Chapter 6 Tourism Development

The Tourism System 6th edition Kendall Hunt Publishing Company

Chapter 6 Tourism Development

Robert C Mill and Alastair M Morrison © 2013 1


© 2013 Photos: Copyright - VisitScotland/Scottish Viewpoint

Copyright - VisitScotland/ScottishViewpoint


Contents Describes tourism development with a particular

emphasis on encouraging sustainable tourism. Discusses government and private-sector roles in

tourism development . Reviews the techniques of pre-feasibility studies,

economic feasibility studies, cost/benefit analyses, and environmental impact assessments.






Purpose Having learned about the concept and principles of sustainable tourism development, students will be able to describe a process for evaluating individual tourism project development opportunities.



Learning Objective 1: Sustainable Tourism Development Explain the concept and principles of sustainable tourism development.






Building a Sustainable Future for Tourism: Sustainable Tourism Development According to Manning and Dougherty, sustainable development “means the use of natural resources to support economic activity without compromising the environment’s carrying capacity, which is its ability to continue producing those economic goods and services.”



Building a Sustainable Future for Tourism: Principles of Sustainable Tourism Development To improve the quality of life of the host community To provide a high quality experience for visitors To maintain the quality of the environment on which both

the host community and the visitors depend

UNWTO






Learning Objective 2: Main Forms of Tourism Development Describe the main forms of tourism development.



Building a Sustainable Future for Tourism: Main Forms of Tourism Development

Low-impact to high-impact tourism Ecologically-sustainable tourism Alternative tourism






Building a Sustainable Future for Tourism: Main Forms of Tourism Development Ecotourism Deter or minimize negative environmental and social-

cultural impacts. Take place within “relatively untouched” natural areas. Contribute to the conservation of areas. Improve the local economy of adjacent communities. Primarily address visitors who maintain a certain “non-

consumerism”, nature-loving, and ethical conscience toward tourism.

Mass tourism Resort tourism



The Link between Tourism Planning and Tourism Development Tourism planning process produces goals, strategies,

and objectives for tourism development. Tourism plan provides overall guidelines for

development and outlines broad development concepts.

Tourism plan identifies individual project development opportunities.

Note: However other developments will occur that were not contemplated in tourism plans.






Learning Objective 3: Government and Private-Sector Participation in Tourism Development Discuss government and private-sector roles in tourism development.



Private-Sector Roles in Tourism Development Idea generation Entrepreneurial role Specialized technical skills Financing






Volunteer Sector Roles in Tourism Development Operating attractions Creating and running events and special meals Providing travel information services Financing the development of community-oriented

facilities



Government Roles in Tourism Development Stimulator or catalyst for development Developer Operator: (1) Bankruptcy; (2) Pilots or Demonstration

Projects; (3) Profitability Concerns; (4) Social Tourism Social tourism provider Regulator of tourism developments






Learning Objective 4: Roles and Types of Government Incentives in Tourism Development Describe the role and types of government incentives for tourism development and the criteria for government financial assistance.



Fiscal Incentives for Government

Tax holidays or deferrals Remission of tariffs Tax reductions






Direct and Indirect Incentives from Government Non-refundable grants

Low-interest loans Interest rebates Forgivable loans Loan guarantees Working capital loans Equity participation Training grants Infrastructure assistance Leasebacks Land donations



Criteria for Government Financial Assistance Competitive impact Compliance with policies and plans Developer and operator capabilities Economic contributions Environmental impacts Equity contributions Feasibility Sociocultural impact Tourism impact






Learning Objective 5: Pre-feasibility and Economic Feasibility Studies Describe the objectives and steps in completing a pre-feasibility study and an economic feasibility study.



Analysis of Individual Project Development Opportunities: Objectives of Pre-Feasibility Studies

The objectives of a pre-feasibility study are to determine

whether: The information available is adequate to show the

project will not be viable or will not be attractive to investors or lenders.

The information available indicates that the project is so promising that an investment decision can be made on the basis of the pre-feasibility study itself; that is, a detailed study is not needed.






The objectives of a pre-feasibility study are to determine whether: A preliminary assessment of potential environmental,

social or cultural impacts shows that these potential impacts are significant and unacceptable to the local community.

Aspects of the project are so critical to its viability that they must be analyzed as part of the detailed economic feasibility study.

The availability of factors critical to the viability of the project (such as availability of a specific site) must be confirmed prior to a detailed economic feasibility study.



Analysis of Individual Project Development Opportunities: Objectives of Economic Feasibility Studies To determine the economic feasibility of a tourism

development project. To evaluate the proposed site for the project or to locate a

suitable site for the project. To analyze the project’s market potential. To produce recommendations on the scale, sizes, facility

types, and quality levels of operation of the project.






Analysis of Individual Project Development Opportunities: Steps in Economic Feasibility Studies Project description Pricing Revenues Expenses and profits (losses) Capital costs Cash flow Return on investment (ROI)



Learning Objective 6: Groups Concerned with Feasibility Study Results Identify the two main groups concerned with the results of economic feasibility studies and discuss the questions they typically want answered.






Analysis of Individual Project Development Opportunities: Main Groups Concerned with Feasibility Studies The two main groups concerned with the results of economic feasibility studies are: Developers and investors Lenders



Analysis of Individual Project Development Opportunities: Developer and Investor Questions Which of several alternative site locations is the most

appropriate? Is a specific site appropriate for the development? If not, is there another site available that would be

suitable? Is market demand large enough to support the project? What are the optimum scale and components of the

project?






Analysis of Individual Project Development Opportunities: Developer and Investor Questions What style of operation and quality levels should be

provided? What revenues and expenses will the project experience? What will the capital costs be? Will the project produce a satisfactory return on

investment? Should the developers and investors proceed with further

analysis?



Analysis of Individual Project Development Opportunities: Lender Questions The same questions as for developers/investors are of

concern to the lenders, and: How much money will be loaned to the developers and

investors? Do the developers and investors have sufficient equity to

invest in the project, given the financing required? Will the project produce sufficient operating profits and

cash flow to cover the interest and principal payments when they become due?






Learning Objective 7: Purposes of Environmental Impact Assessment Explain the purposes of preparing an environmental impact assessment.



Analysis of Individual Project Development Opportunities: Purposes of an Environmental Impact Assessment The main purpose of an environmental impact assessment (EIA) is to identify in advance factors that may affect the ability to build a proposed tourism development and the environmental attributes that will be affected by the development (Manning and Dougherty).






Analysis of Individual Project Development Opportunities: Purposes of an Environmental Impact Assessment To identify risks, minimize adverse impacts, and

determine environmental acceptability. To achieve environmentally sound proposals through

research, management, and monitoring. To manage conflict through the provision of a means for

effective public participation.

Ecologically Sustainable Development Working Group



Analysis of Individual Project Development Opportunities: Detailed Design and Construction Preparation of preliminary architectural concepts Preparation of preliminary architectural design Preparation of final architectural design Construction




THE TOURISM SYSTEM

© 2013

Chapter Summary Highlights

Chapter 6

Photos: Copyright - VisitScotland/Scottish Viewpoint

Development in tourism should follow sustainable tourism development principles.

Government fiscal and financial incentives play a major role in many destinations in encouraging tourism development.

Pre-feasibility and detailed economic feasibility studies should be completed. Environmental impact assessments are a key tool in tourism development.

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Chapter 6 Tourism Development