Could Covid-19 Lead To A Positive Disruption In Tourism Industry?

Tourism is probably the worst affected industry from the outbreak of the COVID-19 pandemic. Sri Lanka is yet to feel the economic and social impact of the unprecedented global lockdown and travel restrictions, which are likely to remain until the third quarter of 2020.

- Indika Hettiarachchi

The COVID-19 pandemic hit Sri Lanka’s tourism industry at a time when the industry was in need of a disruption to catalyse a new growth cycle. Perhaps the COVID-19 pandemic could bring a positive change to the industry for a stronger recovery.

Sri Lanka’s tourism industry expanded fast during the last decade. But poorly planned hotel developments, expansion of the informal sector and over-tourism in some segments resulted in diluting the value of the Sri Lankan tourism offering. Ineffective policy responses/initiatives also contributed to the gradual erosion of the country’s tourism prospects. The tourism industry’s returns were declining while the tourism ecosystem was getting fragile.

However, the developments post COVID19 are likely to be beneficial, at least to some key segments of the tourism value chain.

Formal sector recovery

Sri Lanka’s formal tourism sector has been hit hard by the expansion of the informal sector – mainly informal accommodation. Although the informal sector enhances the inclusivity of the industry, Sri Lanka’s informal sector has been expanding in a direction, which was dragging the overall quality of the industry.

The latest indications suggest that the informal sector will decline and go through a reorganisation post COVID19. International travellers will be more concerned about the health and safety aspects of the lodging they are going to stay, which will not favour the informal sector.