The tourism industry put in a stellar performance in 2010, with tourist arrivals up by 46.1% to 654,476 and earnings rising by 64.8% to US$575.9m. A number of related industries, from hotels to alcoholic beverages, were boosted by the sector's boom. Strong growth continued into January this year, with the number of visitors rising by an impressive 46.2% to 74,197 in that month. The Cricket World Cup (which Sri Lanka is co-hosting) should serve to maintain the surge in numbers in February, but the sector is likely to come under strain as the year goes on, owing to the limited number of available hotel rooms that are suitable for international travellers.

The chairman of the Sri Lanka Tourism Development Authority, Nalaka Godahewa, suggested in March that owners of vacant residences in Colombo might wish to put them to use as serviced apartments for tourists. He also noted that there were some 2,000 circuit bungalows (rentable facilities often used by travelling officials) owned by state agencies that might be upgraded to provide accommodation. The authority believes that the island will need some 35,000 rooms by 2016 to cope with an estimated 2.5m tourists in that year. This target will be extraordinarily tough to achieve, as Sri Lanka currently has just 12,000 rooms.

Attracting investment into the sector is not likely to be made easier if the recent plan announced by the Sri Lanka Ports Authority (SLPA) to spend US350m to reclaim land along Colombo's seafront to build a "new city" are realised. Hong Kong-based Shangri-La Hotels and Resorts recently announced a major hotel investment in the city, whose views of the sea seem likely to be blocked if the project goes ahead.