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More Sri Lanka's hotels seek state help to stifle start-up challenge

Sep 05, 2017 07:42 AM GMT+0530 | 0 Comment(s)

ECONOMYNEXT - Sri Lanka's Citrus Hotels group has called for tighter regulation of tourism start-ups and customers flock in droves on their own initiative, to new leaner smaller properties backed by price transparency offered by booking engines.

Prema Cooray, chairman of Citrus Waskaduwa Hotel, told shareholders that the informal "has grown exponentially and is today a major factor in driving arrivals and growth" and the "unregulated" units is almost equal to the formal sector.

"The tourism authorities should consider to meet this challenge in a pragmatic manner by some means of regulation," Cooray said.

"Currently the informal sector enjoys an unfair advantage over the formal sector, and thus the segment should be brought into the net of formal taxation and levies in such a manner to allow the sector’s growth to continue in line with world travel trends.

"Social media plays a critical role in promoting the informal sector and they should be partners in this exercise in order to regulate and effectively mitigate this challenge."

Both John Keells Holdings and Aitken Spence, which have been feeling the heat of competition, have called for regulatory help to ward off the competition, as have Sri Lanka's three wheeler drivers.

Sri Lanka's three wheeler drivers who have called for a regulatory authority to established to control the sector.

A recent budget actually proposed the setting up of a three wheeler regulatory authority. Like the hotel sector, call-centre based taxis and mobile apps where uber-like services and bringing in competition, are giving older drivers a run for their money.

Many established three wheeler drivers say no on below the age of 35 years should be allowed to carry passengers because they are not mature enough to serve passenger properly and younger drivers wear tattoos and shorts.

Cooray said it was 'crucial' for the supply of new hotel rooms and 'control mechanisms'

"In order to maintain the sustainability of tourism in the long-term, it is crucial that measures are taken to monitor supply and adopt control mechanisms to ensure that global standards of service are met, thus improving the nation’s competitiveness in the international arena," he said.

Sri Lanka's Tourist Board under the current administration has already started tightening regulation on smaller properties, defining what they believe are various grades and services, and charging fees.

"We welcome the efforts taken to improve the standards of Sri Lanka’s tourism industry, with the introduction of a new classification for tourist hotels by the SLTDA in April 2016, replacing the earlier outdated classification guidelines," Aitken Spence Chairman D H S Jayewadene said in May 2018.

"The new classification requires all tourist hotels registered with SLTDA to have a star classification, which would then be reviewed every 3 years."

"However, the implementation must also be accompanied by stringent monitoring and enforcement to protect the image of the industry as well as the client’s welfare."

However most tourism start-ups get guests from booking engines like Agoda.com, booking.com.

They are subject to ongoing market-based disclosure regulation by user reviews.

Meanwhile economic analysts say international travellers are getting increasing adept at paying for what they get without benefit of any state mandated bureaucratic standards which are subject to regulatory capture.

Though established players believe that small start-ups are competing only against them, small properties that are actively using dynamic pricing are competing against hotels in South and East Asia. (Colombo/Sept05/2017)


 

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