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Prerequisites to achieving a Successful Growth

Pr. François VELLAS - Director of the Service and Tourism Economy Institute of research (CEREST), University of Toulouse, France

 

        

INTRODUCTION

1 - HOW TO ASSESS TOURISM GROWTH IN THE POOREST COUNTRIES ?

The assessment of tourism growth in the poorest countries is extremely contrasted since these countries represent only a very small contribution to global tourist flows (0.8 % for 49 Least Developed Countries, LDCs). Whereas these same countries move forward more rapidly than the developed countries as a whole, to such an extent, that in twenty years their contribution to the international tourist arrivals almost doubled from 0.48 % in 1978 to 0.80 % in 1998.

The report on "Tourism in LDCs" published in March 2001 jointly by the UNCTAD and the WTO clearly indicates that one of the major issues in tourism growth for the 20 next years is for LDCs to achieve a significant contribution to the growth of global tourism. To this end, operations led by international organizations are essential to ensure a better understanding of the ethical requirements in tourism as defined in the WTO code of ethics, and to fight more effectively against poverty.

1.1 - Growth of international tourist arrivals in LDCs

The LDCs accounted for 2.3 million arrivals in 1988 or 0.58 % of the total international tourist arrivals in the world. In 1998, their contribution to the total 594 million international tourist arrivals amounted to 0.80% or 5.1 million.

The analysis of the international tourist arrivals shows that global tourism rises more quickly in LDCs than in the rest of the world. The analysis on a country basis indicates that the increase was particularly strong for Cambodia, Mali, the Democratic Republic of Laos, Myanmar, the Samoa Islands, Uganda and Tanzania, which represent more than 1.2 million arrivals in 1998 compared to only 0.4 million arrivals in 1992.

On the other hand, tourism grew at a slower rate in Niger, Comoros, Ethiopia, Togo and Benin.

The tourist arrivals even decreased in some LDCs that have seen political or economic crises. It is especially true for Angola, Burundi, Lesotho, Rwanda, Sierra Leone and Somalia.

1.2 - Growth of international tourism revenues in LDCs

The growth of global tourism revenues has been on the rise for LDCs, from 1 billion dollars in 1992 to 2.2 billion dollars in 1998.

The survey on a host country basis indicates that global tourism revenues are extremely focused since four countries, Cambodia, the Maldives Islands and Nepal, Uganda, Tanzania account for 51% of the total revenues in international tourism, in LDCs for the year 1998.

From a growth rate prospective, Cambodia, Tanzania, Myanmar, Bangladesh, Samoa, Uganda and Haiti have been on the rise more rapidly.

However, Nepal, which is one of the most significant tourist countries among the LDCs has seen a slower growth in its global tourism revenues with only + 12.7 % between 1992 and 1998.

In spite of the challenges that some countries are facing, the LDCs can leverage the quick growth in international tourism through a comparative cost advantage in term of payroll costs and through many tourist natural resources that remain unused. However, one of the main issues lies in the challenge of attracting local investments, and above all international investments.

1.3 - Tourism : First export sector for LDCs

Global tourism is the first sector to generate currencies in all LDCs, with the exception of the fuel and oil product area, which is primarily focused on three LDCs (Angola, Equatorial Guinea and Yemen) and represented export revenues of 3,919.6 million dollars in 1998.

This large contribution of tourism and air transportation to export revenues is particularly significant in some LDCs where this type of revenues ranks first as export sector.

It is especially true for Cape Verde, the Comoros, Gambia, Haiti, the Maldives, the Samoa Islands, Tanzania and Vanuatu.

Under these conditions, for most LDCs, tourism is a vital sector for both foreign trade and economic growth, even more so, since for a significant number of LDCs, this sector is experiencing a strong growth.

However, there will always be many barriers to exporting tourist services by the LDCs for several reasons. Among them, foreign exchange controls and restrictions applied to the transfer and the use of currency received by travel companies, barriers to the growth of business tourism, which are rooted in limited freedom of operation for foreign companies, restrictions related to tourist movements, and mainly visa requirements, misconceptions resulting from non competitive or discriminatory practices according to travel operators.

To do away with these barriers and create appropriate conditions for a lasting growth of tourism in LDCs, it is essential to be able to implement appropriate strategies of international tourism specialization in the greatest possible number of LDCs.

II - WHICH STRATEGIES AND POLICIES OF TOURISM GROWTH IN THE POOREST COUNTRIES ?

The overall objective of tourism growth is a great challenge in most LDCs. The survey on tourism assessment in LDCs indicates that the tourism industry grows for all areas where LDCs are located. In spite of the challenges some countries are facing, tourism growth trend in LDCs is in general very strong as it is often higher than the average global tourism growth.

As a result, tourism in the LDCs has a promising background considering both the domestic economic situation, and the insertion of LDCs in international specialization.

Therefore, this situation is a TREMENDEOUS OPPORTUNITY to make the tourism industry one of the MAJOR PLATFORMS for growth strategies in LDCs.

Indeed, even when the significance of tourist industry is more qualitative than quantitative, TOURISM CAN PLAY A ROLE OF CATALYST for the entire economic and social development strategies in LDCs. This role of catalyst is especially useful in the following areas :

• Basic infrastructures (power, water, etc.)
• Transportation infrastructures (Air transportation including airports, roads, etc.)
• Environmental infrastructures (Wastewater and waste material treatment)
• Communication infrastructures (Cellular telephone, Internet.)
• Health Infrastructure (hospitals, etc.)
• Cultural infrastructures (Leveraging historical and artistic resources)

In all these key areas for the growth in LDCs, tourism plays a major role, notably by setting a priority of QUALITY and RELIABILITY requirement.

III – WHAT ARE THE PREREQUISITES TO A SUCCESSFUL TOURISM GROWTH ?

Strategies of global tourism specialization are essential to ensure an effective and enduring contribution of tourism to the general economic growth. For that, tourism strategies need to meet six main conditions, which can be put forward to define models of specialization and tourism growth :

• Tourism resources
• Comparative costs in the tourism industry
• The conditions of domestic, regional, and international tourism demand
• Trade Policies
• Social and cultural policies
• Environment policies

1 – The valorisation of tourism resources in LDCs

Tourist equipment is one of the most important prerequisites to tourism growth. It is determined by the amount of resources available in a country to ensure the production of all the services in global tourism. The relative abundance of these natural, historical or cultural resources will have a definite impact to explain the position of a country in international tourism. The factorial global tourism resources can be divided into three main categories:

• Natural resources: The natural heritage is one of the economic resources enabling to meet a solvent demand for international tourism. Provided that their use does not deteriorate them, nor destroy them. This implies an effective protection of the environmental balance, and thus setting the limits of their "use".

• The artistic, cultural and historic resources: Their significance as a component of global tourism is based on their degree of uniqueness, which enables a country to have a situation of monopoly or quasi-monopoly.

• Resources in tourist infrastructures: It is one of the main aspects of tourism growth strategies, and a major issue for the development of tourist products. Indeed, conventional strategies for tourism growth are based on the use of the capital resources. They are one of the main factors of tourist production due to the importance of equipment infrastructures it requires, including transportation, accommodation, and site preparation. In this traditional view of tourism growth, the need for heavy investments - thereby implying the availability of significant funds - is obvious. From this point of view, the tourist production is connected here to the heavy industrial production. In this case, fund allocations will have a strong impact on the economic relevance of global tourism from country to country. A country with significant tourism natural resources, but with insufficient funds, will not be able to grow its global tourism sufficiently since it will not be able to produce the necessary equipment. It is particularly true in many LDCs. To counteract this situation, policies aimed at developing international direct and indirect investments in the tourist industry are essential.

2 – The use of comparative advantages

Comparative costs constitute a significant advantage for most developing countries with strong competitiveness in terms of payroll costs. Contrary to other exports of services that run up against issues like the moving of the workforce out of the borders, in the tourist industry, it is the consumer who moves in and out, enabling these countries to fully leverage international competitiveness. However, the comparative costs are not only about international crosschecking of some prices, but they must take into account - especially in tourism - the qualitative factor.

Because of the great diversity of tourist products provided, the comparison of costs between similar products is difficult, and in most cases, impossible. Moreover, tourist products are services for which the production cannot be repeated in an identical way. As a result, cross checking comparative costs in the tourism industry is not limited to the analysis of the cost components only - transportation, travel accommodation services and miscellaneous services -but needs to take into consideration both the payroll costs, and the quality-to-price ratio as well as job evaluation.

• Payroll costs are crucial to comparative costs in the tourism industry and give the competitive advantage to many developing countries able to produce tourist services in highly competitive conditions.

• Quality: Quality and quality-to-price ratio are the main criteria in choosing a vacation destination. However, in many LDCs, substantial efforts need to be made to implement strategies to boost tourism in order to improve this quality-to-price ratio. The global comparison of quality-to-price ratio for tourist products on a country basis allows us to explain an important aspect of the distribution and changes in global tourism flows. Quality is often more important than price.

• Job evaluation: Tourism growth strategies in LDCs aimed at increasing the quality level for tourist products cannot rely only on the payroll advantage, but need to address job evaluation. Indeed, human resources are a key factor in developing and leveraging tourism resources in the global tourist industry. Job evaluation is a criterion used for rating countries, and explaining their position in the worldwide tourist industry. Thus, the lack of senior manager job evaluation in the hotel industry in LDCs may hold back tourism growth by relying on an incoming flow of executives from countries having the required skills or know-how to contribute to the management and maintenance of world-class hotels.

3 - The role of domestic, regional and international demand for tourism

The domestic, regional and international demand is crucial to the growth of international tourism. However, in many developing countries, each of these three components of the tourism demand is often lacking, hence the importance of developing growth strategies for the demand. The demand is directly based on income levels per capita, but also on the interest people show for tourism. It is the relative importance of demand that allows us to understand some vital aspects in global tourism growth, including the concentration of tourist flows in similar countries but differentiated and with comparable economic growth levels. In fact, the greatest flows occur most often in economies with similar features from a factorial allocation point of view. It is the case in the global tourism industry where the greatest tourist flows occur in neighbouring countries.

The tourism demand breaks down into three components more or less relevant according to countries, but their combination allows us to explain, for the most part, the differences in international tourist flows between countries, especially within LDCs.

• The domestic demand for tourism: The level of domestic tourism demand is essential to explain the impact of both domestic tourism and international tourism on a country. In fact, a high domestic tourism demand creates conditions and a promising environment for tourism growth. Transportation and accommodation infrastructures are developed to meet this demand. The same goes for the development of natural, historical and cultural sites that attract tourists. In such a way that a country having a strong domestic demand for tourism is set to meet the global tourism demand in good conditions. In LDCs, although the domestic demand is very low, it remains a part of the components that are essential to a long-lasting tourism growth. Bangladesh, Ethiopia and Mozambique

• The regional demand for tourism: It is possible to define the regional or intra-regional demand for tourism as the demand for tourists coming from other countries of the same region or continent. Two flow categories may be differentiated, on the one hand the coming of tourists residing in other countries of the region - whether they are nationals from these countries or foreigners living in these countries -, and on the other hand, the arrivals of foreign tourists from other countries in the region where they are touring. Intra-regional tourism is mainly focused on the first category, i.e. the intra-regional tourism of residents from the area. The tourism demand by area shows that the regional tourism is clearly growing not only in industrialized countries but also in developing countries.

• The international demand for tourism: This is both the intra-regional and interregional global tourism demand. This global tourism demand is mainly focused on countries having well-developed tourism infrastructures. However, it also plays a major role in tourism growth strategies for some LDCs that are regional leaders.

4 - Trade Policies

Business policies aimed at freeing the trade in tourist services and air transportation can also play an important role in tourism growth strategies. This is why a specific tourism appendix to the GATS could be the basis for negotiating on issues that remain important, with regards to a wide liberalization of international trade in tourist services that should particularly benefit the LDCs where the tourist industry is often impaired by restrictions, including :

• Foreign exchange control

• Financial costs for issuing visas also represent an important barrier to trading tourist services when they are used for tax revenues rather than to actually regulate people moving in and out. A visa can cost up to $50 or more, and is an impediment to the tourist trade South-to-South as well as to the growth of family and social tourism.

• Entry and departure taxes are becoming an increasingly significant issue due to the inflation of airport taxes (WTO/UNCTAD Seminar in Tunis, 1999). In addition, in some developing countries, taxes apply to residents leaving their country in order to limit trips for spending or buying abroad.

• Mandatory insurance policies may also slow down the growth of tourist trade. It is the case with auto insurance when there is no agreement between border countries or countries located in the same area. Such restrictions strongly limit car travel since it is mandatory to subscribe to special insurance policies at prohibitive costs.

• The discriminatory practices related to domestic treatment are equally important and often concealed. Furthermore, access to carriers in the tourism industry for international operators is restricted through required degrees or certificates that need to be issued by national authorities without any alternatives put in place.

Under these conditions, it seems that the need for trade policies aimed at waiving these barriers is vital to a successful tourism growth.

5 - Social and Cultural Policies

Social and cultural policies in the global tourism industry are also a crucial factor in achieving a successful tourism growth. The coming of foreign tourists from developed countries often translates into a clash between two types of culture and lifestyle, resulting in a cultural deterioration for the host country, followed by a rejection. This clash is even greater when the tourist flow is strong whether seasonally (peak season) or spatially (areas or regions with high tourist concentration), but it can be spread out in other ways.

In fact, unless an isolating, autocratic or under-development policy is chosen, the "clash" between two cultures is unavoidable in a fast developing process. If it does not happen through tourism, it will happen in other ways: television, importing consumer goods, equipment and technology goods, fashion, contacts with workers returning to their home country, technical and scientific training and so on.

Faced with the risk of a socio-cultural shock, one of the objectives of a global tourism policy should be to control the impact of international tourism in order to anticipate, reduce and redirect it. For this, two options are available:

• Either a pool of most tourist facilities away from highly populated regions in order to avoid a confrontation too difficult to handle between both lifestyles. For instance, on a remote coast or on island(s). Nevertheless, the major drawback of this solution lies in the fact that it creates business parks that are removed from the economic and social environment and therefore "foreign" to the country, and it requires equipment that will be used only by and for foreign tourists. However, the experience shows that for small, less populated countries, this solution is the only option when it comes to promoting global tourism on a large scale (Maldives Islands, for instance).

• Alternatively, limiting the tourist flows to foreign customers the most likely to respect the environment and the people (For instance, some lodges in Tanzania or Madagascar). But, it is obvious that such a highly selective policy requires further equipment, services and a high quality environment - not widely available -that hardly matches the LDCs financial resources, due to the harsh competition they have seen and the socio-economic growth objective they pursue.

For this, a policy to integrate foreign tourists to the social and economic life of the country is needed, provided that the presence of high purchasing power tourists in large numbers does not create (even involuntarily), and cause a social and cultural disturbance leading to a cultural deterioration or a rejection of foreign tourism (as it is the case with the issue of child sexual abuse in some countries).

To avoid such risks, global tourism policies in developing countries have taken measures to distribute tourist flows in :

• Growth poles where the concentration of tourists is unavoidable but may be controlled.
• Tours and vacation trips, merged into the social surrounding of the country but limited to a certain number, especially by setting prices that are profitable enough to induce a real positive impact of tourism growth in LDCs.

6 - Environmental Policies

Environment policies are also key factors to achieving a successful tourism growth policy in developing countries. Tourism is in fact both :

• A developing factor for the natural heritage in many countries.
• A disturbing factor or a factor leading to the degradation of this environment.

The goal of this global tourism policy is, therefore, to push for positive impact and limit negative effects.

• Preserving and keeping the heritage are the main positive effects. It includes for example the development of national or regional parks to insure the survival of the flora and wildlife. Global tourism often leads to people being aware of the value of the natural heritage of a country, and the opportunities derived from its economic use. From this point of view, the impact of tourism industry is very positive. In addition, compared with other manufacturing industries, tourism is a relatively less polluting area. Very often, tourism may lead to maintaining sites and landscapes that were not taken care of, and likely to attract tourists.

However, in many LDCs, tourism is not linked to a true protection or environment use policy, due to a lack of environmental awareness, a lack of resources, especially financial resources. Indeed, the revenues from tourism are often allocated to other expenditures deemed more important, without budget compensation. As a result, negative effects on the environment prevail.

• Negative effects translate into the disturbance and the degradation of the different environmental elements that make up tourism resources in these countries : destruction of wildlife (large animals in Africa), sites (over-crowded facilities in some areas, including coastal areas), historic or cultural heritage sites (tours allowed when no facilities are planned especially to avoid burglaries and degradation), water pollution (rivers and streams, ground water, coast) with wastewater disposal without wastewater treatment plants. To lessen this negative impact, the need for an environmental protection policy is crucial. It is profitable on the long run since without it, the decline of the existing heritage would unable tourism itself. However, in many LDCs, this policy is challenged in the short run, by business or financial requirements and by the lack of experience in applying tourism plans.

Developing countries need to implement a careful tourism policy in order to control the entire economic and social impact caused by the increase in global tourist flows. The tourism policy should precisely strive to control the risks of economic reliance that could cause a chaotic increase in global tourism. For this, tourism policy makers should enhance, with the support of international organizations, the bargaining power they exert on the main players of global tourism.

Under these conditions, the overall objective of tourism growth in poorest countries is to upgrade all basic infrastructures of tourism growth, which could be rapidly resolved with the help of tourism, while benefiting all national and local players involved in tourism growth, in these countries.

To that end, it is vital, through an appropriate program supported by international organizations from the UNCTAD, WTO and EU, to enable LDCs to move forward, consolidating their bases for tourism growth, and maintaining the growth rate of the previous decade, which greatly increased the contribution of LDCs to worldwide tourism growth.

However, the main objective behind tourism growth in LDCs is to become the preferred resources for fighting against poverty and exclusion. Therefore, NGO operations to fight against child abuse (especially sexual tourism abuse) and in favor of increased contribution of poorest communities, are essential in order to strengthen policies implemented by International Organizations.