Global Trends in Tourism Investment - Benefits and Risks

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Information about Global Trends in Tourism Investment - Benefits and Risks
Investor Relations

Published on March 5, 2014

Author: SWAssociatesDC

Source: slideshare.net

Description

Part 1 of the SW Associates presentation to the Tourism Working Group of COMCEC of the newly released report "Enabling Tourism Investment Climate:Challenges and Prospects for Tourism Investments in the COMCEC Region." This presentation was made by Scott Wayne, President of SW Associates in Ankara on March 4th, 2014.

Enabling Tourism Investment Challenges and Prospects for Tourism Investment in the COMCEC Region Presented by: Scott Wayne and Manuel Knight, SW Associates, LLC Washington, DC

Agenda • Global Trends in Tourism Investment: Benefits and Risks • Enabling Tourism Investment Climate in the COMCEC Region: Challenges, Prospects and Solutions SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 2

Global Trends in Tourism Investment: Benefits and Risks • Importance of Tourism Investment • Key Benefits and Positive Impacts • Key Risks and Negative Impacts • Problems and Impediments SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 3

Importance of Tourism Investment • Engine for sustainable growth: Economy, jobs, incomes, protection of natural and cultural heritage. • People to people industry • Lower barriers of entry • Relatively easy for investors SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 4

Tourism – an attractive investment? SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 5

Over US$2 trillion from tourism to GDP SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 6

TRAVEL & TOURISM INDUSTRY Accommodation, recreation, catering, entertainment, transportation, and other related services TRAVEL & TOURISM ECONOMY Printing/Publishing,concrete, utilities, financial services, furnishing & equipment suppliers, foods, security, administration, ship building, beverage supply, iron/steel, aircraft manufacturing,wood, mining, chemicals, textiles, oil/gas suppliers, plastics, sanitation services, metal products, computers, resort development, wholesalers, rental car manufacturing, laundry services. WTTC

Sources of Investment • Domestic and Foreign Direct Investment – Insurance companies – Pension funds – Religious institutions – Labor unions – Multilateral Development Banks – Private equity funds – Real estate investment trusts SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 8

Crowdfunding: A new potential source of tourism investment • • • • Raises capital from many donors Could maximize local engagement Helps market the investment and destination Two types: – Equity-based – Non-equity or donation based • Compatible with Islamic finance • Potential projects? Hotels, restaurants, retail, destination attractions SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 9

Examples of tourism investment with public participation Religious Pilgrimage Sites Stadiums & Fair Grounds Museums & Cultural Centers Congress Halls National Park Facilities Tourism Training Facilities SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 10

Key Benefits and Positive Impacts of Tourism Investment • • • • • • Economic development Poverty alleviation Foreign exchange generation Urban revitalization Natural and cultural heritage preservation Capacity building SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 11

Economic development • Generates – Attractive financial returns – Tax revenue – Foreign exchange • Benefits broad supply chains • Boosts small and medium-sized enterprises SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 12

Poverty Alleviation • Relies on non-skilled labor • Offers opportunities for: – Women – Racial, ethnic or low income minorities – SMEs • Generates extensive capacity building SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 13

Cultural and Natural Heritage Preservation • Urban revitalization • Preservation of heritage at risk • Preservation of biodiversity via strengthening of protected lands SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 14

Key Risks and Negative Impacts of Tourism Investments • Environmental impacts • Land tenancy challenges • Infrastructure failures • Financial risks • Incompatible neighboring developments SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 15

Environmental Impacts • Inadequate waste and sewage treatment • Inadequate natural resource planning and management – Poorly regulated activities at attractions • Inadequate urban planning – Lack of traffic management • Poor construction practices SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 16

Land Tenancy Obstacles • Unclear land title, contracts and usage rights • Insufficient cadaster or land registry • Customary or other local ownership may not be reflected in legal system • Restrictions on foreign ownership SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 17

Infrastructure Failures Boosting Capital Costs • Water or energy failures are costly for projects • Installing own alternative systems is costly • Inadequate road access SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 18

Financial Risks • Exist for all types of projects, including tourism infrastructure – Risk of default on debt – Insufficient demand for offers – Too many rooms – Management underperformance – Denied repatriation of capital and profits – Non-convertibility of profits – Risk of incompatible development SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 19

Problems and Impediments • Problems Related to Factors of Production • Financial and Administrative Obstacles/Problems • Problems Related to Promotion of Tourism Investments SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 20

Problems Related to Factors of Production • Land, labor, supplies, equipment, and utilities required by projects. • Restrictions in importing and/or hiring foreign labor  High tariffs and duties  Delays and expense clearing goods through customs  Restrictions on foreign labor SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 21

Financial and Administrative Obstacles • High income taxes • High interest rates • Repatriation of capital and profits • Administrative red tape • Local partner requirement SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 22

Problems related to promotion of tourism investments • Inexperience formulating tourism projects • No institution for tourism investment promotion • Industry statistics unavailable or outdated SW Associates, LLC - Enabling Tourism Investment in COMCEC Countries 23

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