Just months ago, Sri Lanka’s tourism industry was celebrating. In 2025, the island nation welcomed more than 2.36 million tourists its highest-ever annual total, up 15.1% year-on-year and surpassing the previous 2018 record by 1.23%. It was a triumphant post-crisis recovery, a sign the country was finally turning the page on its 2022 economic collapse.
Today, that optimism feels like a distant memory.
Sri Lanka’s tourism earnings fell sharply through 2026. According to the Central Bank of Sri Lanka, revenue for the first six months of the year dropped 11.8% year-on-year to $1.51 billion, down from $1.71 billion over the same period in 2025. By the end of July, the decline had settled at 11.5%, with cumulative earnings of $1.79 billion — leaving the industry needing roughly $480 million a month for the rest of the year just to hit its now-lowered $4.2 billion target, a bar well above July’s $285.5 million haul. The worst single month came in March 2026, when tourism earnings plunged 37% year-on-year to $223.7 million amid escalating conflict across the Middle East, followed by an even steeper 38.8% year-on-year drop in April.
What happened? The answer lies thousands of kilometres from Sri Lanka’s shores.
When the US-Israeli war on Iran escalated in March 2026, the ripple effects reached Colombo almost immediately. Iranian strikes on Qatar’s Ras Laffan Industrial City, the source of roughly a fifth of the world’s LNG forced QatarEnergy to halt production and declare force majeure on long-term supply contracts. But the more immediate blow to Sri Lankan tourism came from the skies rather than the gas terminals: airspace closures and flight disruptions across the Gulf severed the vital air corridor that funnels high-spending European and North American travellers through Dubai, Abu Dhabi, Doha and Sharjah on their way to Colombo.
Pakistan knows this story intimately, though its own crisis has different roots.
In Gilgit-Baltistan, home to five of the world’s fourteen 8,000-metre peaks, including K2 — international climber arrivals collapsed by almost 90% this year, according to the Alpine Club of Pakistan. Official figures show just 270 foreign climbers attempted expeditions in the region this season, down from more than 2,000 climbers and trekkers the year before. Only 40 of them summited K2. The club’s president, Major General Irfan Arshad, called mountaineering “the lifeline of Gilgit-Baltistan,” warning that this year’s collapse has “created a ripple effect of losses across all sectors.”
The causes, according to Alpine Club officials and expedition operators cited by Anadolu Agency, are layered: harsh weather that forced many teams to abandon their climbs without summiting, devastating floods elsewhere in Pakistan that claimed at least 1,000 lives and displaced over two million people, and cancellations tied to regional conflict. One tour operator told Anadolu that regional wars “only made the cancellations worse,” with half of his company’s scheduled expeditions scrapped this season. A sharp hike in K2 permit fees climbers now pay a $5,000 individual royalty rather than the old group rate has compounded the deterrent effect for budget-conscious mountaineers.
Both Sri Lanka and Pakistan have discovered a painful truth: tourism is often the first sector to register geopolitical shock, and the last to recover from it. When conflict erupts — whether in the Middle East or along Pakistan’s contested frontiers, it is not just governments and markets that absorb the impact. It is the hotel owner in Colombo watching bookings evaporate. It is the porter along the Karakoram Highway who spends an entire season without a single expedition to join.
Sri Lanka’s tourism authorities are scrambling to adapt. Facing the revenue shortfall, the Sri Lanka Tourism Promotion Bureau chairman Buddhika Hewawasam has pushed a strategy centred on longer stays, higher visitor spending and product diversification rather than simply chasing arrival numbers noting that Indian tourists now spend an average of $154 a day, above the country’s overall average of $148, and that wildlife and marine tourism visitors spend $160–170 daily. But the numbers required to close the gap remain daunting: Sri Lanka needs to generate more than $2.4 billion between August and December alone to reach its revised target.
Pakistan’s climbing industry, meanwhile, is contending with a narrower but equally acute problem. With expedition numbers cut to a fraction of their historic levels and permit revenue with them, the Alpine Club of Pakistan has called on the government to “address policy challenges, resolve disputes with stakeholders, and take urgent measures to revive and promote both domestic and international adventure tourism” before another season is lost.
What both countries are experiencing looks less like a temporary blip than a preview of how exposed tourism-dependent economies now are to shocks that originate far outside their borders. Sri Lanka’s own numbers tell a quieter, longer story too: even in its record 2025 year, tourism earnings rose only 1.6%, from $3.17 billion to $3.22 billion average earnings per visitor were actually lower than in 2024, a sign that more arrivals are not translating into proportionally more revenue.
Sri Lanka and Pakistan are not competitors in tourism. They are fellow travellers on a difficult road, both learning in real time that resilience in this sector now depends less on chasing headline arrival numbers and more on diversifying markets, spending patterns, and the routes by which visitors actually arrive.
The tourists will return. The open question is whether both countries use this stretch to build a sturdier tourism model, or simply wait for the next shock Middle Eastern, climatic, or otherwise to arrive.
