Tourism revenue declines despite arrivals; remittances may follow

Sri Lanka’s tourism earnings keeps on declining, raising fresh concerns for the industry despite a steady flow of arrivals.

According to the Central Bank of Sri Lanka, tourism receipts for January and February 2026 totalled USD 730.3 million, compared to USD 768.2 million in the corresponding period last year, marking a 4.9% drop.

In February alone, earnings declined to USD 352.0 million in 2026 from USD 367.2 million recorded in February 2025.

Industry analysts note that with the winter season coming to an end and the expected drop in high-spending tourists, particularly from Europe, the negative trend is likely to continue until around August.

Sri Lanka recorded 666,065 tourist arrivals from January 1 to March 18, 2026. However, experts point out that the strong arrival numbers are not translating into higher revenue, highlighting a growing mismatch between visitor volumes and earnings.

Rising airfares, driven by higher global fuel costs amid geopolitical tensions, including the US–Iran conflict, are also expected to weigh on future arrivals, potentially adding further pressure on the sector.

Meanwhile, in contrast, worker remittances have recorded a notable increase. According to the Central Bank of Sri Lanka, inflows rose from USD 332.4 million to USD 458.1 million this year, reflecting a sharp 37.8% increase.

However, analysts caution that this upward trend may not be sustained. Ongoing geopolitical tensions, including the US–Iran conflict, are beginning to impact global labour markets, with some foreign companies reportedly scaling back operations and retrenching staff.

This situation could affect Sri Lankan migrant workers, potentially leading to reduced remittance inflows. In addition, escalating instability in certain regions may force some Sri Lankan expatriates to return home, further weighing on future earnings.

Source: Hiru News