Sri Lanka is to borrow US$200 million from the World Bank on concessional terms to develop its tourism industry, beginning with a US$77 million project aimed at persuading visitors to spend longer, and more, in Colombo.
Natasha Kapil, the World Bank’s Lead Private Sector Specialist for South Asia, said the facility supports three successive island-wide operations, EconomyNext reported. Preparatory work is being funded by a separate US$1 million grant under the bank’s Grant Facility for Project Preparation.
The problem the money is meant to fix
Colombo has the country’s highest concentration of five-star hotel rooms and keeps almost none of the traffic that passes through it.
Only 5% to 10% of visitors arriving in Sri Lanka stay in the capital, Kapil said, and most of those stay about half a day.
“If you look at the numbers of visitors that come to the island and those that actually stay in Colombo, the number is minuscule,” she said.
The first operation, called Thrive Colombo, targets higher-spending regional travellers within a five-hour flying radius, pitching the city for 48-to-72-hour breaks. Two further operations will address nature-based and marine tourism.
What the $77 million buys
The Colombo project is built around three components.
The first modernises the institutions under the Ministry of Tourism — the Sri Lanka Tourism Development Authority, the Tourism Promotion Bureau and the hotel school, SLITHM — while supporting the new Tourism Act and upgrading tourism data systems.
The second funds physical infrastructure across two circuits: a Fort heritage loop and an urban wetlands loop. It covers pedestrianisation, building facade improvements and waterfront connectivity from Galle Face Green to the Pettah market, with several Fort heritage buildings identified for adaptive reuse under private management. The wetlands loop upgrades access around sites such as Beddagana and Diyasaru parks.
The third establishes a Tourism Entrepreneurship Fund, run by a private fund manager and expected to draw in private capital alongside institutions including the International Finance Corporation. It is aimed at micro, small and medium enterprises — artisans, baristas, walking and nature guides — and at building a “Colombo calendar” of events.
The strategy work has already started
Two World Bank-supported consultancies were launched on Monday to write the plans the money will follow, the Daily Mirror reported.
The National Tourism Strategic Planning Consultancy (2026-2031) will prepare a five-year framework covering demand and supply, investment needs, regulatory and institutional reform, skills, marketing and implementation. It went to a joint venture between Spain’s Aninver Development Partners and Sri Lanka’s EML Consultants PLC.
A separate Global Destination Communication Campaign Road Map Consultancy, awarded to US-based Skift Inc. and Sri Lanka’s MTI Consulting, will build a five-year international promotional strategy.
The strategic consultancy runs 24 weeks, with stakeholder workshops in October and validation sessions in January, EconomyNext reported separately.
”Five million would be the maximum”
Officials were unusually direct about abandoning arrival targets as the measure of success.
Deputy Minister of Foreign Affairs, Foreign Employment and Tourism Prof. Ruwan Ranasinghe said the country should stop chasing volume. “We are no longer interested only in volumes. We are a small island nation with sensitive ecological settings, a small population and fragile cultural practices and heritage,” he said. “For an island of this size and type, I think five million tourists would be the maximum. Now, however, we need to focus on value.”
The numbers behind that argument came from the consultancy’s local team leader, Malraj Kiriella: Sri Lanka received about 2.36 million visitors in 2025, more than in 2018, but earned about US$3.2 billion — leaving average earnings per tourist well below the 2018 level.
José de la Maza, managing director of Aninver Development Partners, put it as a choice of metric. “As everybody is discussing: focus on yield, not on number of visitors,” he said. “We can grow in visitors year over year, but it doesn’t have to be the key priority.”
The strategy is meant to spread earnings across all nine provinces by linking tourism to agriculture, tea, wellness, fisheries and the creative industries.
Context
The lending lands against a run rate that is behind last year. Arrivals passed 1.5 million by late August but were running about 2% below 2025, with SLTDA chairman Suranjith Wevita attributing the shortfall to the conflict in West Asia while maintaining a 2.5 million target for the year.
Kapil said better data would be central to what follows. “Once we have gathered and analysed more intelligence and data, we will be able to develop much more targeted marketing approaches for the higher-spending visitor segments,” she said.
Neither outlet reported the concessional terms of the loan — the interest rate, grace period or repayment schedule — when the two later operations will be prepared, or how the $200 million splits across the three.
