The Impact of Globalization and

Localization on National Tourism Investment Policies

The Impact of Globalization and

Localization on National Tourism Investment Policies

Athens, October 16, 2006

Donald E. Hawkins, Eisenhower Professor of Tourism PolicyGeorge Washington University School of Business

dhawk@gwu.edu, www.gwutourism.org

The Glocalization Paradox

Using Paradoxes as Strategy ToolsUsing Paradoxes as Strategy Tools

Statements or sentiments that are seemingly contradictory or opposed to common sense and yet are perhaps true and useful for analysis

Paradoxes are as old as humankindParadoxes are as old as humankind

'Cretans were never anything but liars, dangerous animals, all greed and laziness;' and that is a true statement."

Titus 1:12-13

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going the other way”

Charles Dickens - A Tale of Two Cities

The Best of Times for Tourism?

The Best of Times for Tourism?

World: Travel and tourism –WTTC $1.6 trillion, expected to grow by

4.5% a year over the next 10 years, with double-digit growth expected from emerging regions such as China, India and Russia.

According to the UNWTO, tourism represents 40 percent of all exports of services; revenues have grown far stronger than international trade; tourism has spin-off effects on construction, agriculture, telecommunications, and employment. UNWTO claims that international tourist arrivals grew from 25 million in 1950 to 808 million in 2005—spending US $2 billion per day. One in eight of the world’s tourists choose a destination in the Muslim world, despite terrorism and bird flu “bad news”,

Greece: International arrivals increased almost 6% in 2005 to 12.7 million reversing a decline from 2002-04; Tourism receipts increased to 11,000 million euros-- nearly 7% in 2005. Greece's arrivals percentage increase matched Spain, exceeded Cyprus, but fell behind Croatia’s 7% & Turkey’s 20.38 %

The Worst of Times for Tourism?The Worst of Times for Tourism?

World: Natural Disasters: tsunami, hurricanes, floods, earthquakes, volcano

eruptions

Terrorism & Wars: 9/11, Bali 1 & 2, Jammu, Kashmir and Mumbai, UK aircraft bombing plot/aviation response, Iraq & Israel/Palestine/Lebanon War

Health Epidemics and Pandemics: SARS, Avian Flu, Ebola, AIDS, TB, Mad Cow, Cholera, Malaria

Other Threats: oil spills, endangered species, global warming, biodiversity/cultural heritage threats, energy/water shortage, pollution, computer viruses, demographic shifts, fiscal crises, poverty, property rights, decaying infrastructure, safety/security, regime change (Thailand)

Greece: World Economic Forum’s Competitiveness Index in 2006: as in previous years, Poland remains the worst performer among the EU economies, with a rank of 48, right behind Greece 47, out of a total of 127 countries. Spain was ranked 28, Cyprus 46, Croatia 51 Turkey 63.

The Convergence of Globalization and Localization =

Glocalization

The Convergence of Globalization and Localization =

Glocalization

GlobalizationGlobalization

Increasing cross-border movements of goods, money, information, ideas, and people

Interdependency of people and institutions around the world, creating both opportunities and challenges

Positive—Power of brands; events -- World Cup, Athens 2004 & Beijing 2008 Olympics; Diaspora

Negative-- Gap between the rich and the poor, outsourcing, job loss

Demographics!Fewer Young People; Rapid Graying; Decline of European Populations

Localization

Localization

Making a product linguistically and culturally appropriate to the destination

Transfers authority and responsibility for public functions from the central government to subordinate or quasi-independent government organizations or the private sector--“Subsidiarity”

Doing Business tracks 175 economies. Overall, Greece ranks 109 in terms of Ease of Doing Business; however substantial improvement was recorded for Registering Property (94 from 146), Dealing with Licenses (55) & Enforcing Contracts (48)

The key to investment success is also good governance

Importance of Good Governance Averages: Greece (upper

bar) OECD countries (lower bar)

Importance of Good Governance Averages: Greece (upper

bar) OECD countries (lower bar)

Source: Kaufmann D, A Kraay and M Mastruzzi, 2006 Governance Matters V:

Glocalization can Improve National Tourism Investment

Polices

Glocalization can Improve National Tourism Investment

PolicesLearning from global leaders & competitors while engaging local stakeholders in the planning and implementation of tourism investment approaches: – Tourism value chains– Development policies– Competitiveness

strategies– Tourism Marketing &

Investment Promotion.

Tourism Value Chains Tourism Value Chains

Global

Visitor Experience Value Chain

Global visitor markets: Tourists, MICE market, Investment/Business, VFR/Diaspora

Proportion of $ staying in country

Local

Experiences--add value/$ (The Experience Economy--Pine and Gilmore, 1999); time efficiency

Make the guest experience the absolute best it can be, Hilton focuses on three core elements: (1) physical enhancements to its properties; (2) an advertising campaign capturing the concept that travel should facilitate meaningful experiences and connections; and (3) development of partnerships with other market leaders that possess a shared philosophy of customer service and excellence.

Pre-trip

On-trip

Post-tripAccess

Tourism Development Tourism Development

Global

Making tourism more sustainable & responsible– UNWTO/UNEP Initiatives– Tour Operators Initiative

(TOI) Eco-labeling and certification

programs—e.g. Green Globe Conservation International’s

Center for Environmental Leadership

Green Market--LOHAS

Local

Tourism should reduce poverty and positively contribute to economic growth-MDGs– Pro Poor Movement– WTO ST-EP– European Solidarity-FAIR

programs Impact Assessments “triple

bottom line Financial support for protected

areas— Europe's Pan Parks; Prespa Lakes & Laganas Bay,Sakynthos

Tourism Competitiveness Tourism Competitiveness

Global

Michael Porter’s “Competitive Diamond” Importance of rivalry Chance Comparative advantage

Regional/multi-country trip circuits and networks—e.g. World Heritage Routes

Leverage advantages & capabilities with enabling technologies—e.g. World Heritage Alliance—UN Foundation, Expedia, UNESCO partnership.

Local

Canadian Tourism Commission provides financial support through a national matching fund. Product-based "clubs" enable businesses to present a united front in addressing issues of concern and to come together in partnering alliances to achieve common goals.

Inadequate public sector budgets-need Destination Management Organization (DMO) partnerships with business and NGOs for market research, product development, promotion, training, infrastructure advocacy

Tourism Marketing & Investment Promotion Tourism Marketing & Investment Promotion

Global

Peace of mind-- safety and security, mitigate risk, minimize negative impacts, enabling business environment

Money savings--reduce travel cost escalation, use yield management, moderate construction costs

World Economic Forum tourism disaster response communication system for extreme events

Link tourism marketing with investment promotion strategies

Local

Investor relationships--data mining, consideration cycle, project portfolio & incentives—for domestic & international equity and financing targets

Internal Marketing Focus– Multi stakeholder involvement-

community, owners, suppliers– Delegation and trust (Ritz

Carlton--Return on Customer Lifetime Value)

– Human resource development—Investment not a cost

– Ethical codes & behavior

Convergence is the goal!

Geotourism: Tourism that sustains or enhances the geographical character of a place—its environment, culture, aesthetics, heritage, and the well-being of its residents.

Glocalization principle: Ensure sustained market demand (globally) by protecting the product (locally)

Why? Improve performance to enhance the destination’s sustainability (locally) to achieve superior results in target travel markets (globally)

Destination Scorecard: Greece’s ratings: Corfu 57,

Crete 55, Acropolis 51*; highest--Norwegian Fjords 82; lowest --Costa del Sol, Spain 41.

ConclusionConclusion Paradoxes are strategic thinking tools

leading to convergence of positions which initially may appear contradictory—but may be true!

The Glocalization Paradox can encourage more innovative national investment policies by taking risks, learning from others through active benchmarking, and using knowledge management to improve performance

Overall, Glocalization requires a holistic, “all of destination” management and marketing effort. Local solutions can lead to global successes!