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Dr Anna Spenceley Spenceley Tourism And Development cc (STAND) annaspenceley@gmail.com
Sustainable Tourism Network Southern Africa AGM6 May 2010, Durban, South Africa
Increasing the local economic impact of tourism through
supply and value chains
2
1.Ways the poor benefit from tourism
2.Tourism supply chains
3.Tourism value chains
Presentation outline
3
1. Seven ways the poor benefit from tourism
1. Employment of the poor in tourism enterprises2. Supply of goods and services to tourism enterprises
by the poor or by enterprises employing the poor3. Direct sales of goods and services to visitors by the
poor (informal economy)4. Establishment and running of tourism enterprises
by the poor - e.g. micro, small and medium sized enterprises (MSMEs), or community based enterprises (formal economy)
5. Tax or levy on tourism income or profits with proceeds benefiting the poor
6. Voluntary giving/support by tourism enterprises and tourists
7. Investment in infrastructure stimulated by tourism also benefiting the poor in the locality, directly or through support to other sectors
WTO, 2004
4
1. Employment of the poor in tourism enterprises2. Supply of goods and services to tourism enterprises
by the poor or by enterprises employing the poor3. Direct sales of goods and services to visitors by the
poor (informal economy)4. Establishment and running of tourism enterprises
by the poor - e.g. micro, small and medium sized enterprises (MSMEs), or community based enterprises (formal economy)
5. Tax or levy on tourism income or profits with proceeds benefiting the poor
6. Voluntary giving/support by tourism enterprises and tourists
7. Investment in infrastructure stimulated by tourism also benefiting the poor in the locality, directly or through support to other sectors
WTO, 2004
1. Seven ways the poor benefit from tourism
Supply and value chains address both of these
5
2. Tourism supply chains
Andreas Springer-Heinze (2006-2) cited in Mitchell and Phuc, 2007
17.12.2006 6
Tourism product as combination of services
Advisingtourist onproduct,contract
Transport to site
Provideaccomo-dation, food etc.
organizeexperience,event
Transport from site
Travel agent
Bus company Hotel Site operator,
Cultural groupBus company
Tour operator
Local tourism board
Coordination of services:
a)
b)
System of organizations (e.g. people, technology, activities,
information and resources) involved in moving a product or service from supplier to customer
6
Supply chain interventions
Objective of interventions on tourism supply chain is to enhance the positive impacts of tourism on poor people by:– removing barriers that
prevent poor people entering the industry
– enhancing the terms on which they work
– improving the knock-on affects that tourism operations have on surrounding communities
Ashley, Mitchell and Spenceley, 2009
7
Traditional restaurant supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
MEAL
8
Traditional restaurant supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
MEAL
Typical problems for small scale farmers:
•Poor linkages with end users: reliance on intermediaries
•Private sector not serving ‘traditional’ foods
•Transport, storage and processing difficulties
•Variable quality and quantity of stock
•Lack of information on products private sector want
9
Traditional restaurant supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
MEAL
Typical problems for small scale farmers:
•Poor linkages with end users: reliance on intermediaries
•Private sector not serving ‘traditional’ foods
•Transport, storage and processing difficulties
•Variable quality and quantity of stock
•Lack of information on products private sector want
10
Option to adapt the supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation+ Final sale
Finalproduct
Consumer
If the intermediaries are ‘unfair’
MEAL
11
Traditional restaurant supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
MEAL
Typical problems for small scale farmers:
•Poor linkages with end users: reliance on intermediaries
•Private sector not serving ‘traditional’ foods
•Transport, storage and processing difficulties
•Variable quality and quantity of stock
•Lack of information on products private sector want
12
Option to adapt the supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
Restaurants serving more traditional meals buy more local,
traditional produce
TRADITIONALMEAL
13
Options to adapt the supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
MEAL
Typical problems for small scale farmers:
•Poor linkages with end users: reliance on intermediaries
•Private sector not serving ‘traditional’ foods
•Transport, storage and processing difficulties
•Variable quality and quantity of stock
•Lack of information on products private sector want
14
Traditional restaurant supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
MEAL
Typical problems for small scale farmers:
•Poor linkages with end users: reliance on intermediaries
•Private sector not serving ‘traditional’ foods
•Transport, storage and processing difficulties
•Variable quality and quantity of stock
•Lack of information on products private sector want
15
Traditional restaurant supply chain
TOURISTRESTAURANT
VEGETABLEFARMER
FISHERMAN MARKET
SUPPIERFERTILISERAND SEED
DISTRIBUTOR
BOATOWNER
LANDOWNER
TRADITIONALMEAL
MARKET
Input providersPrimary
producers
Transformation(clasify, process,
package)
Transformation+ Final sale
Trade (Transport,distribute, sell)
Finalproduct
Consumer
MEAL
Typical problems for small scale farmers:
•Poor linkages with end users: reliance on intermediaries
•Private sector not serving ‘traditional’ foods
•Transport, storage and processing difficulties
•Variable quality and quantity of stock
•Lack of information on products private sector want
16
Example analysis and intervention:
Spier leisure, Western Cape
• Strategic shift away from philanthropy towards responsibilities as corporate citizen– Survey of existing suppliers in relation to
corporate values (e.g. local, previously disadvantaged, environmentally aware)
– Investigation of new suppliers• Identification of opportunities
for change– Stimulating change among
existing suppliers– Development of new suppliers
• Monitoring and evaluation
Ashley and Haysom, 2008
17
Survey of suppliers
• Broad-based black economic employment• Employment equity• Procurement practice• Human resource practice• Basic conditions of employment• Labour law compliance• Corporate social investment• Health and safety• Environmental action• Number of employees• Location
Ashley and Haysom, 2008
18
Initial LaundryCompany
Enterprise DevelopmentLaundry
Saving to Spier in Year 1
US$ @R 7.5/$1
Costs and savings to Spier in Year 1
Annual Spend by Spier R472 000 R270 000 R202 000 $ 26 933
Set Up cost R 75 000
Sundry costs R 10 000
Total Year 1 Cost R472 000 R355 000 R117 000 $ 15 600
Earnings into the community per year
Jobs 2 7
Salary average p.p. p month R 1 700 R2 000
Earnings into local community R40 800 R168 000 $ 22 400
Community flow, US$ $5 440 $22 400 $ 16 960
Spier laundry development
Ashley and Haysom, 2008
• New alien vegetation clearing business, brick making business, staff restaurant business
19
2. Tourism value chains
Foreign Investment Advisory Service, 2006
•Products pass through all activities of the chain in order and at each activity the product gains some value. •The chain of activities gives the products more added value than the sum of added values of all activities.
20
2. Tourism value chains
Foreign Investment Advisory Service, 2006
Typical Package: 3 Nights Maputo+ 4 Nights Bazaruto
Tourism Itinerary: Lisbon – Maputo – Vilankulos - Bazaruto
Portuguese Tourist
Ancillary Service
ProvidersFrontier Services
Int. Air
Transport
Ground/Other Domestic TransportLogistics
Accommodation
Domestic Air
Transport
Out of Pocket Expenses
Fees/Taxes
Domestic Intermediaries
Foreign Intermediaries
CommissionsCommissions
Negotiated Costs With Service Providers
€ 210 € 310 € 0 € 600 € 200 € 0 € 380 € 300
10.5% 15.5% 0% 30.0% 10.0% 0% 19.0% 15.0%
Cost of Inputs for Travel Package = €1,180
Published Price of Travel Package = €1,490
Total Tourist Expenditure on Travel Experience = € 2,000
Typical Package: 3 Nights Maputo+ 4 Nights Bazaruto
Tourism Itinerary: Lisbon – Maputo – Vilankulos - Bazaruto
Portuguese Tourist
Ancillary Service
ProvidersFrontier Services
Int. Air
Transport
Ground/Other Domestic TransportLogistics
Accommodation
Domestic Air
Transport
Out of Pocket Expenses
Fees/Taxes
Domestic Intermediaries
Foreign Intermediaries
CommissionsCommissions
Negotiated Costs With Service Providers
€ 210 € 310 € 0 € 600 € 200 € 0 € 380 € 300
10.5% 15.5% 0% 30.0% 10.0% 0% 19.0% 15.0%
Cost of Inputs for Travel Package = €1,180
Published Price of Travel Package = €1,490
Total Tourist Expenditure on Travel Experience = € 2,000
•Products pass through all activities of the chain in order and at each activity the product gains some value. •The chain of activities gives the products more added value than the sum of added values of all activities.
21
4. Value chains
Foreign Investment Advisory Service, 2006
Typical Package: 3 Nights Maputo+ 4 Nights Bazaruto
Tourism Itinerary: Lisbon – Maputo – Vilankulos - Bazaruto
Portuguese Tourist
Ancillary Service
ProvidersFrontier Services
Int. Air
Transport
Ground/Other Domestic TransportLogistics
Accommodation
Domestic Air
Transport
Out of Pocket Expenses
Fees/Taxes
Domestic Intermediaries
Foreign Intermediaries
CommissionsCommissions
Negotiated Costs With Service Providers
€ 210 € 310 € 0 € 600 € 200 € 0 € 380 € 300
10.5% 15.5% 0% 30.0% 10.0% 0% 19.0% 15.0%
Cost of Inputs for Travel Package = €1,180
Published Price of Travel Package = €1,490
Total Tourist Expenditure on Travel Experience = € 2,000
Typical Package: 3 Nights Maputo+ 4 Nights Bazaruto
Tourism Itinerary: Lisbon – Maputo – Vilankulos - Bazaruto
Portuguese Tourist
Ancillary Service
ProvidersFrontier Services
Int. Air
Transport
Ground/Other Domestic TransportLogistics
Accommodation
Domestic Air
Transport
Out of Pocket Expenses
Fees/Taxes
Domestic Intermediaries
Foreign Intermediaries
CommissionsCommissions
Negotiated Costs With Service Providers
€ 210 € 310 € 0 € 600 € 200 € 0 € 380 € 300
10.5% 15.5% 0% 30.0% 10.0% 0% 19.0% 15.0%
Cost of Inputs for Travel Package = €1,180
Published Price of Travel Package = €1,490
Total Tourist Expenditure on Travel Experience = € 2,000
•Products pass through all activities of the chain in order and at each activity the product gains some value. •The chain of activities gives the products more added value than the sum of added values of all activities.
Increasing the amount
and proportion of money that is earned
locally
22
Typical Package: 7 Nights
Business/Conference Tourism Itinerary
Europe/USA – Maputo
European,American or
African Business Tourist
Ancillary Service
Providers(Shops, Tours, Restaurants)
Frontier Services
and Airport
Charges
Ground/Other Domestic Transport
LogisticsAccommodation
Average International Air Transport Fare Per
Participant
Out of Pocket Expenses
Fees/Taxes
Negotiated Costs With Service Providers
$1,210 $100 $600 $610
45.0% 3.7% 22.3% 22.7%
Cost of Inputs for Travel to Destination= $1,910
Total Tourist Expenditure on Travel Experience = $2,690
$ 170
6.3%
Portuguese Participant
US$726
AmericanParticipantUS$1,575
S. African Participant
US$300
Mauritian ParticipantUS$1,153
Kenyan Participant
US$939
NigerianParticipantUS$2,547
UKParticipantUS$1,319
FrenchParticipantUS$1,146
ShoppingUS$100
Inhaca/Kruger Tour
US$300
RestaurantsUS$210
Typical Package: 7 Nights
Business/Conference Tourism Itinerary
Europe/USA – Maputo
European,American or
African Business Tourist
Ancillary Service
Providers(Shops, Tours, Restaurants)
Frontier Services
and Airport
Charges
Ground/Other Domestic Transport
LogisticsAccommodation
Average International Air Transport Fare Per
Participant
Out of Pocket Expenses
Fees/Taxes
Negotiated Costs With Service Providers
$1,210 $100 $600 $610
45.0% 3.7% 22.3% 22.7%
Cost of Inputs for Travel to Destination= $1,910
Total Tourist Expenditure on Travel Experience = $2,690
$ 170
6.3%
Portuguese Participant
US$726
AmericanParticipantUS$1,575
S. African Participant
US$300
Mauritian ParticipantUS$1,153
Kenyan Participant
US$939
NigerianParticipantUS$2,547
UKParticipantUS$1,319
FrenchParticipantUS$1,146
ShoppingUS$100
Inhaca/Kruger Tour
US$300
RestaurantsUS$210
Foreign Investment Advisory Service, 2006
23
Typical Package: 7 Nights
Business/Conference Tourism Itinerary
Europe/USA – Maputo
European,American or
African Business Tourist
Ancillary Service
Providers(Shops, Tours, Restaurants)
Frontier Services
and Airport
Charges
Ground/Other Domestic Transport
LogisticsAccommodation
Average International Air Transport Fare Per
Participant
Out of Pocket Expenses
Fees/Taxes
Negotiated Costs With Service Providers
$1,210 $100 $600 $610
45.0% 3.7% 22.3% 22.7%
Cost of Inputs for Travel to Destination= $1,910
Total Tourist Expenditure on Travel Experience = $2,690
$ 170
6.3%
Portuguese Participant
US$726
AmericanParticipantUS$1,575
S. African Participant
US$300
Mauritian ParticipantUS$1,153
Kenyan Participant
US$939
NigerianParticipantUS$2,547
UKParticipantUS$1,319
FrenchParticipantUS$1,146
ShoppingUS$100
Inhaca/Kruger Tour
US$300
RestaurantsUS$210
Typical Package: 7 Nights
Business/Conference Tourism Itinerary
Europe/USA – Maputo
European,American or
African Business Tourist
Ancillary Service
Providers(Shops, Tours, Restaurants)
Frontier Services
and Airport
Charges
Ground/Other Domestic Transport
LogisticsAccommodation
Average International Air Transport Fare Per
Participant
Out of Pocket Expenses
Fees/Taxes
Negotiated Costs With Service Providers
$1,210 $100 $600 $610
45.0% 3.7% 22.3% 22.7%
Cost of Inputs for Travel to Destination= $1,910
Total Tourist Expenditure on Travel Experience = $2,690
$ 170
6.3%
Portuguese Participant
US$726
AmericanParticipantUS$1,575
S. African Participant
US$300
Mauritian ParticipantUS$1,153
Kenyan Participant
US$939
NigerianParticipantUS$2,547
UKParticipantUS$1,319
FrenchParticipantUS$1,146
ShoppingUS$100
Inhaca/Kruger Tour
US$300
RestaurantsUS$210
Foreign Investment Advisory Service, 2006
Increasing the amount
and proportion of money that is earned
locally
25
Value chain analysis and development approach
Phase Step What to do?Phase 1: Diagnosis
Step 1 Preparation
Step 2 Map the big picture: enterprises and other actors in the tourism sector, links between them, demand and supply data, and the pertinent context
Step 3 Map where the poor participate
Step 4 Conduct fieldwork interviews in each node of the chain, with tourists and service providers
Step 5 Track revenue flows and pro-poor incomeEstimate how expenditure flows through the chain and how much accrues to the poor. Consider their returns and factors that enable or inhibit earnings
Phase 2:Opportunities
Step 6 Identify where in the tourism value chain to seek change: which node or nodes?
Step 7 Analyse blockages, options, and partners in the nodes selected, to generate a long list of possible interventions
Step 8 Prioritise projects on the basis of their impact and feasibility
Phase 3: Planning
Step 9 Project planning Ashley, Mitchell and Spenceley, 2009
26
Types of value chain interventions
• Greater volume: Sell more fruit/craft/beds to customers
• Upgrade processes: Better coordination and communication within, and between stakeholders (e.g. artisans, farmers)
• Upgrade products: better quality service, products related to market demand
• Add value: take on new functions and to increase revenues (e.g. processing, delivery)
• Reduce barriers to entry: improve access the poor have to markets (e.g. linkages between producers and buyers)
• Contracts: for members of associations; between producers and tourism enterprises
• Diversify markets: sales locally, nationally and export – and outside the tourism industry
Adapted from ITC/ODI, 2009
27
1. Employment of the poor in tourism enterprises2. Supply of goods and services to tourism enterprises
by the poor or by enterprises employing the poor3. Direct sales of goods and services to visitors by the
poor (informal economy)4. Establishment and running of tourism enterprises
by the poor - e.g. micro, small and medium sized enterprises (MSMEs), or community based enterprises (formal economy)
5. Tax or levy on tourism income or profits with proceeds benefiting the poor
6. Voluntary giving/support by tourism enterprises and tourists
7. Investment in infrastructure stimulated by tourism also benefiting the poor in the locality, directly or through support to other sectors
WTO, 2004
1. Seven ways the poor benefit from tourism
Recommended