The blooming informal sector in tourism is positive, when taking into account the greater interests of the country, Tourist Hotels Association of Sri Lanka (THASL) Chairman Hiran Cooray said at the United Nations World Tourism Organisation conference held in Passikudha recently. “It’s no longer a big boy’s game and that is encouraging. While sometimes my own members in the Hote l s Association grumble a little bit, saying that they are not staying in our hotels, in the greater interests of Sri Lanka’s tourism, this is a good thing,” he said.
He said that this is a natural evolution of tourism and that up to 40 percent of tourists coming to Sri Lanka now stay in homestay units, although Cooray may have included apartment renting, guest houses and villas, etc., that are in the informal sector in this figure. Currently just 921 homestay rooms are registered with the Sri Lanka Tourism Development Authority (SLTDA).
SLTDA Director General Malraj Kiriella had said in a recent press conference that there could be over 4,000 unregistered home-stay rooms, though it is impossible to give an accurate figure.
In total, there are 19,634 hotel rooms and 11,534 supplementary rooms—which include homestays, boutique hotels, bunglows, villas, etc.,—currently registered with the SLTDA. Tourists staying within the local communities pass the revenue directly to the bottom of the income pyramid, fast-tracking grass root level economic development. However, a lack of sound education may cause this income to be utilized in a socially and economically unhealthy manner.
“All that we are doing now, through tourism, though Paddy’s (Withana) team of development people is how they can be brought into the formal sector. To support them further,” Cooray added. Withana had said recently that no efforts would be made to pressure these unregistered units out of business and support would be given to bring business and hospitality practices to levels where they could be registered, even if building structures may not necessarily meet official requirements.
“It’s not an easy task. Even in the developed world, this informal sector likes to remain informal and they don’t like to pay taxes and all other things but of course they like to benefit from all what the government does,” Cooray said.While such businesses do pay local and regional taxes, they do not pay the national taxes or the Tourism Development Levy that has until now been used to promote tourism.
Tourism, Land and Christian Affairs Minister John Amaratunga too reassured that the efforts of formalization were not due to influence by the local hotel lobby to put the informal sector out of business. Websites catering to the sharing economy such as Airbnb and Couchsurfing have helped to increase the creation of informal sector units.
The hotel industry lobby in New York has been successful in bringing in a bill to ban advertising of short-term rentals through such websites, while the European hotel lobby is also pressuring to ban such websites. “We would like to see that they become part and parcel of Sri Lanka’s march to tourism success,” Cooray said.(CW)