Sri Lanka’s rapidly rebounding tourism sector has received a further boost after the US lifted its travel warning to the Indian Ocean island a year after the end of a bloody civil war.

The US State Department said in a statement that it had “cancelled the Travel Warning for Sri Lanka due to improvements in safety and security conditions throughout the country”.

Head of the Sri Lanka Tourism Bureau, Dileep Mudadeniya said: “This is something we have been looking forward to. It will have a knock-on effect on (travel) insurance rates and also encourage more business travel from the West.”

The island nation has just passed its first anniversary of the defeat of Tamil Tiger rebels in a violent military offensive that ended the guerrillas’ separatist campaign after 37 years of conflict. An estimated 100,000 lives were claimed in the war, according to United Nations.

Tourists were never directly targeted even during the height of the troubles between troops and Tamil Tigers, but the violence seriously tarnished the island’s image.

The tourism industry is now staging a dramatic revival. Tourism arrivals have risen for 11 consecutive months and were up 50 per cent in March, compared to the same period last year.

Indian tourists took the top slot with 8,607 visiting Sri Lanka, with tourists from the United Kingdom (8,559) and Germany (5,305) following. With the increase in operations of the low-cost carrier, Air Asia, arrivals from Malaysia also enjoyed a healthy increase.

Dilip Mudadeniya, Director General Marketing, Sri Lanka Tourism Promotion Bureau, said that this healthy trend would continue in the future too. “This positive sentiment is due to peace and the removal of travel advisories and we expect this healthy trend to continue,” he said.

But according to Ajit Gunawardene, chief executive of John Keells, Sri Lanka’s largest hotel group, if the tourism economy continues to grow at such rates there will be an occupancy shortage within two years.

Sri Lanka’s tourist infrastructure can handle up to 800,000 visitors a year, comfortably meeting expected demand this year of 500,000.

However within the next two years, arrivals are expected to double and then double again two years later to 2 million. He suggests that unless the country embarks on a hotel construction boom it will fail to meet demand.

The industry is hoping to attract 2.5 million visitors by 2016, up from 450,000 in 2009. It is also hoping to earn US$2 billion annually in tourist revenue by 2016, up from US$350 million last year.