Sara Elizabeth was found in a pool of blood inside her room in the houseboat this morning, they said.
The police suspect that the victim might be raped before being killed as her clothes were torn.
A Dutch tourist Davit Rechord (43), who was staying in another room of the houseboat, has been arrested when he tried to flee the Valley at Qazigund, 75 kms from here, on Srinagar-Jammu national highway, they said.
A team of FSL experts is at the spot and the body of the woman was sent for postmortem, the sources said.