Tourism is an industry that makes important contributions to the Sri Lanakan economy. Thelong-term survival of this industry depends on the longevity of natural resources and thebeauty of the environment. Today, the tourism industry is impacting the naturalenvironment negatively. The concept of circular economy is gaining global attention assustainable alternative to traditional economic practice. Through qualitative approach, thisthesis investigates how the Sri Lanka tourism industry can adopt a circular business modelto mitigate its negative impacts. The methodology utilized semi-structured interviews withfive business personalities involved in hotel and accommodation sectors listed undercategory of small and medium-sized business.  The study first examined the awareness and perceptions of the circular business modelconcept among tourism SMEs in Sri Lanka. This is a step was extremely important, asawareness is a fundamental prerequisite for adopting more sustainable practices. Theresearch investigated the current level of understanding and knowledge about circularbusiness model concepts within these small and medium-sized enterprises. This exploredhow tourism businesses in Sri Lanka currently view the circular model whether they see itas a practical, beneficial approach or faced concerns and lack knowledge.  Next, under Opportunities and Challenges the study explored the key opportunities andchallenges that either enable or challenge the transition towards circular business models.On the opportunity side, the research examined factors that could facilitate and incentivesSMEs to achieve circularity, such as cost savings, improved brand reputation, attractingenvironmentally conscious tourists, and preserving local value chains and resources. Thefindings also highlighted that some SMEs are already employing innovative circularpractices, indicating a readiness to embrace more sustainable operations. Conversely, theresearch could identify several barriers to the widespread adoption of circular practicesamong SMEs. These barriers include limited awareness of circular economy principles,financial constraints, and regulatory challenges.  Finally, the study evaluated on developing practices the effectiveness of any existingbusiness development goals or initiatives related to circular economy strategies within SriLankan tourism SMEs. This involved assessing the current state of circular practices,identifying areas for improvement, and determining the specific types of support andresources needed to help these enterprises successfully adopt and sustain a circular businessmodel.  The thesis suggests several avenues for future research, including road map to achieve fullysustainable circular business model. It also recommends evaluating the effectiveness ofgovernment policies and initiatives in promoting the adoption of circular economyprinciples within the tourism sector and investigating the role of technology and innovationin facilitating the transition to circular business model. Key words – Circular Business Model, Tourism SMEs Sri Lanaka, Sustainability,Resources optimization