By: Staff Writer
October 14, Colombo (LNW): Sri Lanka’s tourism industry continues to show impressive visitor growth but remains constrained by weak revenue performance, raising doubts about the sector’s ability to achieve its ambitious $5 billion year-end earnings target. Despite recording a record number of arrivals in September 2025, the industry’s income trajectory reveals that higher visitor numbers have not translated into proportional economic gains.
According to the latest Central Bank data, tourism earnings for September stood at $182.9 milliona marginal year-on-year increase but a steep 42% decline from August. This sharp month-on-month fall highlights the persistent mismatch between arrival figures and actual spending. The average daily expenditure per tourist remains around $171, far below expectations and well short of the pre-crisis benchmark levels needed to sustain the industry’s revival.
Comparatively, in September 2018, tourism generated $279.8 million—about $97 million more than the current figure—underscoring that the sector still has significant ground to cover to regain its former strength. January 2025 remains the best-performing month so far this year, when earnings peaked at $400.66 million, supported by strong early-season travel demand.
During the first nine months of 2025, Sri Lanka’s tourism receipts totaled approximately $2.47 billion, reflecting a modest 5% increase compared to the same period in 2024. However, this still represents a 31.2% shortfall from the 2018 benchmark of $3.25 billion, when the country enjoyed record-breaking annual earnings of $4.38 billion. On average, monthly earnings between January and September have hovered around $274 million, indicating limited revenue acceleration despite growing arrivals.
To reach the government’s $5 billion year-end target, Sri Lanka would need to earn over $2.52 billion in the final quarter an average of more than $840 million per month. Analysts caution that this is “challenging but not impossible,” noting that sustained high occupancy rates, increased per-tourist spending, and strong winter season arrivals would be essential to bridging the gap.
The gap between arrivals and revenue underscores deeper structural issues in Sri Lanka’s tourism model. Analysts attribute the weak revenue performance to the predominance of low-budget travelers, inadequate marketing to high-spending segments, limited diversification of experiences, and infrastructure bottlenecks in key destinations. Many visitors continue to choose short-stay or low-cost accommodation options, resulting in reduced overall expenditure per head.
The shortfall has macroeconomic implications. Tourism remains one of Sri Lanka’s top foreign exchange earners, and sluggish growth in sectoral income limits the country’s ability to strengthen reserves and reduce external pressure. A failure to meet the $5 billion target could also dampen fiscal expectations and affect investor confidence in the broader recovery narrative.
However, some optimism persists. Industry insiders point to upcoming winter bookings, renewed airline connectivity, and a stronger push into European and East Asian markets as potential drivers of a fourth-quarter rebound. If supported by targeted promotional campaigns, improved infrastructure, and enhanced digital marketing, the sector could regain some lost momentum.
Yet, without a significant boost in tourist spending and high-value offerings, Sri Lanka risks repeating the pattern of high arrivals but low returns a scenario that could undermine the long-term sustainability of one of the country’s most vital economic pillars.
