TOURISM FOR DEVELOPMENT:STRATEGY & PROCESS

MANAGEMENT

ARVIND MAYARAMINDIA

YES Summit,Nairobi

2006

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

TOURISMa 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.

TOURISMa Potential Development Driver

TOURISMa 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

TOURISMIndia: Case Study

EMPLOYMENTEvery 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 44.6 Jobs

• Manufacturing 12.6 Jobs

TOURISMIndia: 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

• 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 FDIPOSITIVE ROLE OF FDI IN TOURISM IN TOURISM DEVELOPMENTDEVELOPMENT

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

• Policy/Regulatory Framework

• Facilitating Institutions– Decision-support structure

– Facilitating organizations

– HRD institutions

• Infrastructure:– Physical

– Social

• Investment Products (Opportunities)

• Public Private Partnership mode

INVESTMENT PRE-REQUISITES

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, Eco-

Tourism (as applicable)

INITIATIVE: Policy/Regulatory Framework Tourism (Facilitation) Law

OBJECTIVES

To make the country/region “Tourist Friendly”:

• 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

PROVISIONS

• 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: InstitutionsDecision-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: InstitutionsDecision-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: InstitutionsHuman 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: InstitutionsHuman 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

Public Private P-P Partnership

Highways, Airports, Urban Infrastructure,

Power

Hotels, Travel Agencies, Tour

Operators, Dealers, Handicraft Stores

BOT Roads, Airports,Resorts, Heritage

Properties, Circuit development, Web-portals

INVESTMENT

INITIATIVE: InfrastructurePublic 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)

• Civil Aviation (Airports)• Roads Up-gradation Project• Urban Infrastructure• Public facilities• Information Kiosks

PPP: Project Development Process OUTPUT CONTENT

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

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