Government intervention and tourism performance
Governments also intervene in the tourism arena because it is perceived to be a complex industry, being an amalgam of different businesses and sectors, where benefits accrue if these businesses are coordinated better to achieve common goals – the development and improvement of the quality of tourism. A more controversial argument for intervention is that it can prevent market failure. Indeed, some commentators argue that when the public sector gets too involved in tourism, such as through major investment in business activities like visitor attractions, failure is never far away. This is because the imbalance with public sector intervention may deter private sector investment if tourism becomes overly bureaucratized with a multiplicity of agencies involved in its management and regulation. In extreme cases, too much public sector investment may lead to a dependency culture where tourism is protected from market forces, becomes uneconomic due to the subsidies, is unattractive to investors and fails to reach its full potential.
But intervention is often politically justified since the highly seasonal nature of tourism activity in some regions and countries means that there is often insufficient business to support all-yearround operation. In extreme cases, there may not be adequate flows of tourists to support a tourist attraction. State subsidies, grants and assistance to the tourism sector in this context is justified, supporters argue, because without support the attraction may not be able to survive, and therefore would not provide a vital element of the region’s attractiveness. This is highly controversial in countries where the performance of the tourism sector (in terms of visitor arrivals, productivity per business and high levels of seasonality) has been supported by public subsidies to operators and the tourism sector. Critics of such policies point to the obvious advantage of allowing the tourism sector to operate in a market economy with no subsidies or state intervention: it improves competitiveness (see Box 10.3). They argue that a market forces culture is important to stimulate innovation and new ideas, exciting developments and a dynamic tourism industry. For example, one concept which has informed such intervention by the public sector concerns the use of the triple helix model ( Figure 11.1 ). The triple helix model in simple terms suggests that where mutual benefits exist in the intersection of the three stakeholders (public sector, private sector and universities/research institutes) it may be possible to foster innovation. To lead the nurturing of mutual benefits, it is vital that one of the stakeholders (e.g. the public sector) leads and champions the process, initially through networking and then through the creation of a smaller community of like-minded individuals committed to promoting innovation. This particular focus in Norway on the triple helix has informed its thinking on collaboration and cooperation in many of the networks which Innovation Norway (which has absorbed the roles of the National Tourism Organization) has supported and funded. Enterprise, development and innovation may need support and assistance at a fledgling stage, but first ideas on innovation need to be generated. If there is no incentive for such activity due to dependency, and the tourism sector operates in a protective environment and does not have to compete globally, then public sector support may actually dampen vital activity. The result of increased competition may well be the loss of businesses without a viable market to support them in the short-term if subsidies were removed. Yet a decline in the number and range of tourism operators may actually be desirable if it removes marginal and poor-quality operators with low service standards, who may depress the market for other businesses seeking to promote a quality product.
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The perceived impact of such changes on marginal tourism regions, which have a heavy dependence on seasonal tourism for local employment, is viewed as politically unacceptable. Removals of subsidies are only implemented where public sector funding for tourism is reduced owing to financial stringencies in central, regional or local government budgets. Yet critics of state subsidies for tourism argue that few other sectors of the economy with significant private and public sector involvement enjoy such levels of state-related support to facilitate economic activity.
Advocates of continued state support, often described as ‘lobbying’ or ‘interest groups ’ (e.g. the Scottish Tourism Forum in Scotland, the British Hospitality Association in the UK and Tourism Industry Association in the USA, which represents its tourism members) highlight the wider benefits of state involvement in tourism. Even in the USA, where Congress suspended funding of the US Travel and Tourism Administration in 1996 and pushed the marketing and promotion of the US to an industry body (the Tourism Industry Association), it re-intervened in 2005 to provide federal funds for marketing the USA overseas since a combination of problems had damaged the country’s attractiveness as a destination. Industry lobby groups argue that improvements to the range of infrastructure (e.g. roads), attractions and business activity may also have benefits for residents of areas. In many local council areas, especially in towns, tourism is seen by residents as a problem in that cleansing, rubbish collection, policing and marketing/promotion that arises from tourism adding to the tax burden. Yet the beneficial effects of tourist spending on the local economy (see Chapter 12) arguably can reduce rating levels, as tourism supports local businesses, which pay business rates, create employment and generate greater revenue for councils, thereby reducing the potential rates burden for local residents.
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The following statement in the Parliament of New South Wales in relation to Byron Bay, a popular coastal tourist destination and community on the east coast of Australia, highlights many of the reasons why the public sector is involved in tourism, particularly planning, because of the problems which may arise from uncontrolled development and the negative consequences of tourism development. It also shows how small communities may be forced to take the pressure of seasonal tourist development and be forced to pay for it through the rates charged by local authorities to meet tourist and resident needs.
I want to raise the general issue of the pressure that is placed on people and the facilities in the popular tourist destination of Byron Bay ... Everyone knows that the beaches and landscape around Byron Bay are simply magnificent. During the past 10 years in particular Byron Bay has become a significant international destination, especially for backpackers ... Whilst tourism is the economic lifeblood of Byron, and tourists generally are most welcome, if the amenity of Byron for locals and the atmosphere of Byron which attracts tourists in such large numbers are not preserved it will end up being neither attractive for locals or tourists. I believe the Coalition’s policy is an enlightened one because it recognises that a community with a small population, and therefore a small rate base – in the case of Byron some $7.3 million a year only for the whole of shire – which hosts one million tourists a year is deserving of some special assistance ahead of a community of similar size which hosts no tourists.
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Another problem is that the sewerage system at Byron cannot cope with the demand on it. Some progress at last is being made on this front, but overloads are not uncommon. Water consumption is up, sewerage loads are up and it is doubtful that the upgraded sewerage plant at West Byron, which is due to come on line in 2004, will provide more than temporary respite ... On the positive side, council has commissioned a tourism plan to be developed for Byron Bay specifically, and the voice of the local community is being heard more than in the past. The locals are fighting back. A recent public meeting of residents looked at ways of bringing under control the worse excesses of backpacker and other visitor behaviour – namely public drunkenness, using the streets as toilets, loud all night parties and overcrowded houses ... The Byron tourism plan needs to be developed to address all the key issues. It must include strategies for protecting the amenity and the beauty of Byron Bay for locals and tourists alike. ( D. Page 2002)
Such arguments are highly controversial and different facets of each argument are invariably highlighted by interest groups, depending upon the evidence used and points raised to advocate or reject public sector support. There is often a great deal of conjecture, supposition and value-laden arguments used by interest groups and stakeholders when debating tourism. This may explain why some local councils, which periodically change their political complexion, can be described as ‘blowing hot and cold ’ towards tourism, exemplified in the policies and planning approaches they adopt towards tourism. This is one reason why governments have endorsed better research methods to understand, analyse and explain how local economies are impacted by tourism. As Chapter 12 will show, the use of Tourism Satellite Accounts have begun to provide some objective data to support the wider economic arguments on the importance of tourism to national economies. This has started to address the ongoing tension associated with situations where objective tourism data do not exist.
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Inevitably, government involvement in tourism at any level is about the resolution of conflict, seeking to achieve a balance between actively promoting tourism and acting as guardians of the public interest in the manner, form, direction, impact and effect of tourism from a national to local level. For example, state intervention in Spain, Greece and Cyprus in 2008 was critical due to drought and water shortages, requiring Barcelona and Cyprus to import water to address a strategic crisis facing their tourism sector upon which their economies depend. Thus the state has a crucial role as a strategic planner and crisis manager. This conflict resolution process will often mean balancing the protagonists (i.e. the tourism industry) and antagonists (often residents) who are both valid stakeholders in the tourism economy, in seeking to meet the needs of the visitor in a sustainable and locally appropriate manner (see Box 11.1 ).
A more active role for governments, and a potential reason for intervention in the tourism economy or markets, is related to strategic objectives aside from the development process. Here one dimension of public sector management has been divided into two perspectives by Jeffries (2001) :
1 strategic seasonal redistribution of tourists
2 strategic geographical redistribution of tourism. In the first instance, seasonal redistribution is a major global issue, given the problems of seasonality in tourism discussed in
BOX 11.1: CASE STUDY: GOVERNMENT POLICY TOWARDS TOURISM IN AFRICA AND THE ROLE OF INDUSTRY ASSOCIATIONS IN SOUTHERN AFRICA
According to Brown (2000) , few countries in sub-Saharan Africa had developed sizeable tourism economies prior to 1980. Even by 1999, over half of all overseas arrivals were concentrated in South Africa, Morocco and Tunisia. South Africa is one of the success stories of African tourism, with growth rates in recent years of up to 20 per cent a year in non-African visitor arrivals and over six million international visitors a year. Many factors can be attributed to this growth, not least a depreciated currency (the rand) which makes it a very attractive destination for European and Asian visitors. It is also ranked highly by luxury travellers who consume ecotourism and wildlife tourism experiences, as the leading long-haul luxury UK travel magazine Condé Nast Traveller states. To understand how Africa has embraced tourism, it is interesting to consider policy shifts by African governments that have facilitated such growth.
Brown (2000) argues that, historically, African tourism was based on game reserves and parks, developed to suit expatriate white residents, settler communities and overseas visitors. Most of these visitors came from Eastern and Southern Africa prior to the 1950s. As the independence movement developed in many African countries in the period after 1950, national park systems were created. These largely had a conservation rather than a tourism focus. It was mainly in the Eastern and Southern African countries that tourism ministries were created, with a focus on planning, marketing, developing and administering tourism as a vital economic activity.
In the period since the 1970s, government attitudes towards tourism as an economic activity have evolved, integral to economic reconstruction following independence. Prior to the 1970s, tourism was rightly seen as an exploitative activity, controlled by white colonial interests and multinational enterprises. During the 1980s governments, according to Brown (2000) , identified the link between tourism and economic development as a process that they have more power to control and direct, to avoid purely exploitative relationships. However, many studies have highlighted to governments the capital investment that is needed to develop tourism infrastructure.
Tourism also offers new hope, as many politicians acknowledge, bearing in mind the ongoing problems of promoting agricultural development and the obstacles to fair world trade as development options. Tourism also offers some scope for indigenous entrepreneurship, as the extensive government support schemes in South Africa, post-apartheid, suggest. Many African governments have also begun to recognize that they can manage international investment to build visitor markets, as leading hotel brands provide a customer base loyal to international products. As African governments have embraced more democratic government, and ensured a greater degree of political stability, international investment has begun to help build the necessary infrastructure.
The challenge in South Africa is to build the complementary infrastructure and tourism capacity so that indigenous communities can seize the economic development opportunities. Accompanying the international investment has been a greater investment in tourism organizations and administration together with tourism policies and strategies to set the direction for development. Perhaps the greatest challenge for Africa’s fledgling and established tourism industries in those countries that have embraced such activity is ensuring it develops in an environmentally balanced manner. With many fragile environments and ecosystems, government policy has often had a particular focus on this element, especially in relation to ecotourism that has nurtured luxury high-spending markets. Among other challenges for African tourism are:
● generating research data that enable governments to monitor tourism’s development and impacts (social, economic and environmental)
● developing indigenous entrepreneurship as a basis for unique product development
● training and equipping the labour force to meet the needs of international visitors
● developing the right tourism organizations to accommodate the industry’s growth, with marketing, planning and development capacity
● being able to identify the social and cultural effects of tourism growth and development on the indigenous population, to ensure that local culture, expertise and knowledge are not lost with the greater globalization of tourism experiences.
In South Africa a tourism industry association – the Southern African Association of Tourism Professionals (SAATP) – was formed in 2000. As an expanding sector of the economy, SAATP sought to ‘represent the collective interests of individuals operating at a professional level in Southern Africa ’ and its objectives are to:
● raise standards of tourism professional within Southern Africa
● attain and maintain regional and international recognition as representative of professional tourism competence within Southern Africa
● speak on behalf of professional people operating within the tourism sector in Southern Africa
● encourage members of the association to strive for professional excellence both academically and in practice
● protect the professional standing of the association and its members by imposing a code of conduct on the membership and ensuring enforcement thereof
● encourage the development of potential tourism professionals through interaction with appropriate education and training organizations
● foster a better understanding of the role of tourism professionals within public, private and civil society
● establish a tourism network that includes information held by members, tertiary education institutions, public, private and other institutions
● contribute intellectual leadership to tourism development in Southern Africa by providing appropriate responses to public domain issues and processes
● provide opportunities for discussion and debate on tourism issues important to the membership
● develop and maintain an information directory of all the members of the association and to implement appropriate distribution strategies regularly for the benefit of members.
Source : www.tourismprofessionals.org
Members are required to adhere to a code of conduct, including the Global Code of Ethics for Tourism produced by the UN-WTO. SAATP has an important role lobbying industry, coordinating and developing the sector. Not only can it provide industry leadership, it can also promote many of the training and development objectives of the tourism industry in line with government tourism policy. It complements the activities of government-funded bodies such as the National Trade Organization, South African Tourism. With forecasts by UN-WTO of an increase of 300 per cent in visitor arrivals by 2020 to the Southern African region (comprising South Africa, Swaziland, Botswana, Namibia and Lesotho) the organization and management of the tourism sector by government and private sector bodies such as SAATP will be critical to take advantage of growth opportunities.
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