Thursday, February 16, 2017

Tourism: moving up the value chain

“Tourism contributes P1.4T to GDP,” 
Amy R. Remo, Philippine Daily Inquirer, 23rd Mar 2016. “The Philippine travel and tourism industry contributed a total of P1.43 trillion to the local economy in 2015, equivalent to about 10.6 percent of the country’s gross domestic product, according to the latest report by the World Travel and Tourism Council (WTTC).

“Money spent by foreign visitors, or what WTTC termed as visitor exports, was deemed a key component of the direct contribution of travel and tourism to the local economy. In 2015, the Philippines generated P294.4 billion in visitor exports, a figure expected to grow by 3.6 percent this year, during which the country is expected to attract some 5.5 million international tourists.”

For 2016 that would mean US$ 6.1-B in “visitor exports” (from the writer’s back of the envelope arithmetic.) While the total tourism contribution will approximate what we generate from OFW remittances or the BPO industry, granted that the net margin income from the industry may be lower.

The subject arose when the wife and writer (and relatives) were recently in Palawan – El Nido and Puerto Princesa. And foreign visitors were indeed teeming. It was the first time for the writer although wife and daughter were in Coron four years ago; and the wife ensured that this time the writer went – especially after friends back in the US recounted stories from their visits in Coron.

Since the blog is about economics, let’s put some numbers to build on the premise of the title, how tourism can move up the value chain. And since tourism is a global industry, the mindset must be geared for global competitiveness – and why we started with the $6.1-B in visitor exports, expressed in foreign currency.

And Trip Advisor is handy to enumerate the top 30 attractions in PH. Assume that these attractions generate 80% of visitor exports, that equates to $4.9-B in revenues. Twelve of the 30 or 40% are in Palawan. Assume that in the provinces tourists spend a third of what they would in Metro Manila. That means in Palawan we are generating $645-million in visitor exports.

The rest of the top 30 attractions break out as follows: 7-Visayas, 5-Northern Luzon, 1-Southern Luzon, 5-Metro Manila. Applying the same ratio of spending to all those in the provinces across the board, and the balance allocated as the share Metro Manila, that means the latter generates $3.5-B in visitor exports.

Not surprising given hotel rates in Manila are higher as well as recreation, entertainment and other related expenses. The number may be overstated which represents 73% of total, and may be a few points off Metro Manila’s actual share of the economy. (The calculations are solely for visualization purposes.)

But back to Palawan. How does Palawan tourism move up the value chain? As the blog has discussed before, innovation is the key. And innovation must identify a human need that must be addressed to raise man’s wellbeing. 

Let’s imagine how the top attractions in other countries would deliver that. And here Steve Jobs’ definition of creativity would be helpful, i.e., it is simply connecting the dots.

And since we Pinoys love to travel, we know that the dots start and end at our home airport. [And why a world-class airport in Metro Manila is imperative as well as the requisite infrastructure system that will allow visitors to easily move about while in PH.] And to appreciate the thinking process, let’s look at the El Nido Resorts as a benchmark.

To get to the domestic terminal, a relative drove wife and writer through SLEX; it was a Sunday and the drive was a breeze. At the airport, after check-in, they were ushered to the lounge of Air Swift. So far so good . . . and on the return . . . “wow” – the arrival area is head-and-shoulders above the departure area.

Here is what a Canadian posted on the web describing his own experience: “The lounge at both airports had snacks and refreshments. The Manila lounge was nice with reserved seats for passengers with name tags, TVs, Air-Con, toilets, the El-Nido airport didn't have Air-con but they did have fans all over and toilets as well and was nice enough.” A French couple and another one from Spain chatting with the wife and writer marveled at the unspoiled rural scenery – yet with the amenities described by the Canadian.

There is no wading in the water. Here’s how the dots connect reading from the resort’s website: “Travel time is approximately 55-minutes using a 50-seater ATR aircraft. From Lio airport in El Nido, there will be or a 10-15 min van ride to El Nido Town Pier followed by a 30 to 45-minute boat ride to Lagen Island depending on tide and weather conditions.”

And on the return, the brother-in-law punched the Uber App and in no time Ram, the owner-driver, was by the terminal building. And another “wow” – the access road from the domestic terminal to the Skyway was traffic-free, it was a Saturday, early evening.

From Lagen the party stayed in El Nido town, in a hotel owned by Pinoy friends from New York. Groups from Spain and Germany and Denmark became acquaintances and they were unanimous in saying the hotel more than met their expectations. The same can be said of the hotel where the family stayed in Puerto Princesa.

El Nido, a small town of 41,000, looks very dense with foreigners moving around and about as though they were in their hometowns. And aboard the outrigger – even before it reached the pier – the writer already saw the outdoor cafes and bars, and by happy-hour time the group was enjoying the sunset amongst foreigner-drinking parties. For dinner, it was the seafood “ihawan” place that was also by the water.

But let’s see how the dots connect: Note “toilets” figured in the Canadian review referenced above.

Given Palawan captures 40% of the top PH attractions, it must be a focus. [Translation: let’s get over “crab mentality” and prioritize where we get the biggest bang for the buck. It’s about the greater good for the greater number, including employment. It is beyond the rhetoric of rural development.] And to move up the value chain simply means addressing this particular dot (“toilets”) in the outdoor cafes and bars/restaurants.

This is where different concerned groups and advocates (akin to a cross-disciplinary partnership in the pursuit of innovation) can be called upon. For example, if the business establishments need financial assistance to get their facilities up to international standards, the mayor, the Dept. of Tourism and major industries that benefit from tourism can join hands to move PH tourism up to world-class levels. [Sadly, politics always rears its ugly head. The mayor of Puerto Princesa is reported to have been dismissed by the Office of the Ombudsman, and the DILG has stopped recognizing him as mayor.]

For example, in Eastern Europe, along the highways, gas stations have become traveler-friendly. Yet not that long ago, the writer would have his own toilet paper whenever he was on the road. These facilities have become truly world-class. [The writer recalls that over 3 decades ago when the family drove through California, even in the rural areas, “Clean Restroom” really meant a clean restroom.]

Which brings us to two road trips that are popular in Palawan. The drive from El Nido to Puerto Princesa or vice versa (a 5-hour trip) and the one from Puerto Princesa to Sabang (1.5 hours) to get to the Underground River. Again, the toilets. If we map out the drive to the top attractions of PH, how many of them would require international-standard toilets along each of the routes? And there can be several ways to achieve the desired outcome.

For example, sponsors can be tapped to build and maintain these facilities. Should the Dept. of Tourism be involved? What about the Dept. of Trade & Industries? From the private sectors, the telcos and the beverage firms, instead of simply putting up billboards, can be tapped as well? And the oil companies too?

The wifi connections in the hotel in El Nido and the one in Puerto Princesa would confirm why we always complain about the telcos. Surprisingly, on Lagen Island, it was efficient.

Connecting the dots. What are the needs of tourists that we must respond to? Innovation as the blog has argued, does not have to be earthshaking.

In fairness to El Nido town, the writer’s party enjoyed dinner in a restaurant they understood was owned by a Frenchman.

But the highlight of the story is the Puerto Princesa Underground River. Indeed, it has the ability to get the writer to intone “Wow!” Like it did the foreign tourists. But to keep to our global perspective, we Pinoys must know that there are easily 10, if not more, underground rivers elsewhere in different countries per Google. Which only means we better raise our sights higher because if tourism is indeed to be a major industry, we must be truly globally competitive.

And as the blog constantly brings up, we need to appreciably raise the shares of industry and agriculture of GDP in order to progress from an underdeveloped to a developed nation. And in the case of tourism, given the global imperatives of competition, we must constantly raise the bar and move up the value chain. And that means concerned groups and advocates must collaborate and work together in pursuit of innovation and the common good. It is called nation building. 

“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]

“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

“National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists . . . A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.” [The Competitive Advantage of Nations, Michael E. Porter, Harvard Business Review, March–April 1990]

“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” [William Pollard, 1911-1989, physicist-priest, Manhattan Project]

“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]

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