The informal accommodation sector is catering to around half of the tourists visiting Sri Lanka, and the trend will continue to grow, according to the Sri Lanka Tourism Chief.
“On the backdrop of 2014 registering 15.1 million guest nights with tourism receipts recording US$ 2.2 billion, the informal sector is coming out at a staggering 7.3 million guest nights,” Sri Lanka Tourism Promotions Bureau Chairman Rohantha Athukorala said.
Quoting figures from a research by JB Securities (Pvt) Ltd, Athukorala said that the rise of the informal sector explains the consumption patterns of tourists which the formal sector will have to address, but that the trend will further grow, given the success of online booking platforms.
“When Sri Lanka, in two months, gets in place with a global communication partner, then we must focus on quality tourism than just numbers,” he said.
However, both local and international experts have advised Sri Lanka against ignoring young backpackers, who might visit Sri Lanka repeatedly, and stay at star class hotels instead of informal accommodation once in better financial positions.
According to tourism industry expert Srilal Miththapala, Sri Lanka is now experiencing a ‘flashpacker’ phenomenon, where tourists with high spending power travel around with backpacks, and stay in informal accommodation, but spend considerable amounts in order to experience the authentic Sri Lankan culture.
This phenomenon represents the future trend in global tourism, according to experts who spoke at the Indian Ocean Hospitality Investment Conference in Colombo recently.
Miththapala said that there had been 16,223 rooms in the formal sector in 2013, with another 7,000 rooms in the informal sector for a total of 23,200, which is set to increase to 33,500 next 2 years.
He said that 5-star and boutique hotels have an occupancy rate of around 75 percent, while, due to the rise of the informal sector, it is the mid-market 3 and 4-star hotels which suffer the most with occupancy rates around 30 percent.
However, John Keells Hotels has found a market for the 3 and 4-star hotels by attracting MICE tourists. Its latest lean hotel Cinnamon Red has performed beyond expectations, and the group is looking at setting up multiple iterations across key metropolitan areas.
The biggest threat informal accommodation poses to the country is its lack of adherence to tax policies and accommodation standards.