moving up the value chain: best practices & benchmarks for rural tourism
DESCRIPTION
Discusses best practices, benchmarking, and value chain analysis (VCA) for rural community based tourismTRANSCRIPT
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Moving up the Value Chain: Best Practices & Benchmarks
for Rural Tourism
Alan A. Lew, Ph.D., AICP Dept of Geography, Planning & Recreation
Northern Arizona University, USA
AlanLew.com
Dept of Land Resource and Tourism
School of Geographic &
Oceanographic Sciences
Nanjing University, Nanjing, China
15 November 2012
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PPT Slides Online
• DocStoc.com
– www.docstoc.com/docs/135960665/Sustainable-Tourism-Lessons-from-Around-the-World
• v.gd/No6drz
– www.docstoc.com/docs/135960962/NanjingU---Tourism-Incognita
• v.gd/RxAz1L
– http://www.docstoc.com/docs/135962391/Sustainability-and-Resilience-in-Community-Based-Tourism
• v.gd/Llcvqq
• Slidehare.net/alew
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Outline
1. Benchmarking Indicators
2. Creating Value
3. Value Chain Analysis
4. Upscaling Product Quality
Glacier Bay
National Park,
Alaska, USA
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ISSUES
• Demands of Development
– Increasing accountability
– Reason for Benchmarking Indicators
• Increases Between Haves & Have-nots
– How to maximize benefits for have-nots
– Reason for Value & Value Chain Analsys
• Aspirations of the Poor
– Greater day because they know more
– Reason for Upscaling Product Quality
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1. Benchmarking Indicators
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Benchmarking Is …
• “The means by which we attempt to locate a level of performance in a certain area that is superior to ours, then to change the way we do certain activities in order to improve our performance” – Paul Leonard, Benchmarking expert
• “The continuous, systematic search for, and implementation of, best practices which lead to superior performance – Benchmarking Centre
• “Benchmarking is simply about making comparisons with other organisations and then learning the lessons that those comparisons throw up” – European Benchmarking Code of Conduct
View from Burj Khalifa, Dubai
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Benchmarking
Improving a Product
by Measuring it Against
a Recognized Standard
• Widely used for quality control, marketing,
finance, technology innovation
• Vaguely understood in service industries
(such as Tourism)
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Internal & External
• Internal Benchmarking : compare self with others in same organization – Internal audits, targets & efficiency
– Good starting experience; Most common approach
• External Benchmarking : compare with other organizations – rivals (‘competitive benchmarking’)
– non-rivals (‘best-in-class’ or ‘best-practice benchmarking’)
– aggregated sector data (‘sector benchmarking’)
– done by strategic consultants using confidential data
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External Benchmarks
• Best-in-Class Benchmarking
– Best practices in an area
• e.g. marketing, human resources
– Non-competitors from different
sectors share data & results
• Sector Benchmarking
– Led by industry associations
– To educate & stimulate
competition
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Tourism Benchmarking
Indicators 1. Volume & Value of Tourism
– Visitor Number & Economic Value
2. Visitor Satisfaction – Surveys of Customer Perceptions
3. Stakeholder Satisfaction – Surveys of Tourism Providers & Residents
4. Organizational Performance – Sustainability
• Energy use, Local sourcing, Recycling
– Management
• Financials: Cost and Efficiency
• Innovation: Strategic/Long term Objectives
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Balanced Score-card Approach
Comprehensive view based on four (or more) perspectives:
– Customers: How do customer see us ?
– Internal Business: What processes must we improve ?
– Innovation & Learning: Do we continually learn,
improve, and create new value ?
– Financials: How do we appear to our investors &
employees ?
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Net Promoter
Score (NPS)
• Rating of whether or not clients would recommend a
product or service
• Strong correlation with repeat use of products /
services and referrals
• Best indicator of overall ratings for a product or service
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2. Creating Value
At the PATA
Ecotourism
Conference,
Balikpapan,
Kalimantan
(Borneo),
Indonesia
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Creating Value
• Two Types of Value 1. Customer Value = meeting needs &
desires
2. Company Value = profit & success
• Value is Created by 1. Higher quality for purchase price =
Customer value
2. Lower cost for sold price = Company value
• Customer Value
– must be created first – Before company profit can be claimed
Rainforest
Canopy
Walk,
Poring Hot
Springs,
Sabah,
Malaysia
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How to Change Value
1. Reduce Quality – Reduce Price More = Customer Value
– Reduce Cost More = Company Value
2. Keep Same Quality – Reduce Price = Customer Value
– Reduce Cost = Company Value
3. Increase Quality – Increase Price Less or Reduce Price = Customer Value
– Increase Cost Less or Reduce Cost = Company Value
4. Increase Quality + Price + Cost – Perceived Customer Value may Increase
– Perceived Company Value may Increase
Folk artist,
Indonesia
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Quality, Price, Cost & Value
Quality
Customer Benefit
Price
Cost
Value
Business Benefit
- Customer Benefit Value = User Needs & Aspirations
- Business Benefit Value = Enterprise Profits
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1. Reduce Quality, Reduce Price
+ Cost More
Quality
+ customer benefit
Price
Cost
Quality
Price
Cost
= business benefit
If Cost can be reduced more than Price, then business
benefit will increase.
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2. Keep Quality, Reduce Cost + Price
Quality
+ customer benefit Price
Cost = business benefit
Quality
Price
Cost
If Cost can be reduced more than Price, then business
benefit will increase.
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3a. Increase Quality, Increase Cost
+ Price Less
Quality + customer benefit
Price
Cost
Quality
Price
Cost
= business benefit
If Price can be increased more than Cost, then business
benefit will increase.
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3b. Increase Quality and Reduce Cost (on a comparable new product)
Quality
+ customer benefit
Price
Cost
Quality
Price
Cost
+ business benefit
This model is appropriate for a new product. Price is the
standard market price for a comparable product.
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4. Increase Quality, Cost + Price (perceived benefits)
Quality
= perceived customer benefit
Price
Cost
Quality
Price
Cost
= perceived business benefit
If Price is increased more than Cost, then business
benefit will increase. If Quality is increased more than
Price, then customer benefit will increase.
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Methods of
Creating Value
• Quality Increases
– Better Facilities & Materials
• Investment & Maintenance
– Better Services
• Human Resource Development
– Better Innovations
• Strategic Planning & Market Analysis
• Price & Cost Decrease
– Better Efficiency in Production
• More work per worker; More product per raw material
– Better Economies of Scale
• Increased Customers through Better Marketing
(Spend)
(Innovate)
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Creating Value in Tourism
1. Loyalty Programs for repeat customers
– Lower prices = Customer Value
– Repeat customers = Business Value
2. Facilities & Service Upgrade Programs
– New Facilities & Replacements
– Staff Training/Skills Development
– Higher costs & Lower profits
– Repeat customers & Higher net promoter scores
– Higher quality product for customers who becoming
richer over time
3. Special Experiences
– Back-stage experiences; Innovative products
– Unexpected surprises – gifts, fruit, tickets
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Rural Tourism
Product Development
• Goals – Increase Returns from
the Same Number of Visitors
– Increasing Tourist Stay / Nights
• Special Interest Tourism – Spend more Money & Stay Longer
– Active & Experiential Holidays (trend) • Personal involvement & active participation
• Learning about people, cultures, traditions, foods, arts ...
• Adventure & physical challenge attractions
– More employment for guides & transport
– Requires Careful Target Marketing
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Iban / Dayak
Cultural
Ecotourism
in Sarawak,
Malaysia
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Increasing Dayak Tourism Value
Award-winning tourism
promotion poster for
Sarawk, Malaysia
Group tour accommodations
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Summary
• Value =
– Customer + Business Perspectives
– Product Quality + Price + Cost
• Value Creation =
– Efficiency & Effectiveness
• Increased Productivity
– Investments & Creativity
• Improved Product/Service Quality
• New Product Development
– Better than Competitors
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3. Value Chain Analysis
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Value Chain Analysis (VCA)
Q: How to Best Target Changes to Maximize Desired Benefit?
A: Value Chain Analysis (VCA)
– All activities required to bring a product or service to customers
• conception, through production, to delivery
– Focus on Points that Add Value
• to target for development
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VCA Identifies …
Current System 1. How money flow within the production chain
2. Relationships among various actors and exchange points
in the chain
3. Share of tourism expenditures to each segment or group
in the chain
– Usually Firm or Industry Level
• Micro-level “input-output analysis”
Future Predictions / Planning 1. Potential impacts of planned interventions
– Activities that may provide higher value
for each group
2. Potential impact of broader societal trends
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• Example of a
value chain
analysis of
Costaleo, a
fictional coffee-
producing
country in
South America.
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VCA Questions & Data
1. For a study location, in which distinct areas does tourism
show evidence of development ?
2. How much income does tourism generate for the local
economy in each identified area ?
3. How do tourism activities in each area impact employment
& business opportunities ?
4. How does tourism in each area bring other desirable
benefits to the local community ?
5. What specific enabling changes can
be made to enhance goals, such as: 1. Pro-poor tourism development
2. Sustainability practices
3. Other
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VCA for Rural Populations (1)
• Relationship Issues
– Limited Relationships
• In diversity of people & institutions
• Socially, economically & geographically isolated
from the mainstream economy
– Unequal Relationships
• Less influential & more dependent
• More disadvantaged (or exploited) by private
sector
• Lacking key connections
• VCA Goal: Strengthen Linkages &
Access to better quality or more
affordable goods & services
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VCA for Rural Populations (2)
• Human Resource Issues
– Greater needs, with fewer resources
– Less entrepreneurial & more Risk-Averse
– Much shorter time horizons
– Limited resources to make informed choices
– Possibly: Lower self-esteem & culture of
dependency
• VCA Goals: Identify Incentives & Investments to
Change Behavior
– Increase effectiveness of actors
– Create new value chain relationships
– Increase capacity to empower change
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Examples of Targeted Tourism Issues for
Rural Communities
• Overcoming Enclave Tourism
– Hotels, coaches & other vehicles, tourist sites/attractions
– Less accessible to rural local community
• Overcoming Remoteness
– Opening roads & improving transport to Transport Hubs & Tourist Markets
• Intra-regional tourism
– Marketing to Appropriate Upscale Market Segments
• Predisposed to nature, culture and daily life of rural communities
• International Visitors – tend to spend more – some more than others
– Using the Longtail of Internet Marketing
• Free Social Media Outlets
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VCA – As A Capacity Building Tool
If Open & Participatory
– Interviews, Focus Groups, Stakeholder
Engagement
= Effective Tool for
– Capacity strengthening
– Build a common
understanding of a
destination’s economic
gaps
– Promoting stakeholder
dialogue
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Finding Value
in Shenongjia
Shennongjia National Forest County,
Hubei, China
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VCA + Complementary
Approaches • VCA + Sustainable Livelihoods
Approach
– SLA describes target populations: Who
they are, How they participate in value
chains & What factors constrain or enable
their engagement in upgrading
opportunities
• VCA + Food Security Programming – FSP increases availability of food & ability
of poor to access it
• VCA + Social Protection Approaches – SPA identifies & provides skills training,
key assets, and legal & social barriers to
build long-term capacity for VCA
participation
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Outline & Lesson So Far…
1. Benchmarking Indicators
• Comparison to Others: Efficiency
• Net Promoter Score
2. Creating Value – to get better benchmark scores
• Quality Increase
• Price (& Cost) Decrease
3. Value Chain Analysis – to target investments
• Where to invest to get maximum local benefits
• Human resources & Innovative products
…
4. Upscaling Product Quality
• Case Study: Upscaled Ecotourism
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Upscaling Tourism
Through Ecotourism
• Survey of North American
Ecotourism Companies
– with Ecotours to the Asia-
Pacific (excluding SW Asia)
• Absolute / Pure Ecotourism
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Where North
American
Ecotours to
Asia Went (mid-1990s)
Country # Tour % of all Tour
or Region Companies Companies
• Indonesia 16 40.0
• India 13 32.5
• Australia 12 30.0
• Nepal 12 30.0
• Bhutan 10 25.0
• New Zealand 8 20.0
• Tibet 8 20.0
• China 7 17.5
• Thailand 7 17.5
• Burma 5 12.5
• Cambodia 5 12.5
• Laos 5 12.5
• Pakistan 5 12.5
• Malaysia 4 10.0
• Papua New Guinea 4 10.0
• Russian Far East 4 10.0
• Vietnam 4 10.0
• Central Asia 3 7.5
• Japan 3 7.5
• Mongolia 3 7.5
• Sikkim 3 7.5
• Philippines 2 5.0
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Java, Indonesia
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Ecotour Types & Activities • NATURE Type (22 respondents)
– Wildlife (5), Nature (4), Natural history (3), Jungles & Rainforests (2),
Science-based nature tours (2), Fossil expeditions, National Park's, Nature
reserves, Orangutans, Ornithology, Village wildlife conservation, Zoos
• CULTURE Type (14) – Culture (6), Agriculture, Anthropology, Countryside tours, Culture
exchanges, Ethnic area lodge, Food, Local guides, Sustainable technology
• ADVENTURE Type (4) – Soft adventure (2), Adventure, Hard adventure,
Outdoor adventure
• PHYSICAL-LAND Activities (15 respondents) – Trekking (7), Walking (3), Cycling/Mountain Biking (2),
– Backpacking, Bush Walking, Day hiking, Physical activity
• PHYSICAL-WATER Activities (6) – Boat rides, Diving, Rafting, Sailing, Sea Kayaking,
Whitewater rafting
• EDUCATION / OTHER Activities (11) – Educational (3), Guest scholar/teachers/experts (3), Animal riding safaris
(2), Bird watching (2), Local educational programs, Photo-taking safaris,
Study tours N = 31 respondents
Trekking in Nepal
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Orangutan
Rehabilitation
Balkipapan, East Kalimantan,
Indonesia “Charismatic Fauna”
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Ecotourism Management Policies
1.Use guides native to visited area * 31 77.5%
2.Have an education program for local guides 26 65.0%
3.Provide a pre-arrival information packet 24 60.0%
4.Providing a % of tour profits to local groups 19 47.5%
5.Participate in local cleanup programs 17 42.5%
6.Pack-it-out requirements 15 37.5%
7.Other activities to support sustainable dev.** 16 40.0%
N = 40 respondents
* 67% use local guides exclusively
** see next slide
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Rainforest Education
& Research Tourism
Balikpapan,
E. Kalimantan,
Indonesia
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Other Activities to Support Sustainable Development (40%)
Donations: Generous donations to local charities; Funds for conservation & research (2); Land purchases for conservation; Sponsor Village Folk Theatre; Support clinic, school and religious organizations; Support local environmental groups
Education: Environmental education kits; Quality environmental education; Scholarships; Post-trip mailings; Teach adult education class in ecotourism; Up to 70 pages long pre-arrival packets; Support village libraries; Environmental reading library
Services: Provide medical services; Lobby government to protect rainforest; Support orphanages; Peer exchanges; Tree planting (2)
Economic Development: Use of all reusable materials; Support ecovillages; Encourage eco-purchases; Support local handicrafts; Invest in eco-lodges; Support indigenous tourism projects
Near Tonle Sap
Lake, Cambodia
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Added Value / Cost of
Ecotours
Extra Cost of Conducting Eco-sensitive Tours
High: 40.0 % of Tour Price
Mean: 11.1
Low: 0.0
Willingness of Participants to Donate Money to Local Environmental & Social Causes
Very willing 38.9 %
Somewhat willing 55.6
Not Interested or willing 5.6
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Managing Tourist Behaviour
- We strictly enforce proper behaviour on our tours 42.9%
- We explain proper behaviour, but leave it up to the individual 33.3
- We only explain proper behaviour in the most sensitive place 11.9
- We seldom ever direct tourists in how to behave 11.9
Comments:
– Our travellers typically already know how to behave
– We talk to individuals privately if there is a problem with their behaviour
– Our policies vary based upon the destination
– Our operators are responsible for establishing proper behaviour
– We don't accept participants who will not behave
– Policies vary depending on the place
• N = 42 respondents
In Nepal’s Khumbu Region
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Tour Group Size
Smallest Average Largest
Group Group Group
• Mean 4.5 11.4 24.7
• Median 2 8 15
• Range 1 - 22 3 - 60 4 - 125
• Do you intentionally limit tour group sizes?
• Yes 34 (81%) No 8 (19%)
• If yes, what is your size limit?
– Mean: 14.9
– Median: 14.5
– Range: 6 - 40
Mt.
Kinabalu,
Sabah,
Malaysia
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Reasons Limiting Tour
Group Size – p.1
1. IMPACTS: (19)
1. To reduce/lessen impact / damage (7)
2. To minimize cultural concerns/impacts (4)
3. To minimize environmental impacts (4)
4. To ensure privacy
5. To ensure sustainable impact
6. Lower impact from camping
7. Impacts are greater with over 16 persons
2. EXPERIENCE: (14)
1. To ensure a quality and genuine experience (5)
2. Provide more personal contact/attention (3)
3. Increased opportunity to interact with locals / cross-cultural experience (2)
4. Better group rapport / dynamics (2)
5. To give more in-depth insight & equal service to each client
6. To enhance enjoyment of the environment and activities
Hiking Mt. Kinabalu,
Sabah, Malaysia
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Reasons Limiting Tour Group Size – p.2
3. CAPACITY: (8)
1. Due to the carrying capacity of the product (2)
2. Based on capacity of lodges (2)
3. Safety and the ability to airlift out of National Parks and mountains by helicopter if the weather turns bad
4. Our maximum size depends on the itinerary
5. Depends on destination, group size may be as little as two persons
6. Allows use of smaller vehicles to get to more remote places
4. SERVICE: (8)
1. Ease of handling/controlling smaller groups (2)
2. Guides are unable to have personal contact and control the situation with more than 17 persons
3. More than eight is a mob
4. Some private groups may exceed our maximum
5. Logistics of moving too large a group in the destination region
6. Manageable, yet profitable, size
7. We break our larger groups into smaller groups of four to five persons each for daily activities
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The North American
Ecotourism Market
• Specialty Tourism / Niche Market
– Good for the Environment,
• But may not meet full economic needs of an entire community
– Fairly Wide Variety of Types & Activities
– Willing to Pay More for Higher Quality
• Ecotour Quality
– Low Impact, Responsible Travel
• Social & Environmental Contributions
– Authentic & Insightful Place Experiences
• Real Interactions with Locals (not staged?); Educational
– Well Managed with Personal Service
• Small groups sizes, appropriate to destination
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Options for Upscaling
Ecotourism Destinations
1. Improving Quality
•Smaller groups, personal attention; Improved facilities and
human resources to meet market expectations
2. Reducing Price
•Collaboration with complementary services; Awareness of
competition’s quality & price
3. Becoming More Efficient
•Efficient managements & delivery of conservation &
authenticity products; Human resource development; Aware
of new technologies & skills; Efficient marketing
4. Being Innovative
•Creating unique selling propositions (activities, attractions)
for a place; Surprise experiences; Awareness of global
competition
5. Improving Linkages / Relationships
•Through online longtail marketing & collaborations
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Outline &
Conclusions
1. Benchmarking Indicators
• Comparison to Others:
-- Efficiency
• Net Promoter Score
2. Creating Value – to get better benchmark scores
• Quality Increase
• Price (& Cost) Decrease
3. Value Chain Analysis – to target investments
• Where to invest to get maximum local benefits
• Human resources & Innovative products
4. Upscaling Product Quality
• Case Study: Upscaled Ecotourism
Near Yangshuo (Guilin), China