Viability of International Tourism
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Viability of International Tourism Symposium on Tourism Services World Trade Organization, Geneva, February 23, 2001 Iain T. Christie MIGA PowerPoint PPT Presentation


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Viability of International Tourism Symposium on Tourism Services World Trade Organization, Geneva, February 23, 2001 Iain T. Christie MIGA [email protected] World Bank Group. TOURISM IN THE GLOBAL ECONOMY. WTTC’s estimates for 1999: Travel and Tourism: 11.7% of global GDP

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Viability of International Tourism Symposium on Tourism Services World Trade Organization, Geneva, February 23, 2001 Iain T. Christie MIGA

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Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

Viability of International Tourism

Symposium on Tourism Services

World Trade Organization, Geneva,

February 23, 2001

Iain T. Christie

MIGA

[email protected]

World Bank

Group


Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

TOURISM IN THEGLOBAL ECONOMY

  • WTTC’s estimates for 1999:

    • Travel and Tourism:11.7% of global GDP

    • Tourist expenditures: 8%of global exports

    • Employment: 8%jobs worldwide

    • Tourism Satellite Accounts (TSA)

    • Source: World Travel and Tourism Council

    • (WTTC)

World Bank

Group


Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

TOURISM & POVERTY

  • Tourism is designated as “significant” when:

    • > 2% of GDP, or

    • > 5% of exports

  • TOURISM IS SIGNIFICANT IN:

  • - 11 of the 12 poorest countries of the world

  • (< US$1/day)

  • - half of the lowest income countries

  • - almost all lower middle income countries

  • Source: DFID: Tourism and

  • Poverty Elimination: Untapped Potential

  • World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    TOURISM PROJECT DATA REQUIREMENTS

    • Tourism Satellite Account

    • If you can afford it -- go for it!

    • Modular approach

      Data requirements for sustainability:

      • Pricing, conservation of scarce, fragile resources

      • Value added & leakage

      • Linkages to other sectors

      • Investment, local and foreign

      • Job creation and quality

      • Poverty alleviation, creation of wealth and growth.

    World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    WBG CONTEXT

    • DEMAND from client countries

    • IFC finances tourist establishments

    • MIGA provides guarantees and investment promotion

    • Bank/IDA

    • Formerly financed tourism, including:

    • Infrastructure & site development

    • Hotel credit

    • Tourism training

    • Cultural heritage

    • Renewed interest, spurred by:

    • Environment & Ecotourism -- GEF

    • Poverty alleviation

    • Community participation & social inclusion

    • Cultural heritage & preservation

    World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    THE ACTORS

    • TOURISM IS APRIVATE SECTOR ACTIVITY

    • Entrepreneurs finance hotels & other businesses

    • Opportunity to make profits

    • Cross sectoral with wide business linkages

    • SUCCESS DEPENDS ON APERFORMING PUBLIC SECTOR

    • Policy & regulatory framework

    • (economic, social & cultural)

    • Infrastructure services, public & private

    • Key services: public health, security & rule of law

    • PUBLIC/PRIVATE PARTNERSHIP

    • DONOR COMMUNITY

    World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    SUSTAINABILITY

    • RIO EARTH SUMMIT AGENDA 21, 1992

    • - one of few economic activities capable of

    • providing economic incentives for preservation

    • of the environment

    • - potential major source of continuing

    • employment for women and the unskilled

    • COMMISSION FOR SUSTAINABLE DEVELOPMENT 19

    “economic benefits of tourism have the potential to

    alleviate poverty in the developing world, but capacity

    building is needed at the local level to achieve the goal”

    World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    SUSTAINABILITY & DEVELOPMENT

    • POVERTY ALLEVIATION

    • INTERDISCIPLINARY NATURE OF TOURISM

    • FINANCIAL AND ECONOMIC

    • Create the opportunity for owners, investors to make profits

    • Economic catalyst -

    • Expenditure outside tourist enterprises

    • Leakages or linkages?

    • Employment

    • Tax revenues

    • Regional development

    • Ownership

    • SOCIO-CULTURAL

    • Inclusion of local people in benefits

    • Interpretation, protection of cultural heritage

    • ENVIRONMENTAL

    • Conservation and mitigation

    • Eco-tourism, coastal zone management (CZM),

    • wildlife management

    • EXTERNALITIES


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    TOURISM AS AN ENTRY POINT

    SECTORAL

    LINKAGES

    CAPACITY BUILDING

    MACRO POLICIES

    Agriculture

    Foster enterprise learning

    Foreign exchange

    Infrastructure

    Operating, financial,

    Monetary policy

    Education & health

    commercial and marketing

    Tax and trade policy

    Manufacturing

    management.

    Employment

    Construction

    Training and

    Handicrafts

    professional development

    .

    REGULATION &

    TOURISM:

    FINANCING

    COMPETITION

    AN ENTRY POINT

    FDI

    Competition

    Hotel

    Environment & physical

    SME & micro-credit

    planning

    Infrastructure

    Privatization

    Risk mitigation

    Property rights &

    contract enforcement

    Judicial reform

    INSTITUTIONAL

    Security

    FRAMEWORK

    Health

    Public/private partnerships

    MICRO ISSUES

    NGOs

    Sector policy

    Community participation

    Infrastructure & service costs

    Investment promotion

    Employment creation &

    Marketing & sales

    income generation

    Consumer preferences

    Hotel Standards

    World Bank

    Group

    Public awareness


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    FINANCIAL & ECONOMIC SUSTAINABILITY

    TOURISM VULNERABILITIES: MYTHS AND REALITY

    Myths:1.Leakage of foreign exchange

    2.Volatility of demand

    3.Foreign ownership and management

    4.Not pro-poor

    Reality:1.Compare leakage between sectors

    -- focus on linkages

    Pricing of fragile tourism resources

    2.Volatility usually based on conditions pertaining locally, not commodity prices

    3.Evidence of high level of local investment

    Training of local staff in large chains

    Tourism requires international experience

    4.If local communities included, tourism is

    powerful stimulus for job, wealth creation


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    • ERRs ON HOTEL PROJECTS

    • (sample of 46 IFC hotel projects)

    • 12% = average of all IFC projects

    • 8 hotel projects had ERR>20%

    • 9 projects between 1995-1997, ERR median 16%

    • >ERR for IFC as a whole

    • CompositionCharter Scheduled

    • Of Package (%)Two week Three week

    • (E. Philip English)Long-haul Short-Haul

      • LDC DC LDC DC

  • Package:

  • Tour operator -- 21 -- 11

  • Air transportation 4 39 9 9

  • Hotel & Transfer19 -- 27 --

  • Other expenditures17 -- 44 --

  • Total40 60 80 20

  • World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    Turkey: South Antalya Tourism Project

    Projected Completion

    at appraisal (1990)

    Total costs (US$ millions) a/

    Infrastructure 65.0 43.0

    Accommodations (beds) b/ 1,050 (existing)

    6,100 10,350

    Room occupancy (%) 75 60

    Domestic tourists (%) 20 37

    Economic rate of return (%) 17.2 10.5 c/

    Jobs created (1990)12,500 7,300 d/

    a/ Rapid devaluation resulted in higher TL costs than at appraisal

    b/ Includes hotels, vacation villages, guest houses, etc.

    c/ Lower expenditures than forecast outside hotel, as well as lower occupancies; does not include benefits to local populations

    d/ Excludes construction industry and reflects seasonality

    World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    • Dominican Republic: Puerto Plata Projects

    • (Infrastructure and Hotel Credit)

    • Projected Completion

    • at appraisal(1990)

    • Total costs (US$ millions)

    • First project 36.0 49.5

    • Loan 21.0 20.9

    • Second project 71.0 71.0

    • Loan 25.0 21.5

    • Superstructure N/A 180.0

    • (Period of rapid devaluation and inflation in 1980s (>40%) )

    • Accommodations (rooms) 1,600 3,300

    • Room occupancy (%) 65 76

    • Cost per room ($)44,000 75,000

    • Cruise passengers (000s) 3.2 47.9

    • Economic rate of return (%) 17.5 (low) 12

    • (Role of tourism incentive law) (upper) 26

    • Jobs created

    • Direct6,00012,000

    • Indirect N/A28,000

    • Forex earnings (US$ millions) 100 (1980) 1,000

    World Bank

    Group


    Viability of international tourism symposium on tourism services world trade organization geneva february 23 2001 iain t christie miga

    CONCLUSIONS

    • DOES TOURISM HAVE A COMPETITIVE ADVANTAGE?

    • IS IT VIABLE?

    • - Specific context, given endowments, socio-cultural,

    • economic, and environmental considerations

    • MAINSTREAM TOURISM BY:

    • -Building multi-sectoral teams

    • - Launching pilot projects to demonstrate capacity

    • - Working with partners, stakeholders

    • WBG: WHEN TO INTERVENE?

    • - Public good content

    • - Market failure

    • - Other gaps in competitiveness

    • MIGA: Investment promotion, guarantees

    • IFC: Transactions

    • World Bank: Policy framework, public lending,

    • business environment

    • - Lending or non-lending?

    World Bank

    Group


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