The Informal Sector and Its Characteristics

This essay sample essay on Informal Sector Essay offers an extensive list of facts and arguments related to it. The essay’s introduction, body paragraphs and the conclusion are provided below.

Sir Lankan Tourism – Stronger Growth in the Informal Sector? The new breed of tourists… The Flash -Packers Sacral Malthusian There is no doubt that the overall tourist arrivals to Sir Lankan has shown YOU growth in the past few years. Almost all hotels are returning healthy revenue, occupancy and profitability figures.

However there are some ‘rumblings’ from the larger established hotels that the performance has been not all that spectacular as compared to previous years. From an overall country perspective it is indeed quite easy to check the truth’ behind these concerns.

To do this, one has only to study in greater detail the growth In the large and small establishments separately as reflected In the ‘Foreign Guest Nights’ and published by Sir Lankan Tourism Development Authority (SALAD) Itself. Foreign Guest Nights (FOG) are recorded directly from Individual hotel establishments, which indicate the actual number of 1 nights spent in a particular hotel by foreigners.

(There is also separate data on Local Guest Nights). The SALAD also publishes a further sub-division of Figs into two categories, called FOG in Graded Establishments and Supplementary Establishments. Graded

Establishments are categorized by SALAD as conventional star class hotels, while Supplementary Establishments are the smaller guest houses and home stay units (the so called ‘Informal’ sector), registered with SALAD. The SALAD also tracks the average number of days a tourist has spent In the country, which has been In the order of 9.

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8 – 10 days per violators. Dividing the Figs by the length of stay, would then reveal the exact number of foreigners who have stayed in the hotels and other establishments. Hence it is not a major exercise to ascertain separately the actual number of Derived from SALAD statistics

Informal Sector Essay

Analysis The total number of tourists as recorded by the Emigration department and published by the SALAD for 2011 was 855,975, while the ‘real’ tourists as determined by FOG statistics of the SALAD is 725,889, which is a 16 % ‘leakage’ factor, of tourists of this ‘leakage’ could also be the tourists who stay in the large number of unregistered small ‘Bed and Breakfast’ units that have sprung up in all popular tourist 2 cities on the ’round trip circuit’, whose statistics are not caught up in the SALAD records.

Also significant from the analysis is that there was a growth of 21% in all the graded establishments, while the (informal) supplementary sector grew by a spectacular This shows clearly that the ‘informal sector’ has grown much faster than the formal sector’ for 2011 (The breakdown of 2012 statistics giving FOG is still not available with the SALAD). The Future So what of the future? Should we all rush to set up small B units and stop the development of large scale conventional hotels?

Should conventional hotels drop their rates drastically, to try and attract the lower end market? These are all knee-Jerk responses. What Sir Lankan tourism basically needs today is a tragic approach to growth. 3 The Informal Sector and the New Breed of Tourist Certainly, the growth in the informal sector is very interesting. It is fuelled by strong social media, networking and internet platforms, together with the fact that traveling and exploring Sir Lankan today is very safe and quite feasible to do on one’s own, rather than depend on guided tours as a few years before.

Hence, it is no surprise that a new segment of adventure seeking tourists are fuelling this growth, spending less on their hotel utilizing no frills budget on accommodation, and spending more n exploration and adventure. This new segment of tourists are called ‘Flashback’, a combination of flash (as in fancy), with backpacking, used to refer to an ‘affluent backpacker’. Blackjacking has an association of more disposable income while traveling, and has been defined simply as backpacking with a bigger budget.

It includes the use of a backpack or other luggage that is easily carried for long distances or long periods of time; the use of public transport; inexpensive lodging; a longer duration to the trip when compared with conventional vacations; and an interest in meeting the locals as well s seeing the sights. It is typically associated with young adults, who generally have This is not really a bad situation. Actually, this market segment should be strengthened as it is a vibrant driving force, which brings exposure and limelight to the country.

It is precisely due to this growth, that Sir Lankan has found favor as Lonely Planet’s No. 1 destination for 2013. It is this segment of the market that grew some 80%, and which is still reliant on guide books such as Lonely Planet, and GAPS Map interfaces. This growth in the informal sector products is fast catching up with the conventional toll segment. SALAD statistics indicate close upon 15,000 rooms in the conventional hotel 4 category while the supplementary (informal) category rooms have risen to 11,600.

If the unregistered informal category, which is possibly quite large, is added to this, it will be evident that the informal category of rooms already out-numbers the formal sector. This is indeed an eye opener, where possibly in the future, the informal tourism industry will have a greater say in setting the course of tourism of the country. Conventional Hotels So what has happened to the conventional hotel segment? They have far too long rested on their laurels, enhancing their performance on the post war spectacular growth in numbers and revenues (room rates).

No careful redesign of product and service offerings has been done on a major scale, to add value and greater experience, which seems to be what the market is demanding. The conventional hotels with large number of rooms offering the same old restaurant options and facilities are lost in the crowd. There are no real unique selling propositions or differentiating aspects. On the further end of the scale, the higher end boutique hotels offering luxurious, rationalized and custom built products and service offerings are succeeding in maintaining high growth.

Conclusion Sir Lankan tourism therefore, needs to take a step backward, and call time out’, to take a good hard look at the new market forces that are impacting the industry, and causing paradigm shifts in the way we need to do things. New value added products and service offerings are needed, breaking out of the conventional shackles to help Sir Lankan tourism grow in a sustainable manner, and to become a mature tourism destination. All photographs by the Author 5