Tourism earnings rise for second month, but YTD revenue falls 9.2%

Sri Lanka’s tourism earnings recorded a second consecutive month of year-on-year (YoY) growth in September, rising 1.5% to $ 185.6 million despite a marginal decline in arrivals, but cumulative revenue remained under pressure amid weaker visitor numbers and continuing external headwinds.

Tourist arrivals, however, fell 0.3% in September, extending the disconnect between visitor volumes and foreign exchange receipts. Despite the recent improvement, cumulative tourism earnings in the first nine months of 2026 declined 9.2% to just over $ 2.24 billion, from $ 2.47 billion in the corresponding period last year.

Arrivals during January to September totalled over 1.69 million, down 1.8% YoY, highlighting the challenge facing the sector as it attempts to regain momentum ahead of the crucial winter travel season.

The performance comes against a backdrop of heightened geopolitical uncertainty following the escalation of Middle East tensions after US and Israeli strikes on Iran from 28 February, which has placed additional pressure on Sri Lanka’s tourism industry.

The latest earnings figures also complicate comparisons with previous years following a revision to the country’s tourism expenditure estimates.

In August 2025, the Sri Lanka Tourism Development Authority (SLTDA) reduced its estimate of average daily tourist spending to $ 148 from $ 171, replacing the estimate based on a 2018 survey. The adjustment lowered the level of tourism earnings recorded from August 2025 onwards, making comparisons with previously published figures less straightforward.

Nevertheless, the earnings trajectory presents a significant challenge for the Government’s revised 2026 tourism targets.

In August, Sri Lanka raised its arrival target to 2.7 million from 2.5 million, while increasing the annual tourism revenue goal to $ 4.2 billion from $ 3.5 billion. These targets followed earlier downward revisions from initial ambitions of 3 million arrivals and $ 5 billion in earnings amid the Middle East crisis.

With cumulative earnings at just over $ 2.24 billion by end-September, the country would need to generate around $ 1.96 billion during the final three months to meet the $ 4.2 billion target. That would require average monthly earnings of around $ 653 million in October, November, and December — substantially above the levels recorded in recent months.

The scale of the challenge is also evident when measured against the sector’s performance last year. Sri Lanka generated $ 3.22 billion in tourism earnings in 2025, up 1.6% from $ 3.17 billion in 2024, while arrivals increased 15.1% to a record 2.36 million from 2.05 million.

The recent return to monthly earnings growth offers a limited positive signal, but the persistent decline in cumulative receipts underscores the difficulty of converting visitor arrivals into stronger foreign exchange earnings.