slightly (0.3%) higher than the same period in 2018, revenue trends are alarming:
- 2018 (Jan–Oct): $3,495.9 million
- 2025 (Jan–Oct): $2,659.0 million
Despite a 22.5% decline in the real value of the dollar, receipts fell 23.9% nominally and 41.0% in real terms, underscoring a sharp drop in average tourist spending—the real engine of economic growth.
Performance Against Forecasts
For the first ten months:
- Worst-case estimate: 1,942,909 arrivals
- Normal estimate: 2,137,227 arrivals
- Optimistic estimate: 2,395,462 arrivals
- Actual: 1,890,687 arrivals
This translates to:
- 2.7% below worst-case
- 11.5% below normal
- 21.1% below optimistic
The gap is compounded by declining per capita expenditure, reducing tourism’s contribution to GDP.
Policy and Revenue Concerns
The government levies a special tourism promotion tax of up to 1% of turnover on hotels, travel agencies, and tourist shops. This tax is justified only if promotional efforts significantly boost industry income—a claim that current figures fail to support. The effectiveness of marketing campaigns and allocation of tax revenue are now under scrutiny.
How Much a Tourist Spends
India remains the largest source market, contributing 443,622 visitors so far in 2025, followed by the United Kingdom (180,592), Russia (144,308), Germany (123,053), and China (115,400). Other notable markets include France, Australia, and the United States.
In terms of spending, the average daily expenditure per tourist is around $181, with an average stay of 8.3 nights. However, this figure masks significant variation:
- Budget travellers spend roughly $30 per day,
- Mid-range visitors spend about $89 per day,
- Luxury tourists can spend upwards of $270 per day.
This disparity highlights the need for Sri Lanka to attract higher-spending segments to boost overall revenue.
Global Context and Future Outlook
Regional competitors such as Thailand and Maldives are reporting strong recovery, suggesting Sri Lanka’s underperformance may stem from air connectivity issues, pricing strategies, or safety perceptions. If trends persist, 2026 targets may require downward revision, and investment in tourism infrastructure could slow.
Opportunities for Recovery:
- Diversifying offerings into eco-tourism and wellness tourism
- Strengthening digital marketing campaigns
- Improving air connectivity and pricing competitiveness
Sri Lanka’s tourism sector faces a critical juncture. Without swift corrective measures, the industry risks undermining broader economic growth targets and losing ground to regional competitors.