Colombo, Sri Lanka – Devmith Kaggodarachchi’s beachfront hotel in the southwestern coastal town of Hikkaduwa, a tourist hotspot 136 km (85 miles) from the capital Colombo, is almost at capacity.

The three-star hotel, with air-conditioned rooms and private balconies overlooking the Indian Ocean, is busy catering to tourists during the Christmas season.

This has not been the case in Sri Lanka’s tourism industry in the last four years. The number of tourist arrivals fell dramatically in 2019 Bombings More than 250 people were killed in three luxury hotels and three churches at Easter. The Covid-19 pandemic hit before Sri Lanka had a chance to recover.

Of the country economically And political unrest in 2022 – when then-President Gotabaya Rajapaksa and his family had to flee and essential goods such as fuel were almost impossible for everyday people to obtain – the country pushed tourists further away from Sri Lanka.

But a concerted promotional drive to attract foreign visitors, aided by geopolitical tensions unrelated to the country, appears to finally be bearing fruit, providing the country with a revenue engine that could play a crucial role in the recovery of Sri Lanka’s economy.

In 2023, Sri Lanka recorded more than 1.3 million tourist arrivals by the second week of December, official data shows. It is the first time in four years that arrivals have exceeded the 1 million mark. More than 150,000 tourists came here in November, the highest monthly number since March 2020.

“Tourists trust us now. After they return to their country, they speak well of us. Business is good at the moment,” Kaggodarachchi told Al Jazeera. “Our hotel can accommodate about 150 tourists at a time. At the moment it is 130 inches.

Most tourists who have visited this year are from India, which hosted three roadshows in April to promote Sri Lanka’s tourism sector.

But the Russian war in Ukraine also helped Sri Lanka. Russia is the country’s second largest source of tourists this year, while Russian tourists are not welcome in many other countries.

“There were restrictions on the countries Russians could visit. You could visit Sri Lanka. We had that advantage,” Priantha Fernando, chairperson of the Sri Lanka Tourism Development Authority (SLTDA), told Al Jazeera.

Encouraging numbers, but higher revenue needed

Industry officials say that while higher tourist arrivals are a positive sign, big-spending tourists also need to be attracted to generate more revenue for the economy.

President Ranil Wickremesinghe has also called on the tourism sector to improve its products and services to appeal to discerning tourists.

Tourism contributed from January to November $1.8 billion in sales – an increase of 78 percent compared to the same period last year. Tourism is Sri Lanka’s third largest source of foreign exchange. According to government data, a tourist spends an average of $181 a day.

Suranga Silva, a professor of tourism economics at the University of Colombo, suggested that Sri Lanka could use its uninhabited islands to boost luxury tourism by offering exclusivity.

“If we can develop our islands into world-class tourist destinations, we can attract tourists to spend more than $1,000 a day. The service must be worth the price,” Silva told Al Jazeera.

A study published in 2018 at least identified this 87 islands on Sri Lankan territory. Many are neglected and can be used to develop tourist resorts, bird sanctuaries and scenic attractions, the research found.

“Just luxury hotels are not enough. Tourists should be provided with a valuable travel package including domestic charter flights to take them to these places,” Silva said.

In 2021, the World Economic Forum ranked Sri Lanka 74th out of 117 countries in its Travel and Tourism Development Index, which measures factors and policies that enable the development of the travel and tourism sector.

“At the moment there is no advantage for foreign investors to invest in Sri Lanka,” admitted Fernando, the chairman of the tourism board. “These are the things we need to look at and develop measures that enable greater investment.”

“I expect that in 2029 we will welcome five million tourists, half of whom will spend at least $500 a day.”

“Don’t kill the goose that lays golden eggs”

But even as Colombo promotes the country’s tourism internationally, many companies in the industry fear the government is simultaneously weakening their ability to compete for global travelers.

From January 2024, the Sri Lankan government will remove a value added tax (VAT) exemption that it extended to tourism businesses in 2020.

“Our industry generates foreign exchange income quickly. So our request is to exempt ourselves from VAT,” Rohan Abeywickrama, president of the Association of Small and Medium Enterprises in Tourism, told Al Jazeera.

Sri Lanka’s parliament recently voted to increase VAT from 15 to 18 percent, adding to the sector’s concerns.

This is intended to meet tax collection targets agreed with the International Monetary Fund, which is offering the government a $2.9 billion rescue package to overcome the country’s worst economic crisis since independence.

Businesses that serve tourists already pay a tourism development levy, income tax and sales tax.

“If all these taxes are imposed on us, our production costs will increase. This is how we become an expensive tourist destination,” said Abeywickrama, an industry veteran who also sits on the government’s tourism advisory board.

“Tourism is driven by the private sector and is important to generate income. That’s why the government must protect us and encourage us to stay in business. You shouldn’t kill the goose that lays golden eggs.”

The tourism sector is also asking the government for relief from its mounting debts and multiple electricity and water tariff hikes imposed since last year.

Tour operators and four-wheel drive safari drivers say they have to make do with old vehicles as the government banned imports of vehicles in early 2020 to stem dollar outflows.

“The vehicle fleet is over 15 to 20 years old, which poses a challenge with more breakdowns and high repair costs,” Nishad Wijetunga, president of the Sri Lanka Association of Inbound Tour Operators (SLAITO), told Al Jazeera.

“Despite appropriate applications and discussions with the authorities, vehicle imports for the sector were not permitted.”

Brain drain

The mass migration of Sri Lankans to other countries in search of work has also hurt the tourism industry.

According to figures obtained by Al Jazeera from the Sri Lanka Bureau of Foreign Employment, more than 280,000 Sri Lankans, including 78,000 skilled workers and nearly 16,900 skilled workers, have emigrated this year.

According to the Sri Lanka Institute of Tourism and Hotel Management (SLITHM), the capacity building arm of Sri Lanka Tourism, skilled workers make up less than 40 percent of the tourism sector.

To create and retain a qualified workforce, the institute runs training programs that require participants to work in the local hospitality industry for a year to obtain their certification.

“As we invest in training, we bring in a payback component, which is that they have to work in the country to get the certification,” SLITHM chair Shirantha Peiris said last month.

“Optimistic for 2024”

Still, a thriving Sri Lanka tourism board is targeting 2.3 million tourist arrivals and $4.6 billion in revenue next year.

To achieve this, the country has launched its first global tourism marketing campaign in 16 years under the slogan “You Will Come Back For More”.

“We have identified nine tourism markets where we will strengthen our digital marketing campaigns over the next year. We will also attract vloggers and influencers to visit our country and produce promotional content,” Fernando said.

In late October, the government announced it would issue free tourist visas to visitors from seven countries, including China, India and Russia. The initiative, launched as a pilot project, will run until March 31, 2024.

Many tourists are already convinced.

In Mount Lavinia, a suburb of Colombo, 29-year-old Spaniard Guillem Fox walked along the beach with his French partner Mathilde Flachot.

“We will travel around the country, visiting wildlife reserves and tea plantations and perhaps surfing in the south,” Fox told Al Jazeera. The couple plans to stay for about a month. “From the moment we arrived, people were really helpful,” he said.

“It’s a really nice feeling.”