TOURISM FOR DEVELOPMENT:
STRATEGY & PROCESS
MANAGEMENT
YES Summit,
Nairobi
2006
ARVIND MAYARAM
INDIA
TOURISM
a Potential Development Driver
Why Tourism
•
Sustainable Livelihood
•
Poverty Alleviation
•
Uplift of Rural Artists
•
Uplift of Rural Artisans
•
Empowerment of Women
•
Improvement in Urban and Rural Infrastructure
•
Better Image, Quality of Life and Attitude of People
•
Revival of Traditional Crafts
•
Heritage Conservation
•
Conservation of Natural Resources
TOURISM
a Potential Development Driver
Significant multiplier effect on the economy
– Every dollar spent by a tourist changes hands 13 times
– Every hotel room generates direct employment to 3 and
indirect employment to 8 persons
TOURISM
a Potential Development Driver
FAMINE-PROOFING
• Reducing absolute dependence on agriculture:
– Revival of traditional arts & crafts, building art, etc.
– Providing ready marketing opportunities for rural artisans
– Employment generation during entire year
• About half a million of artisans employed in Handicraft sector
in only one State of Rajasthan
• Handicraft Exports from one of the States, Rajasthan:
– 1991-92
Rs. 2800 mn.
– 2000-01
Rs.43,000 mn.
– 2004-03
Rs. 100,000 mn.
TOURISM
a Potential Development Driver
TOURISM creates:
a. Jobs in situ-wild life sanctuaries, historical
places, beaches, mountains etc. Does not result
in migration
b. Creates a large number of semi-skilled jobs for
local population
c. Contributes to overall economic development of
areas that would otherwise be deprived
TOURISM
India: Case Study
EMPLOYMENT
Every Rs.1 million ($25,000) invested creates…
• Tourism (directly)
47.5 Jobs
• Tourism (indirectly)
89 Jobs
(sub-sector of hotels and restaurants, transportation etc.)
• Agriculture
• Manufacturing
44.6 Jobs
12.6 Jobs
TOURISM
India: Case Study
TOURISM THIRD-LARGEST NET FOREX EARNER
(2001-02)
• Gem & Jewelry
US$ 7.40 Bn.
• Readymade Garments
US$ 5.50 Bn.
• Tourism
US$ 3.30 Bn.
COMPARATIVE FOREX INFLOW (2000-01)
• FDI
$ 2.4 bn
• Tourism $ 2.9 bn
*2001-02 & 2003-03 figures are not used due to the effect of Sept 11 2001
TOURISM DEVELOPMENT:
Pre-requisites
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Image/Visibility
Infrastructure
Tourism enabled services
Heritage conservation and management
Tourism friendly environment (non-intrusive,
facilitating, safe and secure…)
• Tourism products
• Deepening tourist experience (repeat visits/longer stay)
Tourism Circuit Approach
• Integrated
• Tourist, the focal point
• Circuit development involves creating a circular
route to be taken by tourists
• Based on features of tourist interest throughout
the circuit route
• Driven by infrastructure development
• FDI can play a major role in inducting capital,
technology, managerial skills and marketing
POSITIVE ROLE OF FDI IN TOURISM
DEVELOPMENT
Foreign Direct Investment (FDI):
• Augments investible resources
• Improves technological standards
• Improves efficiency of the domestic industry
• Increases competitiveness
• Introduces ‘latest’ technology
• Improves allocative efficiency
• Introduces higher level of technical or ‘X’ efficiency
• Results in diffusion of technology and knowledge to local firms
• Leads to labour turnover or ‘reverse engineering’
• Results in income ‘multiplying’ effect
OBVERSE SIDE OF THE COIN
• Could result in cutting into the market of local firms (reduce
productivity)
• Could result in ‘financial leakages’
– Repatriation of profits
– Direct channeling of tourists’ expenditure to the home country
– Remittances by expatriate workers
– Imports on account of weak host country supply chain
• In international tourism, cross-border anti-competitive practices may
adversely affect smaller tourism service suppliers from developing and
least developed countries particularly vulnerable to anti-competitive
policies
• Employment opportunities may not increase for local population
because of absence of skilled manpower
INVESTMENT PRE-REQUISITES
• Policy/Regulatory Framework
• Facilitating Institutions
– Decision-support structure
– Facilitating organizations
– HRD institutions
• Infrastructure:
– Physical
– Social
• Investment Products (Opportunities)
• Public Private Partnership mode
INITIATIVE: Policy/Regulatory Framework
Tourism Development Mission/Tourism Policy
Mission for Tourism Development
•
Efforts to raise tourist arrivals
• Aggressive domestic and international
marketing
• Organizing international tourism events
• Awareness about and professional
management of heritage and raising
resources for it
• Ensuring hassle-free and pleasant stay
of tourists
• Tourism promotion through Internet
• Encourage Public Private Partnerships
• Rural tourism for generating
employment in rural areas
• Eco-tourism
Tourism Policy
• Comprehensive Tourism Master Plan
• Promoting Private sector investment
• Enhancing quality and diversifying
tourism products
• Development of tourism infrastructure
• Aggressive marketing & publicity
• Tourism as ‘Industry’
• Tourism Trade Regulation Act – to
prevent possible exploitation of tourists
• HRD for Tourism Sector
• Upgrading Tourism Support Services
• Improved Connectivity
• Preservation of historical and cultural
heritage and promoting Heritage
Tourism
• Promoting Adventure, Wildlife, EcoTourism (as applicable)
INITIATIVE: Policy/Regulatory Framework
Tourism (Facilitation) Law
OBJECTIVES
PROVISIONS
To make the country/region “Tourist
Friendly”:
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Security for tourist, i.e.
– Not to be mobbed by beggars,
touts, taxi drivers etc.
– Not to be cheated-cost / quality
•
Accessible/reliable Information
•
Good amenities & reliable services
•
Cleanliness & hygiene
•
Heritage conservation
•
Definitions
Regulatory
Anti-begging
Special attention to tourists by Police
Voluntary Adoption of law
Bench-marking
Certification
Third Party Inspections
Penalties
Exit Clause
Heritage
Declaring building/area/township
protected heritage
Construction to be strictly regulated
INITIATIVE: Institutions
Decision-support Structures
Single Window Clearance System
• A. Investment Proposals
• B. Visa applications
• C. Concessions to commercially use state assets
• D. Licenses to operate tourism related activities
(recurring)
INITIATIVE: Institutions
Decision-support Structures
• Tourism Advisory Council
– Top political and bureaucratic executives
– Membership to include tourism trade and industry
representatives, experts…
– To deliberates upon policy initiatives, demands of the industry,
problems with the government institutions, development plans
• Tourism Regulatory Authority
– Accreditation
– Benchmarking services
– Grievance redress
– Adjudication
INITIATIVE: Institutions
Human Resource Development (Indicative)
• Institute of Crafts for the handicrafts sector
– Design input
– Professional degree/diploma in craft & design-techno-design
managers
– Facilitating marketing and marketing linkage intervention
– Technology intervention and product and process standardization
– Capacity building at artisan level
– Documentation and resource centre
– IPR issues related to the handicrafts sector
• Entrepreneurship Management Institutes
– Entrepreneurship development for SMEs
– Tourism specific entrepreneurship programmers for tourism
enabled services
INITIATIVE: Institutions
Human Resource Development (Indicative)
• Institutes of Hotel Management
– HRD in hospitality industry
– Managerial level courses
– Language skills
• Food Crafts Institutes
– Shop floor level skill development courses
– Language skills
• Centre for Heritage Management
– Capacity building amongst officials in the local governments, town
planners, urban and civic bodies, government functionaries about
heritage conservation and management issues
INITIATIVE: Infrastructure
INVESTMENT
Public
Highways,
Airports, Urban
Infrastructure,
Power
Private
Hotels, Travel
Agencies, Tour
Operators, Dealers,
Handicraft Stores
P-P Partnership
BOT Roads, Airports,
Resorts, Heritage
Properties, Circuit
development, Web-portals
INITIATIVE: Infrastructure
Public Finance
• Several key sectors like water supply, sewerage, roads, capacity
building and public awareness, and heritage conservation can be
covered - assistance from multilateral and bilateral funding agencies
• Separate budgetary provisions for tourism related activities in Forest,
PWD and other related departments
• Public finance and assistance from organizations such as the UNESCO
and the World Monument Watch for restoration of heritage monuments
TOURISM Infrastructure (Illustrative)
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Civil Aviation (Airports)
Roads Up-gradation Project
Urban Infrastructure
Public facilities
Information Kiosks
PPP: Project Development Process
CONTENT
OUTPUT
I
Detailed Feasibility
Report
To assess the feasibility and to recommend a suitable institutional and financial
plan for the project
II
Risk Management
Plan

To assess the major areas of vulnerability underlying the assumptions,
forecast cash flows and profitability of the project

To assist in the development of suitable strategies to limiting such effects
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To ensure the equitable sharing and allocation of project risk

To reflect the differing perspectives of the consortium, contractors,
Government, lender, etc, on the project and to assess the balancing of
interests achieved
III
Environment and
Social Assessment
Report
To assess the environment and social impact of the project and to incorporate
appropriate mitigation measures
IV
Contractual
framework
Documentation
To develop the contractual framework of the project and to provide the draft
agreements to be entered into by the principal stakeholders to the project, such
as Government, Operators, Lenders, etc.
V
Procurement
To provide a blue print to achieving technical close for the project, including
selection and award of the contract to successful bidders.
CONCLUSIONS
• Tourism is the main driver of economic growth/employment
generation in more than 80 countries
• It has the potential of addressing issues such as rural poverty,
empowerment of women, strengthening the economic status of the
rural artisans, earning forex etc.
• It is necessary to create the right environment to attract FDI by
establishing progressive legal-institutional framework and facilitating
organizations
• Circuit development approach yields fastest results
• HR is the key
• Presenting bankable projects to the investors not only increases the
possibility of attracting forex but also establishes benchmarks for the
future
Thank You
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INVESTMENT PROMOTION: KEY ELEMENT FOR TOURISM …