Sri Lanka tourism may fall short of 2025 arrival and earning targets 

• Sector report by CT Smith Securities forecasts 2.4 m arrivals and $ 3.4 earnings for 2025; falling short of 3 m and $ 5 b targets, but likely to exceed 2018 levels
• Projects arrivals to climb to 3 m, revenue to $ 4.3 b next year 
• Mid-September arrivals hit 1.64 m and $ 2.3 b revenue, though growth slows seasonally
• Average daily spending remains $ 171, below 2018 prompting push for high-spending segments like MICE and luxury

Sri Lanka’s tourism industry is poised for one of its strongest years since the crisis years of 2019–2022, but the country is unlikely to hit its ambitious targets of 3 million arrivals and $ 5 billion in earnings by the year end. 

A new sector report by CT Smith Securities forecasts 2.4 million arrivals and $3.4 billion in earnings for the year, whilst projecting visitors to climb to 3 million and tourism revenue to $4.3 billion in 2026.

“We remain optimistic about the growth of the tourism sector heading into 2025E, which is likely to exceed 2018 levels, with increased interest from key source markets in the near term,” the report noted, while cautioning that the Government’s stated goals will be out of reach this year.

Despite falling short of its lofty 2025 goals, it noted that the country’s tourism sector is on a growth path. 

By mid-September 2025, Sri Lanka had welcomed 1.64 million foreign visitors, already surpassing arrivals during the same period in 2018, the benchmark year for the sector. This inflow generated an estimated $ 2.3 billion in revenue over the first eight months, a 6% year-on-year (YoY) increase and accounted for 6.3% of GDP in the first half of the year. Average daily arrivals stood at 6,389 for the year to date, in line with the highs of 2018 and 2019, though September’s figure of 5,383 reflected a seasonal slowdown, marking a 32% YoY increase, but a 16% month-on-month (MoM) dip.

The report also noted that tourism earnings, too, show a robust trajectory. The industry earned nearly $ 259 million in August alone, although that represented declines of 19% MoM and 8% YoY. The cumulative earnings of $ 2.3 billion in the first eight months of 2025 amounted to about 72% of 2024’s total of $ 3.17 billion. 

Analysts expect 2025 revenue to comfortably surpass last year’s figure, which was the strongest since 2018 and the fifth-highest ever recorded.

It added that affordability has played a pivotal role in the rebound, with the sharp depreciation of the rupee making Sri Lanka one of the region’s most cost-competitive destinations. Current average tourist spending, at around $ 171 per day, remains below 2018 levels despite global inflation. To increase yield, authorities and the private sector are looking to attract more high-spending visitors through MICE tourism, niche offerings and high-end facilities.

The travel and tourism industry is currently one of the largest contributors to foreign inflows and ranked as the eighth largest contributor to GDP growth in Q2 this year, adding +0.17 percentage points.

The 2024 WTM Global Travel Report projected inbound tourism spending in Sri Lanka to grow by 109%, positioning the island as Asia’s second fastest-growing destination after Thailand.

Sri Lanka’s source markets remain diverse, led by India, the UK, Russia, China, and Europe. Indian arrivals have fully recovered, consolidating India’s position as the largest inbound market. Russia, Germany, France, and Australia have all surpassed pre-crisis peaks, while the UK has recovered to nearly 90% of its historical highs. China lags behind at around 50% of peak levels, but its outbound travel is expected to surge by 2030, offering significant long-term upside.

The report suggests that the growth is expected to be driven by several policy and infrastructure initiatives. A long-delayed global branding campaign, now anticipated to launch in the coming months, is expected to boost arrivals and the free-visa entry for 40 countries, including top markets such as India, China, Russia, and major European countries, though an official implementation date has not been confirmed.

“Growth in neighbouring economies, particularly India, presents further opportunities to attract affluent tourists to Sri Lanka. The country is also well-positioned to capitalise on emerging outbound markets like Thailand and Vietnam, which are popular among wealthy Indian tourists seeking similar experience,” it added.

However, the report noted that the current demand patterns indicate significant potential to enhance the country’s market mix by targeting high-growth niche and underdeveloped mainstream markets aligned with Sri Lanka’s emerging value proposition. “Presently, visitor activity and investments are concentrated around Colombo as a commercial hub, the South coast beaches, the hill country’s tea estates and forests, and historic and religious sites. The economic benefits of tourism have yet to reach many areas with untapped assets, prompting the Government to prioritise reducing these geographic and economic disparities through updated market intelligence, asset mapping and robust data analysis,” it added.

With strategic reforms, infrastructure upgrades and diversification into new markets, the country aims to consolidate tourism as one of its largest and most resilient sources of foreign exchange. However, it cautioned that external shocks, intense competition in the region and the challenge of luring high-yield tourists remain risks that could temper the sector’s full potential.