Short term lets on the rise in Sri lanka: is this good for the tourism industry?

The informal tourism sector is growing in Sri Lanka and Hiran Cooray Chairman of the Tourist hotels of Sri Lanka for one thinks it’s a good thing.  ( see  report in the Daily Mirror )

So do I.

By his reckoning 2/5th of tourists coming to Sri Lanka now stay in rented apartments, villas and homestay accommodation many of which are rented out via organisations such as Homestay.com Trip Advisor, AirB&B and the like.

Benefits

So why is this a good thing? Let’s start with the positive side.

  • Money paid by tourists goes directly to local people;

“Tourists staying within the local communities pass the revenue directly to the bottom of the income pyramid, fast-tracking grass root level economic development.” Hiran Cooray

  • Visiting tourists get to mix with local people rather than stay cooped up in hotels full of foreigners and they get to experience and enjoy true Sri Lankan hospitality; plus they get to hang out away from traditional tourist areas.
  • Because tourist are using existing facilities there is no additional strain on local authority services
  • The emergence of the informal rental market actually expands what Sri Lanka has to offer to tourists.

Not everyone (Chinese apart maybe) wants to stay in an hotel. A significant number of tourists like to do their own thing, explore local areas eat when they want in and around local Sri Lankans, and so on. They don’t want to be “trapped” in a cramped and possibly quite expensive hotel room. They like the space and informality that the informal sector can offer and when you can stay in an apartment in Havelock City for example.. at a much lower cost.. well why wouldn’t you?

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Havelock City; example of apartment

doing away with the negatives :

  • Unlike the major developments which are springing up around the coast from Kalpitiya to Mirissa and down the east coast; there is no negative environmental impact.
  • There are no major costs to be borne by local communities, economic, environmental or social
  • Homestay and the rental market place no extra strain on stretched local authority services such as electricity, water supply and refuse disposal (although the latter doesn’t seem to be working that well)
Costs
  • owners of rented accommodation don’t pay tourist taxes
  • they are not registered; no-one knows how many there are
  • there is no real quality control beyond what TripAdvisor and AIR B&B can exert
Is it a threat?

So does  the hotel sector needs to worry? No of course not. Sri Lanka can offer world class tourist accommodation for those who want it; plus Colombo is set become a signicant business hub in South Asia so the growth of business tourism which depends on quality hotels is almost assured.

It’s just that not every one can afford the prices that some city centre hotels charge in Colombo for example.

(I could add from my experience that for the money sometimes the service could be a whole lot better, some hotel staff could be a little less “up themselves” but that is for another blog.)

Where it is possible to agree with the Hotels Association is that it is not a level playing field because the informal sector are mainly unregistered and do not have to pay the tourist tax and development levy paid by the hotel chains.

True but the owners do pay local and regional taxes; adding the other costs could simply cause them to raise their rentals to a level where they would not get business so thinking about applying these extra costs or banning the advertising of short term rental and homestay on the web (as has happened in New York for example) is not a step to be taken lightly.

That said there is a case for regulation to be introduced in homestay and private rentals to ensure quality and value for money.

Research needed

In the meantime there is very little data available on the growth of the informal sector at present and maybe it would be worth conducting research so that all concerned know what it is they are discussing.

So time to start asking questions;

  • Where do informal sector tourists stay ? In Colombo? Western Province? Or coastal areas? Maybe it would be worth finding out.

To judge by the Air B&B site much of it is in and around Colombo. If that is so then is it a bad thing? Getting more people to visit Colombo and stay for longer, not necessarily in the city centre can only be good for the economy.

  • Who are these type of  tourists; where do they come from?
  • How long do they stay?
  • What do they do, where do they go what do they visit?
  • Why do they choose rental/homestay?
  • What about the owners/renters: who are they? What accommodation is being used and why?
  • How much money is it making for the owners?

As I wrote in an earlier blog; A Paradise Lost ; see https://geosrilanka.wordpress.com/2015/06/16/sri-lanka-tourism-is-it-just-a-case-of-re-branding/, my belief is that Sri Lankan tourism needs a balanced portfolio of investment; homestay and apartment rentals are.   a part of that, (as is mass tourism) because it has the value of bringing tourists much closer to an understanding of Sri Lankan life and culture.

After all, there is nothing better than hanging out around Water’s Edge on a Saturday night along with the thousands of families who come to chill, enjoy the street food , and relax over an affordable beer maybe.. and you don’t get to do that at The Cinnamon Grand

Boardwalk

 

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