Transcript Planning for Tourism Development in Small Island Destinations

Planning for Tourism Development in
Small Island Destinations: the need for a
new sustainability mindset
Larry Dwyer
President, International Academy for the Study of Tourism
Former President, International Association for Tourism
Economics
Professor, Australian Business School University of New
South Wales
Characteristics of SIDS
• The natural, economic and social systems of SIDS
are very vulnerable to external shocks due to the
following shared characteristics:
• small size
• Remoteness from major origin markets
• narrow resource base
• narrow export base
• exposure to global challenges (economic, political,
socio-cultural, environmental, technological)
Importance of SIDS
• Islands are distinctive places to visit, often with a
unique character and appeal
• Islands, overall, are hugely important for global
biodiversity, with many containing unique species
on account of their relative isolation
• Similarly, this explains the rich cultural heritage
that can be found on many islands
• SIDS provide a significant tourism resource but
also a strong responsibility on tourism to support
conservation of resources
The importance of tourism to islands
• Tourism is a dominant force in the economy of many SIDS and provides
one of only a few sources of foreign exchange earnings for most of them.
• In half of the SIDS, tourism expenditure accounts for over 40% of all their
exports of goods and services.
• equates to more than 20% of GDP in two fifths of SIDS where data are
available.
• demonstrated by the recent graduation of Cape Verde and the Maldives
from Least Developed Country status due to their levels of income from
tourism.
• the projected growth of the sector worldwide, with international tourism
arrivals forecasted to reach 1.8 billion by 2030. The popularity of islands
as destinations and the kinds of experience that they offer should enable
them to see at least an equivalent amount of growth.
• Tourism income can support livelihoods in many island communities.
• They are also uniquely placed to benefit from, and provide support for,
the special cultural and natural heritage assets which are a feature of so
many of the world’s islands.
• Tourism contributes to economic resilience in SIDS.
Global growth forecasts and future
market patterns
 SIDS should see continuing growth in forthcoming years
up to 2030.
 The forecast is for global growth in international tourist
arrivals to continue but at a more modest pace, from 4.2%
per year (1980–2020) to 3.3% (2010–2030) as a result of
four factors:
• the higher base volumes;
• lower GDP growth as economies mature;
• lower elasticity of travel to GDP;
• a shift of falling transport costs to increasing ones
Success? Yes if its only about
numbers!!!
Challenges to Development of SIDS
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Transport Access
Scarce and fragile natural resources
Climate Change
Low Multiplier effects (leakages)
Community Engagement
Opportunities for Development of SIDS
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Economic Growth
Employment & Women Empowerment
Promotion and protection of natural resources
Blue & Green Economies
Investment and Value Chains
Resilience
Three accepted propositions
 Tourism as a key driver of sustainable development in islands
• For many islands, tourism is the single most important economic
activity, with clear opportunities for future growth
• Therefore tourism must feature strongly on the sustainable
development agenda of islands and be given high priority in
programmes to support SIDS and other island territories
 Natural and cultural heritage as primary assets for island
tourism
• Tourism is well placed to generate awareness and support for the
unique biodiversity and rich cultural heritage of islands, on which
it depends
• Tourism development must be carefully planned and managed so
that it has a positive impact on island resources, environments
and communities and responds to the challenges of climate
change
 Importance of Sustainable Tourism Development
3 pillars of sustainable tourism
• environmental sustainability: emphasizes the
protection and conservation of the environment
• economic sustainability: increasing incomes and
employment, foreign exchange earnings, public
revenues, poverty alleviation, business
development and investment to stimulate local
economies
• socio-cultural sustainability: harmonises with
social values and cultural integrity
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Three pillars of Sustainability
OUR LEADERS’ RESPONSE
Environmental Impacts: Negative
pollution (air, water, noise, littering)
 loss of natural habitat including agricultural and
pastoral lands
destruction of flora and fauna
 vandalism
degradation of landscape and of historic sites and
monuments
congestion including crowding
effects of conflicts over land use
effects of competition for scarce resources (fresh
water, energy)
 carbon footprint
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Socio-cultural Impacts: Negative
 Create a hectic community and lifestyle;
 Introducing an immigrant workforce with attendant social
problems;
 Competition and conflict between tourists and residents
for available services, facilities, and recreational
opportunities.
 Adverse demonstration effects
 Change or loss of local identity and values;
 Loss of traditional crafts and skills;
 Commercialization of traditional cultural events, arts and
crafts (‘commodification’ of culture)
 Loss of authenticity;
 cultural deterioration
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The Standard Planning Approach
 Conduct a SWOT analysis
 Strengths
 Weaknesses
 Opportunities
 Threats
 Develop Strategies
 Exploring Opportunities based on strengths
 Exploring Opportunities by addressing weaknesses
 Countering threats by developing strengths
 Countering threats by addressing weaknesses
 Applies to tourism planning
 Geographically: trans nationally, nationally, regionally and locally
 tourism market segments (Business, VFR, holiday - - -etc.)
 Special interest markets (cruise tourism, events tourism,
ecotourism - - - etc)
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But will tourism strategies work?
 Tourism development strategies are often a mixed bag
- -a dogs
breakfast
 Some support growth, investment, development, more tourist
numbers
 Others support a slowing down, lower numbers but greater yield
 inconsistent strategies
 Tourism development strategies typically ignore fundamental
reasons why tourism growth proceeds in an exploitative, chaotic
way
 They are often band-aid solutions, which worsen tourism's negative
effects
 Ultimately, they will fail
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4 Issues for Discussion
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Economic Growth
Leakages and Multipliers
Investment and Value Chains
Resilience
All have relevance for understanding how to cope
with vulnerability of SIDS
Economic Growth: Effects of Tourism
 Tourism is regarded as an economic development lever
 Destination managers anticipate that tourism can - -  boost business sales and output
 income, value added
 government receipts
 employment
 foreign exchange
 reduce poverty
 etc
 But - - - Does tourism always offer these benefits?
 What is the reality?
Accelerated Consumption
THE PERFECT STORM
Climate Change
Energy & Fuel
Material Resource Scarcity
Food scarcity
Water Scarcity
Ecosystem Decline
Disparate Prosperity
Government Debt
Lack of Global Governance
Political Instability
Pandemics
Can we handle another 400 million tourists globally in just 6
years?
How will we handle congestion?
How will we handle waste?
How will we handle emissions?
How will we manage our thirst for
water and land?
The Queue to Climb Everest
Source: Guardian
Protest Sign Erected by Young Balinese
Source: ABC They Paved Paradise
How will avoid residents’ backlash?
How will we protect vulnerable
people and cultures?
The Island Where Tourist Garbage is Stored in the Maldives
Source: China Daily
Source: Daily Mail
Are we at a ‘tipping point”?
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Two Mindsets regarding tourism
Standard Mindset
Sustainability mindset
Anthropocentric Ethic
Environmental Ethic
Profit
Benefits
Product
People
Destination
Place
Price
Value
Promotion
Pull
Growth/Exploitation
Protection
Tourism and the Economy: Four Tools of Analysis
 Tourism Yield Measures
 expenditure measures popular but limited
 Tourism Satellite Accounts
 measures economic contribution of tourism (eg contribution to
tourism GDP, tourism employment etc)
 Economic Impact Analysis
 estimates the effects of shocks (+ or -) to tourism demand and
supply
 changes in economy wide output, GDP/GSP, employment etc
 Cost-Benefit Analysis
 estimates change in economic welfare from a policy or investment
proposal
Tourism Yield
Standard measure is expenditure injected by type of visitor
by trip and by visitor night
 Often forms basis of destination marketing effort
 Expenditure is the most commonly used concept of yield.
 corresponds to the well known concept of ‘marketing
yield’ which is found in the mission statements of many
DMOs.
 The expenditure ‘yield’ of different markets informs the
marketing effort of many destinations world- wide at both
national and regional levels.
 Tourism Australia, Tourism Victoria, Tourism Western
Australia, Kenya, NZ, Hong Kong, Malaysia, UK, Northern
Ireland etc
Useful Measure?
 Measures of economic (expenditure) yield can guide destination
stakeholders as to:
 the origin markets that should be promoted
 the types of products and services that should be developed to
attract ‘high yield’ visitors
 Important for assessing relative importance of both ‘mature’ and
‘emerging’ source markets
 Who cares?
 Destination Marketers
 Individual firms (within and outside tourism industry)
 Tourism industry stakeholders generally
Expenditure Yields - - of limited value !!!
 gross expenditure data does not in itself provide information on what
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products tourists purchase. Give no indication of the business sectors that
receive the sales revenues.
tourist expenditure is not an indicator of profitability to firms. Profit is not
uniform across industries.
gross tourist expenditure does not inform us about the import content of the
goods and services purchased by tourists (leakages)
gross tourist expenditure does not inform us about the contribution to tourism
output, tourism gross value added, tourism employment (need a TSA)
Expenditure measures ignore the economic impacts of tourist expenditure
(indirect and induced effects) such as contribution to Gross Domestic (or
regional) Product, Gross Value Added, and employment. (need an economic
model)
Does not provide information on the geographic spread of revenues or
impacts to the wider destination
expenditure injections per se tell us nothing about the social or environmental
costs and benefits associated with different visitor market segments.
The Ideal Tourist: Two main Perspectives
 Economic Perspective
 Tourist has economic value to destination
 4 measures as highlighted
 Sustainability Perspective
 Tourist has economic, social and
environmental value to destination
 Does it matter which perspective is
adopted?
 YES
Sustainable Yield
In the context of sustainable development, it is impossible
to consider the economic dimension in isolation from the
social or environmental and vice versa
 This implies a re-examination of the notion of ‘yield’ and
its implications for tourism firms
 On a broader view, the notion of ‘yield’ includes social
and environmental value in addition to economic value
 But - - difficulties in measuring social and environmental
‘footprints’ of tourists
 Attempts to operationalise this measure (Dwyer) have
been unsuccessful
Leakages and Multipliers
• The small economic base and the land scarcity of many
SIDS means that they are prone to financial leakages and
to shortage of labour and skills.
• The contribution of tourism to GDP diminished by
leakages of foreign exchange earnings due to imports of
materials and equipment for construction, consumer
goods, and repatriation of profits earned by foreign
investors.
• Tourism leakages in some SIDS economies can be as high
as 56% (UN-OHRLLS, 2011).
• Leakages reduce the multiplier effect of tourism
expenditure
Standard View: The Multiplier Effect
 Direct Spending: Direct spending relates to purchases of goods and
services directly attributable to tourist activity.
 Indirect spending Firms that sell G&S to tourists purchase inputs
from other firms and these other firms (suppliers) purchase inputs
from other firms (suppliers) and so on -  Induced spending Induced effects arise when the recipients of the
direct and indirect expenditure-firm owners and their employeesspend their increased incomes.
 This in turn sets off a process of successive rounds of purchases by
supplier firms, plus further induced consumption - --
Size of Multiplier
• The stronger are the links between tourism and other
sectors within a destination, the greater will be the value
of the relevant multiplier
• Thus SIDS at great disadvantage compared to more
developed destination
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Direct spending by visitors
is only the tip of the
iceberg
The indirect
impact of tourism
is much larger
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Relatively easy to
measure: visitor
numbers, expenditure
Hard to measure:
subsequent spend by
suppliers, induced
effects, investment etc
Huge Economic Impact
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In the real world - -  Leakages. Additional inputs and final products may be imported due to domestic
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shortages
reduces the multiplier effect
Factor supply constraints
economies experiencing an increase in tourism expenditure face labour, land and
capital constraints.
tourist expenditure thus results in increased prices rather than increases in
output, income and employment
factor constraints lead to interactive industry effects which change the industrial
composition of an economy
Real exchange rate appreciation.
Increased inbound tourism will strengthen the real exchange rate leading to a
reduction in other exports and/or increase in demand for imports at the expense
of the demand for domestic import competing commodities
government fiscal policy
expansionary or restrictive?
Increased tourism to Fiji
 Narayan (2004) used a CGE model to simulate the long-run impact
of a 10 per cent increase in visitor expenditures on Fiji’s economy
from its three main source markets - Australia, New Zealand and
USA
 The projections indicate that the impact on real GDP in Fiji is a
relatively large 1.15 per cent
 The increasing economic activity increases real wage rates which
positively impacts private disposable incomes
 This, in turn, leads to an increase in real private consumption
helping to increase real GDP
 This generates increased government revenue, value added tax and
income tax revenues and an improvement in real national welfare.
 BUT - - - - - - -
But - - - adverse effect on traditional exports, together with increased imports
 The real outputs of the hotel industry, transportation, commerce and other private sector
output are amongst the most positively affected exports
 However, due to exchange rate appreciation, the real outputs of the various traditional
export sectors decline. These include coconut output, ginger, processed food, textile,
clothing and footwear, other manufactures
 There is also a rise in domestic prices of goods and services relative to foreign prices,
further eroding the competitiveness of the traditional export sectors
 These price and exchange rate effects also result in an increase in imports, implying
reduced output of various import competing industries
 For Fiji these include fruit and vegetables, beverage and tobacco, transport, property
services, and business and other private services imports all of which are connected closely
with the tourism industry
Exports
Products/Services
Coconuts
Ginger
Dalo
Kava
Fish
Gold
Sugar
Processed food
Textile, clothing & footwear
Other manufactures
Hotels
Transport
Other private services
Commerce
% Change
-1.1229
-0.6693
-2.2710
-2,5474
-2.0406
-0.6027
-0.4061
-8.3215
-1.7104
-2.5963
4.9543
2.5931
0.3916
0.2440
Imports
Products/Services
Fruit and vegetables
Dairy
Rice
Other crops
fish
Processed food
Textile, clothing and footwear
Other manufactures
Transport
Insurance
Property services
Business services
Other private services
Beverage and tobacco
%Change
38.828
0.6087
-0.2523
0.2876
0.7966
2.1658
0.9138
0.9316
5.6522
1.7169
3.5489
4.3318
8.1386
0.7057
Gainers and Losers
 study indicates that for an island developing country such
as Fiji, an expansion in inbound tourism can generate
growth in real GDP
 - - However, effects on the real exchange rate, real wages
and the CPI imply that the gains to tourism related sectors
are offset to some extent by losses in traditional export
and import competing industries
 Similar results would apply to other developing
economies given an expansion of the tourism industry
Local Prosperity and Poverty
Alleviation
 This aspect of sustainable tourism is concerned with
• maximising the retention of tourism income in the local
economy
• the creation of quality employment
• equitable distribution of economic benefits within society,
providing opportunities for poor communities.
 BUT - - Tourism does not necessarily alleviate poverty
• Thailand Study (Wattanakuljarus & Coxhead,2008)
Is an expansion of tourism good for the poor in Thailand?
 Tourism expansion in a destination may well create jobs for
unskilled workers, and this would have a direct poverty alleviation
impact.
 But much of the gain from tourism growth accrues to factors other
than unskilled labor, so income distribution may actually worsen. In
addition, low-skill jobs in other sectors may be destroyed, and
returns to agricultural land, from which the poor derive a
considerable share of their income, may fall as tourism expands
(crowding out effects)
 Wattanakuljarus and Coxhead (2008) use a CGE model for Thailand
and simulate the effects of tourism growth.
 Their stated goal is to answer the question: is tourism growth propoor?
Study Findings
Promotion of Thailand as a tourism destination will not
necessarily advantage the poor
Distribution of the gains from tourism depends on the
factor ownership.
 Owners of the factor that gain most from a given shock
will benefit most from tourism growth
 Increased international visitation particularly to a less
developed country such as Thailand may increase the gap
between rich and poor
 Thus, additional policy instruments are required in
Thailand to correct for the inequalities occasioning
tourism growth
Lessons for SIDS?
• Expansion of tourism draws resources from other
sector
• There will be gainers and losers within and outside
tourism
• There ain’t no such thing as a free lunch
(TANSTAAFL)
Risks of Overspecialisation
 One type of risk relates to a dependency on tourism in general as an export
market.
• The global financial crisis has demonstrated the risks involved in tourism
dependency arising from sudden unfavourable changes in demand from world
markets
 Another type of risk involves too much reliance on tourism from particular origin
markets or too much reliance on a particular tourism product (e.g. conventions,
health tourism, pilgrimage).
• Given the discretionary nature of tourism expenditure, the industry is extremely
sensitive to crises of every type (economic, environmental, political).
• Some diversification of production and exports can be prudent even if it entails a
temporary decrease in trade.
• Both of the above types of risk are compounded by the reality that TNCs firms
are increasingly 'footloose', with ability to move and change at very short notice
creating uncertainty for the host destination
Volatility
Economic Leakages and Local Supply Chains
 The contribution of tourism to local prosperity and how this reaches
different parts of the economy and society is best understood by
considering the structure and performance of the tourism value chain.
 A value chain comprises a complex set of components which
constitute the visitor experience (travel to and within the destination,
sleeping, eating, shopping, visits and activities, and return home) and
all the transactions associated with them, including the supply
linkages behind each one.
 tourism value chain analysis has been carried out in a number of
countries and local destinations in order to assess income flows in
the tourism sector and the percentage that flows to poorer groups of
the society to identify interventions to help poverty reduction
 Dwyer and Thomas, Cambodia study
 different visitor yield measures provide an important basis for the
development of strategies to increase tourism's pro-poor impact
.
Pro poor income effect in Cambodia by
origin and length of stay
Cape Verde Study of Tourism Value
Chain
1. Direct jobs in the tourist sector – number of jobs in the tourism
workforce, including hotel workers; the proportion in nonmanagement grades and, of those, the likely proportion from
poor backgrounds
2. Indirect links with the construction sector –the numbers of FTE
construction workers actively building tourism assets in Cape
Verde, and their average daily wage rates; almost all
constructions workers are from poor backgrounds
3. Indirect links with agricultural supplies –the value of local
purchases of food and beverages, based on spend by hotels on
food and beverages; the proportion of this that is supplied
locally,
4. Taxation – This mechanism for transferring resources from
tourist to poor workers appears to be supported in Cape Verde
through progressive policies relating to poverty reduction
Recommendations
• recognising that tourism in Cape Verde does not
currently take place where poor people live;
• ensuring the availability of indigenous workers with
the correct skills to participate fully in the tourism
sector as it moves forward; (compare Macau)
• working with the construction sector to identify and
train Cape Verdean workers to occupy higher skilled
positions with attractive wage levels;
• identifying specific agricultural inputs required by the
tourist industry which are particularly appropriate for
cultivation in Cape Verde;
• reviewing the fiscal incentives awarded to the tourist
industry to create a more level playing field between
foreign and domestic companies.
Lessons for SIDS?
 Undertake detailed analysis of the tourism value chain
 to identify how the local island economy and
communities can gain maximum advantage from tourism
 to design and implement measures to strengthen local
employment and engagement in the sector, including
access to training
 Policy makers should
 integrate tourism in national sustainable development
plans
 emphasise the linkages of tourism with local economies
 Promote a foreign investment framework that stimulates
the use of local products and skills
Community Engagement
 essential that local communities are consulted,
engaged and empowered to influence decisions on
tourism development in SIDS (UNWTO)
 This dialogue should engage communities in
 planning and decision taking on tourism at a local level
 pursuing equitable benefits from tourism within
communities
 a beneficial interaction between communities and tourists
Four Types of Agents for Sustainable Tourism
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The Responsible Government
The Responsible Tourist
The Responsible Operator
The Responsible Host
 Each has role to play in reducing vulnerability of small
island tourism
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The Responsible Government
 Employs comprehensive evaluation criteria in its own decision
making in formulating tourism development strategies and policies
 more use of cost benefit analysis (CBA) in assessing sociocultural,
environmental and economic effects
 identification of gainers and losers among tourism stakeholders
and wider community
 employs precautionary principle in decision making
 takes genuine account of effects on future generations
 addresses market failures associated with tourism development
 enacts environmental protection mechanisms with adequate
monitoring and enforcement
 values community consultation
 Tourist operators should have no “licence to operate” in the future
unless they act ‘responsibly’
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The Responsible Tourist
 Has greater social, cultural and environmental awareness regarding
tourism’s impacts.
 Responsible Travellers; Low impact, high yield, dispersed, engaged
 Adheres to credo of responsible traveller
 Wants to learn and grow as a result of travel, to be changed,
transformed by having experiences that help them see the world
from a different perspective, or that enrich, challenge and provide
more fulfilment
 seeks out the different, the authentic, and the ‘real’, more
meaningful social encounters,
 prefers to deal with environmentally and socially responsible
operators
 recognises that health, happiness and well being cannot be achieved
exclusively through acquisition of material goods
 increasingly
seeks quality over quantity and experiences over
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The NEW Consumer
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New Consumers still want MORE, but they
are defining that differently.
Now they seek more meaning, more deeply
felt connections, more substance, more control
and a greater sense of purpose.
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Implications of New Tourist for Destination
Marketing: importance of Pull
 PULL relates to the biggest challenge most hosts face on a daily
basis – attracting the right customer.
 Destination marketing should be LESS ‘PUSH’ AND MORE ‘PULL’
 Instead of asking: ‘what tourists do we want to target in promotion’,
we should ask ‘what tourists do we want to attract”? These are
different questions
 Involves creating the type of destination that ‘ideal tourists’ will
wish to visit
 the challenge is to attract the right customer – the one who truly
values what the provider has to offer. (The ideal tourist?)
 Attracting the right type of tourist is more important than attracting
large numbers
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Implications of New Tourist: importance of ‘place’
• The starting point for all tourism planning is about experiences that
are unique to a PLACE
• It is the place that can be valued, celebrated, expressed and
experienced
• Emphasis on PLACE provides opportunity to sustain value because
every place is unique.
• Respect for Place implies that space and locations are not merely
space as real estate to be carved up and enhanced with amenities
and infrastructure.
• Sense of Place provides an antidote to the sea of sameness,
uniformity and mediocrity that plagues tourism development
• Respect for local identities and cultures benefits not only the host
country and its people, but also correspond to the customers‘ desire
for authenticity
• reduces market dependency and volatility
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The Responsible Operator
Understands customer needs
attracts stakeholders who are in alignment with the core purpose and values of firm
Social Responsibility: becomes an agent of change through conscious leadership to make the
community a better place
understands that doing good is good for business. Thus introduction of TBL, CSR, shared value
not an ‘additional cost’ of doing business
adopts a long term perspective on business outcomes
Strategic alliances and partnerships. Collaboration replaces competition as firms in different
sectors work together to deliver the whole experience to visitors
Use of local material and skills whenever possible.
emphasises Relationship marketing, Customer Relationship Management, brand equity
close links with customers makes tourism markets more resilient to changing circumstances in
the ‘remote’
environment
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attempts to attract Responsible Tourists (Pull)
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The Responsible Host Community
 Responsible hosts must ask: What kind of future do we wish to create?
 Community members look into the future and imagine what they would like their
community to be (visioning)
 involves identifying what is really valued by the community
 What type of tourism do we want (if any) ? (the ideal tourist?)
 What kind of tourist do you wish to attract? Mass tourists vs Responsible tourists
 DMO think of themselves as HOSTS, assuming a much broader range of responsibilities.
 Local residents can to express what it means to them and be involved in extending the
invitation to guests to experience the place for themselves
 Adopts attitude that destination is a ‘protected landscape wherein the goals for
conservation are dramatically expanded from protection of nature and biodiversity to
include a broader cultural context and social agenda
 Views the products of Mass tourism as ‘out of place’
Conclusion
 Imagine......Tourism that comprises
 a network of host communities each exploring how to
deliver net benefits from tourism,
 a good living for people,
Transformative experiences for guests
 promoting cultural tolerance and peace
 Environmentally friendly
 reduces volatility
 Do we have this???. Answer =NO
 Need change of mindset wherein tourism stakeholders
truly adopt the principles and practices of a community
based sustainability model
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Thank You
Merci