A Diagnostic Methodology Checklist for Tourism Studies

Purpose and outline Tourism is one of the largest and fastest growing sectors in the world and a major driver of growth for developing countries - their tourism market share have actually increased markedly over the past two decades. The Tourism industry cuts across many sectors, such as retail, housing construction, hotels, restaurants, telecom and transportation. Serious policy issues in one of these sectors may threaten the whole tourism value chain. This makes analysis of the sector complex but crucial as it could be the catalyst for widespread reforms of overlooked issues (e.g. land market). The first step of such analysis should to identify the main tourism segments based on a countrys comparative advantages (we provide a long list of possible tourism segments/offers in section 1 below). The second step should be to benchmark the countrys economic performance on these key segments with relevant international good practices (section 2). The third step should be to identify the policy and institutional issues which may constrain investment and productivity growth of actors in the sector (we provide a long list of such possible issues in section 3). The fourth step should be to design solutions taking inspiration from other countries experiences (section 4). We summarize the key points in the figure below:

TOURISM SUMMARY CHECKLIST

Sources of Growth
Profile of the tourism sector: -contribution to economy (GDP/FX /jobs/fiscal impact) -profile and volume of tourists, length of stay and market share -structure of the sector and the key industries Sources of growth: -cultural and natural assets, labor assets, security/health, cost advantages Tourist products: -product life cycle of SSS, cruise, FIT, VFR, business and other products Source markets: -socio demographic segments New tourism products: -sources of growth, supply and demand

Benchmarking

Policy issues

Reform issues

Comparative performance: -market share, tourist revenues Range, quality and prices of key services: -benchmark travel, accommodation, food & beverage, activities Cost, time, output and productivity: -benchmark performance of key service providers

Land market issues -Unsecured land property rights, Zoning restrictions, Red tape for access and development Infrastructure issues leading to high access cost Environment and conservation -preservation of tourism assets Restrictions of FDI on key products and services Trade barriers - import barriers on key inputs (e.g. food) Security and health issues Labor and training (e.g. restrictions on expatriates)

Tourism development strategy supported by high -level government master plan? Experience from relevant international good practices leveraged? Economic benefits of tourism sector reform well understood? Stakeholders effectively managed international tour operators vs. domestic firms?

1. Identifying the main sources of growth The identification of the main sources of growth emanates from a fivefold exercise involving: a profile of the tourism sector; a stock taking of existing and potential new sources of growth and comparative advantages; scope of tourism product lines where the country could be competitive; scope of source markets. The exercise will ultimately bring about a subset of tourism products in which the country has a comparative and a competitive advantage. A. What is the tourism sector profile? The profile is in four parts the macro setting, the demand and the supply side and the institutional framework of the Tourism sector. For this task the Balance of Payments Statistics (IMF/National Bank), the World Travel Organization and the World Travel and Tourism Council provide good datapoints. Macro Basic macro background of the economy (structure - manufacturing, services, etc.) GDP per capita level and growth, private and foreign investment as a share of GDP), Tourisms contribution to the economy share of GDP and growth trend: Contribution to growth; exports and foreign exchange earnings; fiscal effect taxes, fees and incentives; job creation, Structure of the tourism industry number of firms, ownership and management, employment, direct and indirect, full-time/part-time, seasonality. Demand Number of foreign tourists, average length of stay and average daily expenditure, percentage of return tourists (level and growth trends), Main categories of foreign tourists by socio demographic profile and country of origin as well as seasonality, Revenue by main tourist categories and market shares (regional and global). Supply Main tourist attractions and circuits, Size and structure of the distribution channels (travel agents, tour operators, etc), Size and structure of the airline industry,

Size and structure of the industry of hotels and other accommodation, Structure of key service sectors in tourism (such as restaurants, bars, ground transportation), Structure of key activity service providers in tourism (such as diving, horseback riding, guide tours, fishing, adventure activities), Main tourist projects in the pipeline.

Policy and institutional framework Public institutions (ministry, statutory body, etc.), Private institutions (business associations and business councils), Tourism legislation laws and regulatory practices (licensing, classification, inspection), Does the country rely on a planning framework at what level, national, regional or local. Inventory of relevant policy reforms underway or being discussed. B. What are the recognized and potential sources of growth and comparative advantages? Summary of the main sources of comparative advantage. The main sources of growth and comparative advantage will be evident from the initial analysis and typically might cover: Cultural assets (for world heritage see sites listed by UNESCO) Natural assets (for world ecological see sites listed by IUCN) Labor assets (languages, service orientation, music, craftsmanship) Relatively secured environment Access to world class healthcare Education Low access cost (to and within country) Low labor cost Low land cost (access, security and right of use) Proximity to major/growing sources of tourists C. What are the current and potential tourist products where the country could be competitive? Leisure Sun, Sand, and Sea (low end versus high end) Other natural offerings (e.g. game reserves, national parks, waterfalls, mountains), Natural Events (e.g. volcano eruptions, eclipse), Eco-Tourism, Sports events,

 Conferences.

Sport offerings (e.g. golf, rafting, diving, horseback riding, fishing, bird watching and hunting), Adventure activities, Festival events, Religious events, Visiting Friends and Families, Cruising/boating, Cultural offerings (e.g. Landmarks/heritage, theme parks, museums, archeology, opera, music and dance), Other cultural events and offerings (e.g. spa, serenity, dining, nightlife, shopping, gambling, leading hotels), Stop on regional circuits, Learning facilities (languages, music, dance, etc) Retirement homes, Nursing homes, Weekend homes,

D. What are the main tourist targets (socio economic profiles and geographic origin) and the supply of tourism facilities to host these targets? Illustrative potential target markets: Young students Back packers Young professional bachelors Returning emigrants Expatriates Traveling businessmen Local businessmen Young families Upper income foreign couples Retirees E. What the most promising existing and potential tourism segments? A tourism segment is defined as the source market and the socio demographic group as well as the matching range of services required from origin to destination: travel from origin to destination, accommodation, activities/services /products consumed while on travel. Criteria for prioritizing the tourist products should include: Revenue growth potential (spending per day x length of stay)

Spillovers to the rest of the economy (e.g. linkages, competitive pressure on domestic players, etc.) and reduction of leakages, Impact on poverty, Impact on environment and sustainability.

2. Benchmarking performance The data points for this is Hotel Productivity and Investment Climate Surveys (HPICS) and it can be developed by applying the value chain analysis approach. The approach requires case studying individual itineraries each including travel, ground services, accommodations, food & beverages, and other expenditure on activities and entertainment. The data points for this are interviews with groups of service providers and review of published sources of information of component elements in proposed tourist services. Benchmark tourist revenues for the key segments with relevant international good practice (number of tourists, average length of stay and spending per day, repeat visits). Benchmark the range, quality and prices of key products and services e.g. food & beverages charges, hotel charges and airfares with relevant international good practices. Benchmark the productivity of key tourism product/service providers to international good practices e.g. hotels, transportation (airlines), retail, construction and telecom. Benchmark the costs of key inputs e.g. labor, capital, land, construction materials and telecom.

3. Identifying the key policy and institutional constraints affecting performance Identification of supply side constraints from a HPICS should be complemented with in-depth interviews with current and potential investors (e.g. international hotel and tour operators) as well as tourist interviews/surveys. This should also include a review of the key possible policy and institutional issues in the sectors that are critical pillars to the tourist industry. While they will vary from country to country, the key issues include: Issues affecting tourists directly: Security concerns (social unrest, terrorism, crime/theft, harassment by people and/or police, lack of regulations/enforcement on road traffic) Health concerns (HIV/AIDS, food poisoning, tropical diseases, water safety, inadequate health care services) Restrictive/troublesome emigration policies (e.g. for foreign retirees)

Issues with access to and ground services within the country (inadequate infrastructure, policy and governance issues in the transportation sectors) Payment issues (FX services, credit card facilities) Issues with management/governance of key tourist cultural landmarks Issues affecting investors directly: Difficult access to land (e.g. unsecured property rights, problematic access to government and customary land, issues with land use rights and development policies) Issues with the workforce (restrictive emigration policies for key workers, high minimum wage, social security, hiring/firing regulations, unequal enforcement of regulations, training and education issues, corporate social responsibility and gender issues) Restrictions on FDI for key products and services Barriers to trade for key imports (e.g. food products) Contract enforcement issues (e.g. ineffective commercial courts, problematic enforcement of court decisions, lack of alternative dispute resolution) Access to finance issues (e.g. lack of mortgages and secured lending) Fiscal issues (high taxes and/or unequal enforcement) Admin barrier issues (business registration and inspections) Sector specific policy issues: Inadequate environment and conservation policies Licensing policies and practices for key products/services (e.g. hotels, restaurants, taxis, etc) Restrictive policies (and/or unequal enforcement) in retail and other entertainments (e.g. opening hours, zoning, price regulations) Standard/certification issues (policies and/or unequal enforcement) for key services e.g. hotels, restaurants, taxis, diving and nursing Telecom sector policy and enforcement issues leading to poor Internet and mobile services

4. Analyzing good practice as a source of sound design solutions The case studies should shed light on the following questions: How were supply side issues identified in the previous step resolved e.g. did they designate priority zones where they resolve these issues with special focus and authority? How is the country being marketed by whom and how and are country/value propositions made for each segment e.g. how was the

targeting done? What are the respective roles of the private and public sectors? Does the country rely on a powerful tourist ministry? What authority does it have? What budget? Which incentives? How is it organized? Is there a statutory body? How are the relationships between the relevant central and local governments, special tourist zone authorities and tourist ministry organized? How was the public/private sector dialogue organized? How were vested interested managed, compensated and/or confronted? We should develop overtime a database of good practice case studies. Promising candidates include: Egypt red sea (land market reform) Mexico Cancun (infrastructure led approach) Indonesia Bali (tourist zone approach) Thailand Phuket (private sector led approach) Singapore and Dubai (leveraging the transportation hub and marketing) Dominican Republic and Spain (retirement place for rich foreigners) Turkey (facilitating FDI, infrastructure development) South Africa - Makuleke (community based development) Aruba (institutions to maintain leadership) ***