Operators of successful tourist destinations recognize that tourism and travel is by nature a partnership between the public and private sectors. And while the public sector is often in the driver’s seat in these partnerships, it is especially important that projects in the tourism and travel sector be based on sound commercial principles as well as community values. It is only by taking a commercial approach to unlocking the value of public assets that projects can generate real income and provide adequate and sustainable returns on those assets. Through this process of commercialization, tourism businesses develop and grow.
Transitional economies on top
Well-constructed public-private partnerships (PPPs) are already having an impact on many of the newest travel destinations, once off-limits due to conflict or lack of development. In fact, the biggest growth areas for tourism PPPs were once the most unlikely places for tourists—transitional economies. Since 1980, the share of international tourism receipts spent in the developing world has doubled to almost 40 percent.
Strong economic growth in the emerging economies has been matched by strong growth in tourism and travel within many of those countries as well—especially in developing or newly industrialized nations such as Brazil, China, India, Russia, and South Africa. China is already the second biggest tourism and travel economy after the U.S. in terms of contribution to GDP, and by 2023 it will rank first.
With faster connections and a rapidly increasing array of options—and a trend in tourists taking frequent, shorter breaks—arrival numbers will continue to grow. In Asia alone, there will be 2 billion newly-middle class people searching for travel destinations. Globally, the number of people in the middle class is predicted to almost double by 2020, introducing an extra 1.5 billion people to the travel experience.
The challenge for all economies—advanced and emerging—will be how to use PPPs to capture a share of this growth and how to manage it to drive prosperity.
From parks to palaces
Because the tourism industry is inherently global, opportunities for PPPs span continents as well as sectors, including natural heritage sites like national parks, as well as iconic cultural heritage landmarks such as castles. Many of these projects have successfully overcome initial opposition based on fears that the commercial interests of private operators would dilute the site’s appeal.
This has been an especially relevant issue for America’s national parks, several of which are experimenting with the PPP model. Tellingly, some parks in the hands of private operators have stayed open despite federal budget cuts that have shuttered others. “We aren’t trying to pave the wilderness; we aren’t trying to build condos in front of Old Faithful,” argues Warren Meyer, one of the leaders in the movement to privatize national parks, in a Handshake interview. “Privatizing parks takes them off the government budget, and makes them immune from being pawns in government budget battles.”
Just as these national parks draw tourists away from urban hubs, other tourism PPPs provide a way for governments to promote rural travel among a region’s less-explored routes. Spain’s Paradores, or “castle-hotels,” also featured in this issue, have transformed ruined palaces into luxury hotels offering quality accommodation options on predetermined travel circuits. This approach strengthens the overall product.
The degree to which public and private partners capitalize on cultural offerings can be called “the economics of uniqueness.” Professor Francesca Medda shares the successes as well as missteps of governments that have explored this—with the furor that erupted in Italy when a shoe manufacturer offered to help restore the Roman Colosseum. She closely examines the evolution cycle of a tourism area, using this concept as the basis for describing three different PPP models at work today.
Passport out of poverty
The economic argument for tourism as a development tool is built on the idea that bringing visitors into a community is a public good—good for the residents, good for local commerce, and good for services like water and sanitation, which may otherwise be ignored. But as the Overseas Development Institute’s Jonathan Mitchell points out, “Developing countries are littered with well-intentioned community-based tourism and eco-tourism projects which, with notable exceptions, are delivering limited benefits to few people.”
So what’s the evidence backing up the economic argument? Mitchell describes the crucial elements of and results from projects that work, including models like the partnership between the private sector and NGOs in The Gambia through its International Centre for Responsible Tourism. This initiative linked low-income communities with tourism, and improved the impact of tourism in one of Africa’s smallest, poorest, destinations.
Handshake editors also polled government officials and industry experts on how development institutions can best contribute to the economic stability of communities in tourist areas. Their diverse, surprising answers hint at emerging trends in unexpected locations.
Access is all
Accessibility is one of the key issues all governments face in building the tourism economy—whether it’s airline access to a country or shepherding tourists to an out-of-the-way site. Investment in low-cost airlines is one strategy that can eliminate travel barriers. The impact on travel of low-cost carriers in Samoa proves this point; a successful PPP has improved access to the destination while strengthening the national flag carrier. The extraordinary growth in low-cost carrier routes in South East Asia over the last decade also shows the level of untapped demand.
Accessibility has been dramatically improved by the adoption of open skies policies and improvement of the quality and maintenance of road, air, and water transportation infrastructure, as Professor Don Hawkins points out.
There’s no better proof that creative PPPs can be tailored to unique situations in previously inaccessible locations than the success of UNESCO’s World Heritage Sites. The number of these sites has doubled in the past ten years, and in his interview with Handshake, Francisco Bandarin, UNESCO’s Assistant Director-General for Culture explains why: “When you have an expansion of your core business the first question you ask yourself is, ‘How do I keep delivering the same quality of services?’… We want to deal with tourism in a way that’s constructive. PPPs can help us do that.”
Indeed, when governments and the private sector work together to deliver a competitive offer tailored to a site’s specific needs, the tourism industry reaches its full potential—delivering services and jobs to the resident community while offering an unforgettable experience to visitors.