Dr Anna Spenceley Spenceley Tourism And Development cc (STAND) [email protected] Sustainable Tourism Network Southern Africa AGM 6 May 2010, Durban,

Dr Anna Spenceley Spenceley Tourism And Development cc (STAND) [email protected]

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








WTO, 2004


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

http://en.wikipedia.org/wiki/Vendor_%28supply_chain%29

http://en.wikipedia.org/wiki/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


TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


package)



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


TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


package)



Finalproduct

Consumer

MEAL







10

Option to adapt the supply chain

TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


Finalproduct

Consumer

If the intermediaries are ‘unfair’

MEAL

11


TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


package)



Finalproduct

Consumer

MEAL







12

Option to adapt the supply chain

TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


package)



Finalproduct

Consumer

Restaurants serving more traditional meals buy more local,

traditional produce

TRADITIONALMEAL

13

Options to adapt the supply chain

TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


package)



Finalproduct

Consumer

MEAL







14


TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


package)



Finalproduct

Consumer

MEAL







15


TOURISTRESTAURANT

VEGETABLEFARMER

FISHERMAN MARKET


DISTRIBUTOR

BOATOWNER

LANDOWNER

TRADITIONALMEAL

MARKET


producers


package)



Finalproduct

Consumer

MEAL







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


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


• 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


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



Portuguese Tourist

Ancillary Service


Int. Air

Transport


Accommodation

Domestic Air

Transport


Fees/Taxes





€ 210 € 310 € 0 € 600 € 200 € 0 € 380 € 300

10.5% 15.5% 0% 30.0% 10.0% 0% 19.0% 15.0%





21

4. Value chains




Portuguese Tourist

Ancillary Service


Int. Air

Transport


Accommodation

Domestic Air

Transport


Fees/Taxes





€ 210 € 310 € 0 € 600 € 200 € 0 € 380 € 300

10.5% 15.5% 0% 30.0% 10.0% 0% 19.0% 15.0%






Portuguese Tourist

Ancillary Service


Int. Air

Transport


Accommodation

Domestic Air

Transport


Fees/Taxes





€ 210 € 310 € 0 € 600 € 200 € 0 € 380 € 300

10.5% 15.5% 0% 30.0% 10.0% 0% 19.0% 15.0%





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


Fees/Taxes


$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






Ancillary Service


Frontier Services

and Airport

Charges




Participant


Fees/Taxes


$1,210 $100 $600 $610

45.0% 3.7% 22.3% 22.7%



$ 170

6.3%


US$726



US$300


Kenyan Participant

US$939




ShoppingUS$100

Inhaca/Kruger Tour

US$300

RestaurantsUS$210


23






Ancillary Service


Frontier Services

and Airport

Charges




Participant


Fees/Taxes


$1,210 $100 $600 $610

45.0% 3.7% 22.3% 22.7%



$ 170

6.3%


US$726



US$300


Kenyan Participant

US$939




ShoppingUS$100

Inhaca/Kruger Tour

US$300

RestaurantsUS$210






Ancillary Service


Frontier Services

and Airport

Charges




Participant


Fees/Taxes


$1,210 $100 $600 $610

45.0% 3.7% 22.3% 22.7%



$ 170

6.3%


US$726



US$300


Kenyan Participant

US$939




ShoppingUS$100

Inhaca/Kruger Tour

US$300

RestaurantsUS$210


Increasing the amount

and proportion of money that is earned

locally

24

Comparing tourism revenue to the poor in different

destinations

ITC/ODI, 2009

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








WTO, 2004


28

Thank you!

Dr Anna Spenceley Spenceley Tourism And Development cc (STAND) [email protected] www.anna.spenceley.co.uk +27 (0)72 311 5700

Documents

Dr Anna Spenceley Spenceley Tourism And Development cc (STAND) [email protected] Sustainable Tourism Network Southern Africa AGM 6 May 2010, Durban,