The cancellations started before the dust had settled on the hotels and churches hit by suicide bombers in Sri Lanka as tourists and operators pressed the panic button.

Sanath Ukwatte, chairman of the colonial-era Mount Lavinia hotel in Colombo, said he lost about 30 percent of his bookings within days of the Easter Sunday attacks that killed 253 people.

Many holidaymakers got the first plane out of Colombo after the blasts -- at least 40 foreigners were among the dead -- raising fears for a tourism industry that had managed to move on from the shadows of a decades-long civil war.

The United States, Britain, Australia, India and Israel have all warned their nationals against visiting, while the Netherlands is organising a special flight to evacuate hundreds of Dutch tourists.

On Friday, European travel giant TUI announced it had stopped taking bookings for the South Asian country.

And the crisis could get worse before it gets better for the island nation, whose palm-fringed beaches and mountain tea plantations were recently named the best place to visit in 2019 by the Lonely Planet guide.

- Armed guards -

Sri Lanka’s Finance Minister Mangala Samaraweera had hoped tourism would earn a record $5.0 billion this year, up from $4.4 billion in 2018. He thinks the attacks could now see the country lose up to one third of that.

Tourism accounts for about five percent of the economy, with Britain, India and China the main markets. Official figures show tourist arrivals in the first quarter of this year jumped 4.6 percent to 740,600 from 2018.

But with armed guards now a fixture in some Colombo hotels and cancellations flooding in after the carnage unleashed by coordinated suicide attacks, Samaraweera must work out a rescue plan for establishments now facing ruin.

"We expect a 30 percent drop in arrivals and that means a loss of about $1.5 billion in foreign exchange," he said on Friday.

Ruchir Desai, a senior investment analyst with Asia Frontier Capital in Hong Kong, said the next year will be a tough one for Sri Lanka.

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"Given the scale of the attack I still think you would see a negative impact on the industry," Desai told AFP.

"It should recover," he added, "obviously it depends on the steps the government takes to improve stability."

Ukwatte, who is also president of the Hotels Association of Sri Lanka, hopes Sri Lanka can "bounce back".

Sri Lanka's tourism is heading into its low season, and Ukwatte believes if confidence can be restored by October or November, "then we will be able to revive the industry with European winter travellers."

Finance Minister Samaraweera highlighted how other countries hit by Islamic State-inspired attacks rebuilt their image and convinced tourists to come back.

"Typically, countries that suffer isolated IS-style attacks see tourism recovering within one-to-two years, as long as root causes are addressed and security measures taken are well communicated," the minister said.

He pointed to tourist industries in Belgium, France, Spain and Tunisia as countries which had all managed to bounce back after suffering indiscriminate terror attacks.

- Bad message -

Much will depend on how the government gets its message across, observers said.

Canadian adventure tourism promoter Wade Campbell criticised the government's communications after the attacks, particularly a top defence ministry official -- who has since resigned -- who said Sri Lankan hotels should have arranged their own security to avoid being hit.

Danger is "a perception thing," said Campbell, who is now looking at redirecting bookings to rival destinations like Nepal.

Italians Donatella Papi and her husband Maurizio Fantappie were on a 25-day holiday in eastern Sri Lanka when the bombers struck.

"My husband wanted to leave after the bombings, he suggested going to Thailand. But I wasn't too scared then, I thought it would settle down," said Papi.

"I think Sri Lanka tourism will fall -- we are very sad about it. This year is the anniversary of the end of the war -- it was supposed to be a celebration," she said.

"We have no regrets about staying on but we are very sad and worried -- for our safety and for Sri Lanka."