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.

1. 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

2. 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
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3. 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
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4. 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
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Investment in COMCEC Countries
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5. Tourism – an attractive
investment?
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Investment in COMCEC Countries
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6. Over US$2 trillion from tourism
to GDP
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Investment in COMCEC Countries
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7. 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

8. 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
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Investment in COMCEC Countries
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9. 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
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Investment in COMCEC Countries
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10. Examples of tourism investment
with public participation
Religious
Pilgrimage
Sites
Stadiums
& Fair
Grounds
Museums
& Cultural
Centers
Congress
Halls
National
Park
Facilities
Tourism
Training
Facilities
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Investment in COMCEC Countries
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11. Key Benefits and Positive Impacts
of Tourism Investment
•
•
•
•
•
•
Economic development
Poverty alleviation
Foreign exchange generation
Urban revitalization
Natural and cultural heritage preservation
Capacity building
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Investment in COMCEC Countries
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12. Economic development
• Generates
– Attractive financial returns
– Tax revenue
– Foreign exchange
• Benefits broad supply
chains
• Boosts small and
medium-sized
enterprises
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Investment in COMCEC Countries
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13. 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
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14. 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
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15. Key Risks and Negative Impacts of
Tourism Investments
• Environmental impacts
• Land tenancy
challenges
• Infrastructure failures
• Financial risks
• Incompatible
neighboring
developments
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Investment in COMCEC Countries
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16. 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
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Investment in COMCEC Countries
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17. 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
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Investment in COMCEC Countries
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18. Infrastructure Failures Boosting
Capital Costs
• Water or energy failures are costly for projects
• Installing own alternative systems is costly
• Inadequate road access
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Investment in COMCEC Countries
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19. 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
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Investment in COMCEC Countries
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20. Problems and Impediments
• Problems Related to
Factors of Production
• Financial and
Administrative
Obstacles/Problems
• Problems Related to
Promotion of Tourism
Investments
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Investment in COMCEC Countries
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21. 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
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Investment in COMCEC Countries
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22. Financial and Administrative Obstacles
• High income taxes
• High interest rates
• Repatriation of capital and
profits
• Administrative red tape
• Local partner requirement
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Investment in COMCEC Countries
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23. Problems related to promotion
of tourism investments
• Inexperience formulating
tourism projects
• No institution for tourism
investment promotion
• Industry statistics
unavailable or outdated
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Investment in COMCEC Countries
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