Tourism earnings to undershoot despite arrivals surge

• Lower earnings after SLTDA revises daily spending estimate

Sri Lanka is bracing for lower-than-expected tourism earnings following a downward revision in the estimated daily spending of visitors by the Sri Lanka Tourism Development Authority (SLTDA), a key metric used to calculate the industry’s contribution to the economy.

Addressing the media at the post-Monetary Policy Review briefing, Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe said the SLTDA had identified weaknesses in its previous estimation method and corrected them based on a new survey.

“There were some weaknesses in estimating the per day spending by the SLTDA and they have recognised the mistake and revised based on a new survey,” he added.

The SLTDA had been depending on spending estimates drawn from a 2018 survey, but its updated assessment from August 2025 has prompted a sharp reduction in its per-day spending figure from $ 171 to $ 148.

Adding to that, CBSL Economic Research Department Head Dr. Sujeetha Jeganathan said the revision explains why tourism revenue has not kept pace with the rising number of visitors.

“This is why even though we are seeing the tourist arrivals have almost gone to the 2018 level, in terms of earnings we are not going to reach the 2018 level. So we will end up closer to last year’s earnings levels,” she noted.

The impact of the revision is already visible in official data. Tourism revenue rose just 0.3% in October despite a 21.5% surge in arrivals. In September, revenue increased only 1% while arrivals jumped 30%. Earlier in the year, July’s earnings fell 3% year-on-year (YoY) even though visitor numbers grew by 6.6%. In August, revenue dropped 8.2% despite a 20.4% rise in arrivals.

Tourism, which accounts for nearly 3% of GDP, generated $ 3.17 billion in 2024, up 53.2% from the previous year, is supported by a 38.1% increase in arrivals to 2.05 million. 

But with the revised spending estimate, Dr. Jeganathan predicted that earnings this year are unlikely to hit the SLTDA’s ambitious targets of $ 5 billion in revenue and 3 million tourist arrivals.

Separately, First Capital Research in its latest tourism sector review noted that despite Sri Lanka’s tourism arrivals rebounding strongly, the corresponding earnings recovery has remained relatively subdued. “Despite expectations of $ 3.3 billion in earnings for 2025, this remains well below the 2018 peak of $ 4.4 billion,” it noted.

It added that earnings performance from January to October reflects a clear shortfall compared to previous peak years, highlighting the persistent disconnect between the recovery in tourist arrivals and the corresponding growth in tourism earnings.

The trend suggests a shift towards shorter, lower-spending trips, driven primarily by regional travellers and backpacker segments rather than high-yield long-haul markets.

“Although Asian countries such as India and China together account for the majority of arrivals, these markets typically record shorter stays, limiting their overall earnings contribution. China’s recovery remains below 2018 levels, and even high-spending Asian tourists tend to visit for brief leisure or business trips. In contrast, European markets, including Russia, Germany, and the Netherlands, show longer average stays, supported by growing interest in adventure, wellness, and Ayurveda tourism. The UK also maintains moderate stay durations, reflecting a mix of leisure and business travel. This highlights a key challenge for Sri Lanka, where arrivals are strong from Asia but longer-stay European segments contribute more meaningfully to occupancy and tourism value,” it explained.

First Capital noted that this spending compression underscores the need to reposition Sri Lanka towards higher-value tourism experiences and extended-stay visitor segments.