Key western countries have issued travel warnings against traveling to Sri Lanka following recent attacks in Colombo city Government troops and Tamil Tiger rebels locked in combat are spooking visitors, with hotel occupancies down to around 45-50 percent, the Tourist Hotels Association of Sri Lanka said recently.

"The adverse publicity the country received in the last few months was very badly timed as October and November was the peak booking period for the winter 2006/2007 season. Bulk of the prospective bookings have gone to other destinations," the association's vice president, Srilal Miththapala said.

The association says negative publicity is also hitting summer bookings for 2007, and hotels and resorts are unable to meet loan repayments. Miththapala says hoteliers may even be forced to lay off staff to mitigate some of their losses. Holidaymakers from India, the island's top source of visitors, fell 11.6 percent to 9,302 in November, as against the same period 2005.

Traditional key markets of Britain and Germany, which attracts the usual sun 'n surf discount packages, continued to falter, as sun worshippers cancelled their holidays. German arrivals fell 42.9 percent to 3,229, while holidaymakers from Briton slipped 29.3 percent to 5,180. Sri Lanka welcomed 549,308 visitors in 2005 and the board is hoping to equal the score this year.