Consultant Calls for Tourism Donors To Act, Market and Promote not Talk Through The Credit Crunch

“There are two key lessons from the financial crisis for sustainable tourism development – in the long term without balance, the system will self-correct; continuing to doing more of the same because everyone else is, is not OK when it goes against business basics.” Says international tourism consultant Kate Lloyd Williams

I am frequently frustrated at the amount of hours and words devoted to discussing a definition of ‘sustainable tourism’, often at the expense of taking practical actions. The one dimension most people can agree on is creating a better balance than the average product. This balance spans destination impact, carbon footprint, local and international benefits. There are tensions between stopping long-haul travel to the developing world, which brings environmental costs, but contributes essential incomes to local and poor people whom would otherwise starve.

These debates will and should continue (to some extent), but for those involved in sustainable tourism development, there are other balance considerations that are being systematically neglected, namely the demand side or marketing.

2009-10 looks set to be ‘rocky’ for the global tourism industry. It is important to look ahead realistically in light of the current ‘Financial Crisis’ sweeping the globe, but perhaps we should also look back to take advantage of a broader lesson. For the developing world, where tourism is often the major export earner, the picture could be especially bleak, if long haul travel declines due to price or even carbon concerns. If there is one key message to emerge from the recent months, that lesson is that we ignore at our peril the fundamental principles of business, however good the PR or wrapping looks. Whether this is applied to financial derivatives or an ecolodge, we must not get carried away by emotion, but consider the basics in a balanced way. For sustainable tourism development typically the aspect ignored (or not given sufficient attention) is that of marketing to bring the customers through the door. Most tourism businesses fail through lack of customers.

For development agencies involved in tourism, this is compounded further by a reluctance to accept that marketing is such a fundamental part of the business model that it deserves considerable investment of funds and time relative to the project budget. Why are agencies and NGOs reluctant to do this? Firstly it is seen as a private sector role. They are correct in that the private sector is much better at understanding the product, the market and how to drive which customers. However, for product in remoter locations, or where there should be a considerable local development impact, some donor funds may be a critical catalyst to build the basic awareness required to market the product ongoing. In a tough market firms may be forced to reduce their product in harder or poorer destinations. If donor funds could support effective national or destination marketing this would provide much greater incentive for industry to support the product.

Secondly, there are typically reservations about the appropriateness of spending donor funds on marketing and PR. Our business basics apply again. Without ‘Promotion’, the ‘Product’, ‘People’, ‘Place’ components of marketing will fail. This seems obvious, yet agencies seem happy to leave off the promotion part. This can and has resulted in raised expectations in poor rural communities that are consulted about the new tourism product and invest in making changes, only to see that after a couple of years the benefits have not emerged due to lack of tourists. In addition, the perspective for the other ‘P’s can be skewed away from the business. Often the product is developed without industry partners, to advise on shaping the product and service to make it sellable. Many ecolodges go bust through well intentioned work in a remote location that has no phone or internet. Too many sustainable tourism products fail to adequately develop a picture of the target customer they will serve, focusing more on how many local people could benefit. These present real challenges to tour operators, even those committed to try to sell them, and could have been solved through greater partnership at the outset.

Coming back to the ‘business basics’ for development agencies to support any sustainable tourism development they need to adopt the Dragons Den or Donald Trump mindset. What components bring the greatest Return on investment? (this may be jobs for locals, incomes to the poor etc.). If this approach is taken we would see two changes in behaviour – an acknowledgement that in general the approaches to date have had very limited success in terms of commercial viability (so should be re-thought), and a return to support for all aspects of marketing necessary to get new products and destinations off the ground or developed well. Development agencies are often experienced at (and therefore comfortable with) investing in major supply side local development projects, albeit these can be very costly relative to local benefits. They shy away from funding sensible marketing plans run by business partners. At best where marketing is considered important they may be happy to fund the plan, but not the promotional activities. Donald Trump would be very unimpressed by this from his Apprentice teams, as he would know that this would result in bankruptcy.

So as we look ahead in the context of the financial crisis, we must remember that we ignore the business basics at our peril. The question is, do our development partners watch enough Apprentice and Dragons Den to look at the results to date and start redressing the balance?

Kate Lloyd Williams