But sources in the industry warned that the post-war boom could be short-lived as planned airport closures forced the cancellation of international flights.
Tourism on the Indian Ocean island suffered heavily during a decades-long civil war that ended in 2009, but has been recovering in recent years.
Tourism minister John Amaratunga said Sri Lanka had 2.05 million arrivals in 2016, short of its target of 2.2 million but still the best the island has ever recorded.
"The drop will be because of the partial airport closure and (national carrier) Sri Lankan stopping direct flights to France and Germany," a senior tourism official told AFP.
International airlines have reduced flights to Colombo during the airport refurbishment that is expected to continue until April.
Sri Lanka's loss-making national carrier Sri Lankan has said it will lose USD 50 million as a result of flight cancellations.
Authorities say tourism has also been boosted by improvements in the island's international reputation for human rights following the ousting two years ago of former president Mahinda Rajapakse, widely criticised for suppressing dissent.
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